IFR 6.1 IFR 6.1 Application
IFR 6.1.1 IFR 6.1.1(1) This section applies in the case of a
Domestic Fund:(a) which is an Islamic Fund, to its Fund Managerand where appointed, its Trustee;(b) which is an Umbrella Fundwith one or more Islamic Sub-Funds, to its Fund Managerand where appointed, its Trusteein respect of those Sub-Funds; or(c) which is an Islamic Fund on a Fund Platform, to the Fund Manager using the Fund Platform, in respect of that Fund.(2) The requirements that apply to a conventional Fundunder the Collective Investment Law 2010 and CIR apply equally to an Islamic Fund, except as otherwise provided in this chapter.(3) The requirements in MKT chapter 6 that apply to a conventional Listed Fundapply equally to an Islamic Fund, if it is or is to be a Listed Fund, except as otherwise provided in this chapter.(4) In this chapter, except where otherwise provided, any reference to a Fundis to an Islamic Fund,to an Islamic Sub-Fundof an Umbrella Fund, or to an Islamic Fund on a Fund Platform,as the case may be and any reference to a Fund Manageris a reference to a Fund Managerof such a Fund.Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
[Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
[Amended] DFSA RM272/2010 (Made 11th July 2010). [VER2/07-10]
[Amended] DFSA RM220/2018 (Made 22nd February 2018). [VER13/12-18]
[Amended] DFSA RMI249/2019 (Made 18th December 2019). [VER14/12-19]
IFR 6.1.1 Guidance1. While the CIR module contains the key requirements relating to the management and operation of conventional
Collective Investment Funds, this module sets out the additional requirements that apply where such a Fundis managed or held out as being managed as an Islamic Fund. There are other requirements that applying to such firms which are found in other modules of the DFSA rulebook, such as the GEN module, COB module and PIB module.2. While section 3 contains the requirements that apply to Authorised Firmswhich are Fund Managersof Collective Investment Funds, the requirements in this section mainly focuses on Shari'a compliance related requirements that apply at the Fundlevel. For example, while the systems and controls required under IFR section 3.3 relate to the systems and controls that a firm must have in order to comply with its Shari'a obligations, IFR Rule 6.1.3 sets out systems and controls that must be established and maintained at the Fundlevel.
Systems and Controls
IFR 6.1.2 IFR 6.1.2(1) The
Fund Managerof a Fundmust establish and maintain systems and controls which ensure that its management of the Fundand the Fund Propertyis Shari'a compliant.(2) A Fund Managermay, where it is practicable to do so, include the systems and controls required under (1) within those it is required to establish and maintain pursuant to IFR Rule 3.3.1.
IFR 6.1.2 Guidance1. Article 38 of the Collective Investment Law 2010 requires the
Fund Managerto establish and maintain systems and controls, including, but not limited, to financial and risk controls to ensure sound management of the Fundin accordance with the Fund's Constitutionand its most recent Prospectus, taking due account of the nature, scale and complexity of the Fund'sinvestments and operations.2. IFR Rule 3.3.1 requires a Fund Managerof Islamic Fundsto establish and maintain systems and controls to ensure its Shari'a compliance.[Added] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
Fund's Constitutional Documents
IFR 6.1.3 IFR 6.1.3(1) The
Fund Managerof a Domestic Fundthat is a Public Fundmust ensure that its Fund's Constitutionand Prospectusare, and remain, approved by the Fund's Shari'a Supervisory Board.(2) The Fund Managerof an Exempt Fundmust ensure that the Fund's Constitutionand Prospectusare, and remain, approved by the Fund Manager's Shari'a Supervisory Board.
Islamic Financial Business Policy and Procedures Manual
Fund Managermay, instead of having a separate Islamic Financial Businesspolicy and procedures manual both at the firm level and at the Fundlevel, maintain a single Islamic Financial Businesspolicy and procedures manual for the firm and the Fundsit manages.
Fund Managerof a Fundmust implement and maintain an Islamic Financial Businesspolicy and procedures manual for the Fundwhich addresses the following matters:(a) the manner in which the compliance function will be undertaken, in respect of Shari'a compliance;(b) the manner in which the Shari'a Supervisory Boardwill oversee and advise in regard to the Islamic Financial Businessconducted by the Fund Manager;(c) the manner in which Shari'a Supervisory Boardfatwas, rulings and guidelines will be recorded, disseminated and implemented and the internal Shari'a review undertaken;(d) the manner in which disputes between the Shari'a Supervisory Boardand the Fund Managerin respect of Shari'a compliance will be addressed;(e) the process for approving those internal systems and controls which are in place to ensure not only that the Islamic Financial Businessis carried out in compliance with Shari'a, but that information is disseminated to Unitholdersin an appropriate manner; and(f) the manner in which conflicts of interest will be identified and managed, including as prescribed in IFR Rule 6.2.4.