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Nurul Atiqah 1620244 Legal Aspect Notes Week5 6

The document summarizes the Shariah governance framework and dispute resolution system for Islamic financial institutions in Malaysia. It outlines the key functions and expectations of the Shariah board, Shariah committee, management, and other governance bodies to ensure Shariah compliance. It also describes the multi-tier court system for resolving Islamic banking disputes, including dedicated High Court judges and alternative arbitration and mediation mechanisms.

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0% found this document useful (0 votes)
51 views5 pages

Nurul Atiqah 1620244 Legal Aspect Notes Week5 6

The document summarizes the Shariah governance framework and dispute resolution system for Islamic financial institutions in Malaysia. It outlines the key functions and expectations of the Shariah board, Shariah committee, management, and other governance bodies to ensure Shariah compliance. It also describes the multi-tier court system for resolving Islamic banking disputes, including dedicated High Court judges and alternative arbitration and mediation mechanisms.

Uploaded by

Solutions Master
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name: Nurul Atiqah Najmina bt Zulhijar Matric No: 1620244 Section: 1

ISF 3209 NOTES


WEEK 5 - Shariah Governance of Islamic Finance
Overview of the Shariah Governance Framework for IFIs in Malaysia

SHARIAH

BOARD RISK BOARD BOARD AUDIT


MANAGEMENT Overall oversight on SHARIAH COMMITTEE COMMITTEE
COMMITTEE Shariah governance Oversight accountability
structure & Shariah on Shariah related
compliance matters

MANAGEMENT
Ensure business & operations comply with Shariah
Support Shariah Committee

SHARIAH RISK SHARIAH AUDIT


SHARIAH RESEARCH
MANAGEMENT SHARIAH REVIEW Provide
FUNCTION
CONTROL FUNCTION independent
Conduct in-depth
FUNCTION Review business assessment &
Shariah research
Identify, measure, operation regularly objective assurance
prior to submission
monitor, report & to ensure Shariah to improve IFIs
to Shariah
control Shariah non- compliance compliance with
Committee
compliance risk Shariah

Expectations on Key Functionaries of SGF

Approve all policies related to Shariah matters

BOARD Oversee the implementation of SAC rulings & decisions or SC advices

Oversee the implementation of internal control framework


Accountable for the quality, accuracy & soundness for its own
decisions

SHARIAH
Establish a robust methodology to guide its decision making process
COMMITTEE

Consider relevant business & risk practices in its decision & advice

DIsclose necessary info to SC in a true & fair manner

Provide adequate resources & manpower to support Shariah


MANAGEMENT
governance infrastructure

Report to Board & SC on any non-Shariah compliance events

The Shariah Compliant Framework

Al-
Riba Zuhm
1st Level of
Compliance Gharar

Uqud Musamma

Islamic Contract
Uqud Ghair Musamma

Investment Activities

Underwriting

Fund Management
2nd Level of Shariah Compliant
Compliance Function Managing Income

Risk Management

Disclosure & Transparency

Shariah Audit VS Shariah Review


Shariah Audit Shariah Review

Periodical assessment conducted to


Regular assessment on Shariah
improve the degree of Shariah
compliance in the activities &
compliance of IFI's businness
operations of the IFI
operations

Objective: ensure a sound &


Objective: ensure IFI's operations &
effective internal control system for
activities do not contravene Shariah
Shariah compliance

WEEK 6 – JURISDICTION OF COURT OVER IBF


Overview of the Dispute Resolution System in Malaysia

Based on civil law

IBF Within the Civil Court's jurisdiction

May interpret conventional banking law

Partnership
contracts

Foreign Agency
exchange contracts

Jurisdiction of
Civil Vourt
(9th Schedule,
List I)
Promissory includes... Negotiable
notes instrument

Bill of
Cheques
exchange

Multi-Tier Dispute Resolution System


Court System
Precedents for Islamic finance cases
Dedicated High Court judge to Competent pool of judges
adjucate Islamic finance cases

Arbitration Mechanism
Special rules
Asian International Arbitration Speed & confidentiality
Centre (AIAC)

Mediation Mechanism Scope of jurisdiction


Ombudsman for Financial Fast & low cost dispute
Services (OFS) settlement

Hierarchy of Malaysian Court

Superior
Courts

Special
Federal
Court Court

Court of Appeal
Muamalah
Court
High Court

Subordinates
Courts Sessions Court

Magistrates' Courts Court for Children

Federal Courts Court of Appeal High Court

Consist of Chief Justice, Hears all civil and criminal General supervisory &
the President of Court of appeals against High revisionary over all
Appeal, the Chief Judge of Court's decisions Subordinate Courts
Sabah & Sarawak & 6 Hear civil & criminal
Federal Court Judges appeals from Subordinate
Every proceeding = min 3 Courts
judges Hear matters such as
Chief Justice - head divorce, bankruptcy
Malaysian Judiciary children's custody,
contracts & etc...

High Court – 5 Specialized Division


High Court

Criminal Commercial Special Power Family


Civil Division
Division Division Division Division

Muamalat
Division

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