December 8, 2022

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SEC exposes new rule on Shariah advisory companies 


The Securities and Alternate Fee has uncovered new guidelines on Shariah Advisory Companies for non-interest capital market services.

In line with the SEC, Shariah governance is essential contemplating that compliance with Shariah guidelines and rules is necessary in Non-interest Capital Market operations/transactions.

“The availability of the principles is consistent with native and worldwide finest practices. The regulatory group within the Nigerian Monetary System resembling CBN, NAICOM had issued such pointers to supply clear and good Shariah governance of their respective sectors.

“Making the Shariah Advisory service a registrable perform out there will help in efficient implementation of the proposed consolidation of the Shariah governance guidelines and also will be an extra income to the Fee” the Fee acknowledged.

The Fee acknowledged that the Non-interest Capital Market actions in latest instances are exponentially rising because the market is witnessing the doorway of extra asset managers, emergence of i-REIT, itemizing of sovereign Sukuk on the Exchanges, issuance of company Sukuk, emergence of shariah advisory perform and many others. 

Going by the Rule, an issuer or fund supervisor with the consent of the trustee (the place relevant) shall appoint a Shariah Adviser to supply Shariah Advisory companies for Shariah merchandise, issuances and schemes.

A capital market operator searching for to supply Shariah compliant services shall appoint a registered Shariah Adviser for the agency and notify the Fee of such appointment inside 5 (5) enterprise days of the appointment.

The rule stipulates that the SEC could register a Shariah Adviser or renew the registration of a registered Shariah Adviser topic to the applicant satisfying some standards.

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On expertise, the applicant is predicted to: Have no less than two years of related expertise in Islamic finance; or have no less than one 12 months of related expertise in Islamic finance and have attended no less than 5 related Islamic finance programs/workshops.

The Rule additionally states that the roles and obligations of a Shariah adviser shall embrace: Advising on all facets of the Non-Curiosity Capital Market Merchandise and Companies together with documentation and structuring;

Issuing Shariah certification which outlines the premise and rationale of the construction and mechanism, the relevant Shariah rules used and related Shariah issues regarding the documentation of the Non-Curiosity Capital Market Merchandise and Companies; Offering Shariah experience/steering on all issues, significantly on funding devices and reviewing compliance stories of the Shariah product’s proceeds utilization (the place relevant) to make sure that funding actions are Shariah compliant.