| 10.1. | Each Company shall have in place an Internal Shari’ah Control Division in its Shari’ah governance framework. This division ascertains Shari’ah compliance and supports the ISSC in its duties. It is comprised a number of employees that is commensurate with the size and the nature of the Company’s operations. The ISSC shall supervise the work of this division from the technical perspective.
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| 10.2. | The Company must have specified work procedures related to the Internal Shari’ah Control Division and it must carry out its duties in line with the said procedures.
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Fit and Proper
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| 10.3. | The Company must appoint a head for the Internal Shari’ah Control Division, after obtaining the Central Bank’s approval, who shall report to the Board. The head of this division must:
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| a. | be a Muslim;
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| b. | have a university degree in Islamic Shari’ah, or relevant specializations;
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| c. | have a professional certificate in Shari’ah supervision and/or Takaful Insurance from one of the organizations that supports Islamic finance like the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the General Council for Islamic Banks And Financial Institutions (CIBAFI), or other recognized institutions that issue similar certifications. It is also preferable to have a professional certificate in insurance issued by a local or an international organization;
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| d. | have an experience of ten (10) years, as a minimum, in the field of Shari’ah supervision in Islamic financial institutions, including at least five (5) years Shari’ah supervision in Takaful Insurance;
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| e. | practice his/her duties on full-time basis, and it is not permissible to combine between the job of a head of the Internal Shari’ah Control Division and any other job in the Company;
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| f. | have good conduct and behavior, where he/she must not have been sentenced by a court in crimes related to honor or honesty, or was convicted of offences and sentenced to imprisonment;
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| g. | have excellent command of English and reasonable command of Arabic.
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The Internal Shari’ah Control Functions
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| 10.4. | The Internal Shari’ah Control Division shall undertake the following functions:
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Firstly: ISSC Secretariat Function
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| | This function undertakes the following:
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| a. | preparing, and organizing the meetings of the ISSC,
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| b. | preparing and drafting the minutes of the meetings,
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| c. | communicating the resolutions to the relevant functions of the Internal Shari’ah Control Division and Internal Shari’ah Audit Division in addition to other divisions in the Company,
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| d. | following up with resolution implementation as per the follow-up list required by the ISSC,
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| e. | filing resolutions and Fatwas, and
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| f. | Following up administrative matters related to the ISSC.
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Secondly: Shari’ah Consultations Function
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| | This function provides consultation based on the ISSC’s Resolutions in regards to:
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| a. | contracts, documents and other aspects related to the Company’s products and services, including products manual, policies, internal procedures,
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| b. | Company’s Shari’ah related inquiries and issues,
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| c. | marketing/advertising materials and publications,
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| d. | customers complaints (related to the compliance with Islamic Shari’ah Provisions), and
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| e. | other Shari’ah issues faced by the Company especially the ones related to Takaful Insurance operating model and products.
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Thirdly: Shari’ah Research & Development Function
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| | This function undertakes the following:
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| a. | conducting research for related Shari’ah and procedural issues requested by the ISSC,
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| b. | contributing, with other relevant divisions in the Company, to the development of products and formulation policies, procedures, and contracts, and
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| c. | other areas of development in the Company.
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Fourthly: Shari’ah Compliance Function
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| | This function does not report to any other compliance function in the Company. It concerns with Shari’ah compliance and it is responsible to conduct the following:
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| a. | performing regular Shari’ah monitoring and assessment on the Company’s businesses and activities to ensure Shari’ah compliance with resolutions, regulations, standards, which are issued by the Central Bank and the HSA,
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| b. | ensure the first line of defense conducts the tasks in accordance with the approved procedures from the relevant entities, in particular the ISSC (e.g. segregation between the Participants' Accounts and the Shareholders’ accounts, the existence of a documented and approved mechanism for the distribution of surplus to the participants, deficit in Participants' Account is covered via Shari’ah compliant mechanisms), and
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| c. | ensure the Company establishes a Zakat Fund.
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| | The Shari’ah compliance function must not be outsourced to external entities.
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Fifthly: Shari’ah Training Function
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| | This function is responsible for the following:
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| a. | conducting training for Company’s staff on those aspects of their duties related to Company’s compliance with Islamic Shari’ah Provisions,
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| b. | qualifying employees with the information and skills that they need based on the nature of work of each employee, to ascertain that the Company complies with Islamic Shari’ah Provisions at all times, and
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| c. | assisting the Senior Management in implementing a continuous professional Shari’ah-related training and development program.
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| 10.5. | The Internal Shari’ah Control Division must not issue resolutions or Fatwas. Instead, the Internal Shari’ah Control Division must refer back to the ISSC in all matters that it considers and all tasks it carries out, unless there were resolutions or Fatwas issued for the matters before.
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| 10.6. | Internal Shari’ah Control Division staff shall not undertake any executive powers or responsibilities related to the businesses and activities that may be monitored by themselves.
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Reporting Lines
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| 10.7. | The Shari’ah compliance report must be submitted to the ISSC to look at the technical Shari’ah matters prior to submitting the same to the chief executive officer. The Shari’ah compliance function must have the right for direct access to the Board.
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| 10.8. | The duties of the Shari’ah compliance function must complement the compliance function of the Company. This function must have a dotted reporting line to the head of compliance of the Company to submit reports regarding the compliance with Islamic Shari’ah Provisions for information. The head of compliance shall not have any authority or responsibility related to the Shari’ah Compliance function.
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| 10.9. | In matters related to promotions, bonus, performance assessment, and termination, the Internal Shari’ah Control Division’s head and staff shall be carried out by the Board or its committees in consultation with the ISSC and it must not be carried out by the Senior Management.
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