The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held the 23rd meeting of its Governance and Ethics Board (AGEB / the board) on 29-30 November 2021 in Bahrain.

Mr. Farrukh Raza, Chairman AGEB, opened the meeting and expressed his appreciation to all the members for their commitment and dedicating their valuable time to the cause of AAOIFI despite their eventful work agendas and engagements. He also expressed his gratitude for meeting the members physically in Bahrain for the first time after two years of the formation of the board.

The board deliberated on the exposure draft of governance standard on syndicated financing. The exposure draft sets out the key requirements for various stages of syndicated financing including deal origination, award of mandate, marketing and placement, financial close till deal termination, whether early or as per original maturity phases. The board discussed the conceptual issues and directed the secretariat to incorporate the required changes.

The Chairman of the AGEB, Mr. Farrukh Raza, stated: “It’s an honour to announce AGEB’s in principle approval of exposure draft of governance standard on syndicated financing”. He added: “I am certain that standardization of practices in this area will help promote the Islamic Financial Institutions’ global reach, enabling them to conduct their business efficiently and effectively”. He concluded that “during the meeting, the board also reviewed 2021 report and I am happy to state that despite the challenging circumstances, the board accomplishments during 2021 are remarkable. These achievements include holding 4 board meetings over a course of 11 days as well as holding more than 100 working group and short working group meetings”.

On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated: “I am pleased that the board approved the issuance of exposure draft of governance standard on syndicated financing and I am confident that the standard will ensure good governance in the whole process of such transactions. He added: “In terms of the way forward, the standard will be edited as per the instructions of the board, after which it is expected to be issued as an exposure draft, following the public consultation process, comments will be compiled, and any suitable changes will be incorporated”. He concluded “the board also approved the plan for 2022 which includes the development of preliminary studies, issuance of exposure drafts and final standards as well as holding roundtables and public hearings on the pertinent topics”.

The board also approved the plan of the board for 2022 which includes the projects related to Shari’ah compliance and fiduciary ratings for instruments, Shari’ah decision making, governance standard on implementation of the code of ethics for Islamic finance professionals, commodity Murabaha, management of investment account, and alternative benchmark rate project.