IFSB-INCEIF EXECUTIVE FORUM
9-10 December 2014
Sasana Kijang, Bank Negara Malaysia,
Kuala Lumpur, Malaysia.
Sound Governance Practices: Promoting Stability in
Islamic Finance
Assoc. Prof. Dr. Younes Soualhi
Rights of IAHs
Monitor the
performance of IFI
Knowing the
associated risks
IFI should have adequate means to ensure the preservation of this
rights
Rights of IAHs
Access to
relevant
information
Knowing
contractual
rights and risks
Knowing asset
allocation
strategies
Knowing
policies and
practices
Method of
calculating
profit/loss
Governance committee to monitor the following
rights of IAHs:
Disclosing PER
and IRR
functions to IAH
Informing the
IAH of PER pay
outs for
smoothing
purposes
Disclosing business
strategies to IAH
which is aligned to
the risk and return
expectation of IAH
Right to know
reasons of
investment
losses
Disclosing the
intergenerational
issue
Checks and
balances to curb
control of
mudarib and
avoid conflict of
interest
Right of IAH consent in:
Transferring
mudarabah fund
to other mudarib
Disposing of
mudarabah capital
in the form of
loans, gifts, or
investing above
initial capital limit.
Comingling of
IAH’s fund with
shareholders'
funds
Issues affecting the rights of Takaful
participants
Agency and
conflict of
interests
Intergenerational
rights on
unearned profits
in Investment
fund
Access to
information
Representation
and rights of
management
Strengthening
TF as an
independent
legal entity
Transparency in
relation to shariah
non-compliant
activities
permitted under
hajah basis
Underwriting
permissible
risks
Treatment
of Surplus
Rights
T&C
drafting
Monitoring
TOs
performance
Deciding
on the
exclusion
clause
Right of Pooling/non pooling in Takaful
and Retakaful operations
Thank you