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2014-01-01

EFSA Board of Directors Decision No. (8) of 2014 Regulating Sharia Supervisory Boards for Islamic Financial Products

The Egyptian Financial Supervisory Authority (EFSA) issued Decision No. 8 of 2014 to mandate the establishment of Sharia Supervisory Boards for investment funds, Takaful companies, and other regulated entities issuing Islamic financial products. The regulation stipulates that these boards must comprise an odd number of at least three members, including specialists in Islamic jurisprudence and finance or accounting, who must meet strict academic, publication, and criminal record requirements or qualify for specific exemptions. Registered members serve renewable three-year terms subject to a nominal fee, and all existing boards were required to formalize their compliance with the new registry standards by June 30, 2014.

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Egyptian Financial Supervisory Authority (EFSA)

Chairman of the Board of Directors

Decision of the Board of Directors of the Egyptian Financial Supervisory Authority No. (8) of 2014 dated 9/1/2014 Regarding the Regulation of the Work of Sharia Supervisory Boards for Financial Products Issued in Accordance with Islamic Sharia

The Board of Directors of the Egyptian Financial Supervisory Authority

Having reviewed the Insurance Supervision and Control Law in Egypt issued by Law No. 10 of 1981 and its Executive Regulations, and the Capital Market Law issued by Law No. 95 of 1992 and its Executive Regulations, and the Real Estate Financing Law No. 148 of 2001 and its Executive Regulations, and the Law Regulating Supervision over Non-Banking Financial Markets and Instruments issued by Law No. 10 of 2009, and the Statutes of the Egyptian Financial Supervisory Authority issued by Presidential Decree No. 197 of 2009, and the letter from Al-Azhar Al-Sharif addressed to the Authority dated 4/12/2013, and the memorandum prepared by the competent department within the Authority dated 8/1/2014, and the approval of the Authority's Board of Directors at its meeting held on 9/1/2014.

Article (1)

Investment funds, Takaful (Islamic insurance) companies, or any other companies or entities subject to the Authority's supervision whose articles of association, offering or prospectus circulars regarding their issued securities, or public announcements of issuing securities conform to Islamic Sharia provisions, shall establish a committee named the Sharia Supervisory Board, responsible for matters related to their compliance with Islamic Sharia.

Article (2)

The Sharia Supervisory Board shall be composed of an odd number of members – at least three – drawn from a special registry maintained by the Authority for this purpose. Among them, at least one member must specialize in Islamic jurisprudence (Fiqh) or its principles, and at least one member must specialize in economics, finance, or accounting.

Article (3)

The following conditions shall apply to applicants for the Authority's Registry of Sharia Supervisory Board Members:

  1. Holding a doctoral degree from Al-Azhar University or its equivalent, in a relevant field.
  2. Having at least two specialized scientific publications in a scientific journal in the fields of Sharia-compliant financial, accounting, or economic transactions.
  3. Not having been previously convicted of a felony or misdemeanor involving crimes against honor or trust, or any of the crimes stipulated in company or commercial laws, or laws referenced in Article Three of the aforementioned Law Regulating Supervision over Non-Banking Financial Markets and Instruments, or declared bankrupt, unless their reputation has been restored.

An exception to the first and second registration conditions stipulated in this Article may be granted to applicants meeting any of the following:

  • Having held the position of Mufti of the Arab Republic of Egypt.
  • Being nominated by His Eminence the Grand Imam of Al-Azhar Al-Sharif.
  • Providing evidence of prior membership in similar Sharia supervisory boards in banks, financial institutions, or investment funds for a period of three years prior to the issuance of this Decision.

Registration in the aforementioned Authority registry shall be valid for three years, renewable upon submission of a request from the applicant and subject to meeting the renewal requirements set by the Authority. A fee of three Egyptian pounds shall be paid for registration or renewal upon submitting the application.

Article (4)

This Decision shall be published in the Egyptian Official Gazette and on the Authority's website, and shall take effect from the day following its publication. The Authority's sectors and central departments shall implement this Decision within their respective jurisdictions, and existing Sharia Supervisory Boards shall regularize their status by the deadline of 30/6/2014.

Chairman of the Board of Directors
Sherif Samy

47.76

Smart Village, Building 15 - 84 B
Km 28, Cairo-Alexandria Desert Road
Giza Governorate, Postal Code: 12577

Tel: +202 2537 0040
Fax: +202 2534 5222
Email: info@efsa.gov.eg
Website: www.efsa.gov.eg

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