GUIDING PRINCIPLES ON CORPORATE GOVERNANCE FOR INSTITUTIONS ISLAMIC FINANCIAL INSTITUTIONS (IFI)

It contains 4 parts and 7 principles. Each parts consists of its own principles & every principles have its own stucture and process, recommended best practices, rationale and objective.

Part 1: General Governance Approach of IIFS

Principle 1.1:

IIFS shall establish a comprehensive governance policy framework which sets out the strategic roles and functions of each organ of governance and mechanisms for balancing the IIFS’s accountabilities to various stakeholders.

Principle 1.2:

IIFS shall ensure that the reporting of their financial and non-financial information meets the requirements of internationally recognized accounting standards which are in compliance with Shariah rules and principles and are applicable to the Islamic financial services industry as recognized by the supervisory authorities of the country.

Part 2: Rights of Investment Account Holders (IAHs)

Principle 2.1:

IIFS shall acknowledge IAH’s right to monitor the performance of their investments and the associated risks, and put into place adequate means to ensure that these rights are observed and exercised.

Principle 2.2:

IIFS shall adopt a sound investment strategy which is appropriately aligned to the risk and return expectations of IAH (bearing in mind the distinction between restricted and unrestricted IAH), and be transparent in smoothing any returns.

Part 3: Compliance with Shariah rules and priciples

Principle 3.1:

IIFS shall have in place an appropriate mechanism for obtaining rulings from Shariah scholars, applying fatwa and monitoring Shariah compliance in all aspects of their products, operations and activities.

Principle 3.2:

IIFS shall comply with the Shariah rules and principles as epressed in the rulings of the IIFS’s Shariah scholars. The IIFS shall make these rulings available to the public.

Part 4: Transparency of Financial Reporting in respect of Investment Accounts

Principle 4.1:

IIFS shall make adequate and timely disclosure to IAH and the public of material and relevant information on the investment account that they manage.