The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held the 24^th meeting of its Governance and Ethics Board (AGEB / the board) recently, via video conference.

The board primarily discussed the exposure draft of the governance standard on Shari’ah compliance and fiduciary ratings of Sukuk and other Islamic finance instruments. The exposure draft aims to introduce and set out principle-based guidance on Shari’ah compliance and fiduciary ratings of Sukuk and other Islamic finance instruments. Furthermore, the exposure draft seeks to strengthen stakeholders’ confidence in the Islamic finance industry and the Islamic capital markets as well as improve transparency and demonstrate the compliance of Sukuk and other Islamic finance instruments with the standards, regulations and best practices related to Shari’ah principles and rules, Shari’ah governance, adherence to values and fiduciary responsibilities. The board reviewed the draft of the standard, deliberated on the conceptual issues and directed the secretariat to incorporate the required changes and issue the exposure draft for public comments.

The meeting’s agenda further included a review of the progress of the governance standard on the institutional framework for implementation of the code of ethics. The board advised the relevant working group members to consider some changes and start the development of the exposure draft. In addition, the board was briefed on the progress of two governance standards, namely the sustainable financing and alternative benchmark rate.

The Chairman of the AGEB, Mr. Farrukh Raza, stated: “I would like to express my appreciation to all the members and the secretariat, as well as, the relevant working group for their commitment and dedication towards the cause of AAOIFI, despite their eventful work agendas and engagements.” He added: “I am pleased the board has initiated the development of this significant governance standard on Shari’ah compliance and fiduciary ratings of Sukuk and other Islamic finance instruments. Once the final standard is issued, I believe it will contribute towards good governance by providing independent, comparable, assessment-based rating (or scoring) to various stakeholders regarding the Shari’ah compliance of Sukuk’s and other Islamic finance instruments”.

On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated: “I am grateful for the board and the relevant working group members for their time and contributions for the development of the exposure draft of the governance standard on the Shari’ah compliance and fiduciary ratings of Sukuk and other Islamic finance instruments. In terms of the way forward, the said exposure draft is expected to be issued shortly after completing the due process. The public and regulators’ comments will be compiled after the consultation process is completed, and any suitable changes will be incorporated”. He added: “We are also thankful to Islamic international rating agency (IIRA) for providing support for the development of this standard”.