Entire Section

  • IFR 6.2.1 IFR 6.2.1

    (1) A Fund Manager of a Domestic Fund that is a Public Fund must, subject to (3), appoint a Shari a Supervisory Board to its Fund that meets the following requirements:
    (a) the Shari a Supervisory Board has at least three members;
    (b) the members appointed to the Shari a Supervisory Board are competent to perform their functions as Shari a Supervisory Board members of the Fund;
    (c) any appointments, dismissals or changes in respect of members of the Shari a Supervisory Board are approved by the Governing Body of the Fund Manager; and
    (d) no member of the Shari a Supervisory Board is a director or Controller of the Fund or its Fund Manager.
    (2) A Fund Manager may comply with the requirement in (1) by appointing to the Fund the same Shari a Supervisory Board as it has appointed to the firm in accordance with IFR Rule 3.5.1, provided the requirements in (1) are also met.
    (3) A Fund Manager is not required to comply with the requirement in (1) where it relies, for the purposes of making investments for the Fund, on a widely accepted Shari a screening process such as investing in securities included in, or recognised by reference to, an Islamic index, sukuk, or treasury instruments issued by a Shari a compliant financial services provider regulated by a Financial Services Regulator.
    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 RM139/2014 (Made 21st August 2014). [VER8/06-14]

    • IFR 6.2.1 Guidance

      1. In appointing a Shari'a Supervisory Board for the purposes of IFR Rule 6.2.1(1), the Fund Manager should consider the previous experience and qualifications of the proposed Shari'a Supervisory Board members to assess whether the proposed Shari'a Supervisory Board member is competent to advise on the activities undertaken by the Islamic Fund. If the Fund Manager is appointing the same Shari'a Supervisory Board as it has appointed to the firm pursuant to IFR Rule 6.2.1(2), the Fund Manager should still consider whether the requirements in both Rule IFR 3.5.1(1) and IFR 6.2.1(1) are met in respect of that board.
      2. If the Fund Manager is relying on Shari'a screening methodologies such as the Dow Jones Shari'a index, such screening is generally regarded as widely accepted and accessible. However, if less widely known methodologies are used, the Fund Manager should be able, upon request by the DFSA, to demonstrate to the satisfaction of the DFSA the grounds on which it considers the particular methodology used to be acceptable and reliable.
      3. Although the Fund Managers of Exempt Funds and Qualified Investor Funds are not subject to the requirement for the appointment of a Shari'a Supervisory Board for such a Fund, they would need to ensure that the Exempt Funds or Qualified Investor Funds they manage continue to meet the applicable Shari'a requirements applicable to the Fund. They may use a member of the Shari'a Supervisory Board appointed at the firm level for the purposes of ascertaining compliance with the Shari'a requirements. The manner in which they demonstrate to the Unitholder of the Exempt Fund or Qualified Investor Fund as to how they achieve such compliance is a matter left to negotiation (i.e. subject to contractual terms) between the Unitholders and the Fund Manager.
      4. An External Fund Manager may not be able to take advantage of IFR 6.2.1(2), unless it has a Shari'a Supervisory Board appointed at the firm level. In contrast the Fund Manager of an External Fund will be able to use its Shari'a Supervisory Board to meet the Shari'a Supervisory Board requirement relating to the Fund as set out in IFR 6.2.1(2).
      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 RM139/2014 (Made 21st August 2014). [VER8/06-14]