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Shari’ah Funds

Shari’ah Funds. Wan A Rahim Kamil ICM Consultant, Securities Commission Malaysia. Shari’ah Funds. Shari'ah Funds are

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Shari’ah Funds

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  1. Shari’ah Funds Wan A Rahim Kamil ICM Consultant, Securities Commission Malaysia

  2. Shari’ah Funds • Shari'ah Funds are • A group of specialised collective investment funds which offer investors the opportunity to invest their surplus cash in a diversified portfolio of securities that are managed and selected by professional portfolio managers in accordance to Shari'ah principles

  3. Structure of Typical Islamic Unit Trust UNITHOLDERS Invest in Unit Trusts Fund Trust Deed MANAGER Administers the operation of the Fund TRUSTEE Custodian of the Assets Invest in Shariah Approved Investments Shari’ah Committee

  4. Investments • A Shari’ah fund is allowed to invest in • listed securities • unlisted securities • foreign securities • other collective investment schemes • futures contracts • liquid assets provided the above are approved by its Shari’ah committee or SC’s SAC

  5. Approval of Shari’ah fund • The establishment of a Shari'ah trust fund requires similar approval process and compliance as outlined in The Guidelines on Unit Trust Funds • The investments of the fund must be adequately disclosed in the prospectus and annual report of the fund / scheme Additional requirements for Islamic Unit Trust • The Guidelines on Unit Trust Funds require that any fund, expressed to be managed in accordance with the Shari’ah principles, to appoint a Shari’ah committee: • Consisting of not less than three members who are individuals • The appointment of a member of the Shari'ah committee must be approved by the SC • Subject to the SC’s approval, the fund may alternatively appoint a Shari’ah consultant

  6. Criteria imposed on members of Shari'ah Committee • Members of the Shari'ah committee of the fund must • Be of a good repute and character; and • Possess the necessary qualifications, expertise and experience (particularly in fiqh muamalah) to perform their duties and responsibilities in a fit and proper manner

  7. Roles, Power and Duties • Role, power and duties of Shari'ah committee / Shari'ah consultant include: • Ensuring the fund is managed and administered in accordance with Shari'ah principles • Providing expertise and guidance for the fund in all matters relating to Shari'ah, including on the fund’s trust deed and prospectus, its structure and investment, and other operational and administrative matters • Consulting the SC’s SAC in cases of ambiguity or uncertainty as to investment, instrument, system, procedure and/or processes • Ensuring compliance with any guidelines, ruling or decision made by SC or SC’s SAC • Carrying out duties and responsibilities with due care, skill and diligence

  8. rahim@secccom.com.my; wark06@gmail.com

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