shariah governce

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Session 1: Concept of Shariah governance
The definition of “shariah governance system” is referred to the processes and structures composed by the stakeholders in the Islamic Financial Standard Board in order to ensure that shariah rules and principles are compiled within the industry. Islamic Financial Standard Board began their operations on March 2003. They are considered to be an international standard setting organization for the purpose of promoting and enhancing the stability of the Islamic financial services industry through issuance of worldwide and practical standards and principles that would guide the banking, insurance sectors as well as capital markets on their operations. Thus, IFSB-10 has defined shariah governance systems as ““A set of institutional and organisational arrangements through which IFIs ensure that there is an effective independent oversight of Shariah compliance over the issuance of relevant Shariah pronouncements, dissemination of information and an internal Shariah compliance review” ref. Thus, the main objectives for shariah governance framework and the reason for its existence is to ensure that all the activities, transactions and operation done by Islamic financial institutions are in compliance with the shariah rules and principles. In addition, it is to provide a detailed and comprehensive guideline to the shariah committee, board and management of the Islamic financial institution when performing their duties related to matters in shariah. Moreover, it provides a framework that outlines functions related to shariah audit, shariah review shariah research and shariah risk management. Therefore,” Section 28 of the Islamic Financial Services Act 2013, on Shariah compliance provides: 1- An institution shall at all times ensure that its aims and operations, business, affairs and activities are in compliance with shariah. 2- For the purposes of this Act, a compliance with any ruling of the Shariah Advisory Council in respect...
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