Regulatory Alerts2018-11-05
Added · Updated
Shariah Governance Regulations, 2018
The Securities and Exchange Commission of Pakistan mandates that companies and securities must obtain a Shariah compliance certificate to be designated as Shariah compliant, with certificates valid for three years subject to renewal. The regulations establish specific financial screening criteria, including limits on interest-bearing debt and non-compliant income ratios, and require the divestment of non-compliant securities within one year. Entities must appoint a Shariah Advisor, conduct annual internal and external Shariah audits, and purify non-compliant income by transferring it to a charity account. The Pakistan Stock Exchange is required to conduct bi-annual screenings and establish a dedicated Shariah department within three months.