Takaful Insurance business shall be practiced by licensed Takaful Insurance Companies only.

Direct Takaful Insurance activities are classified into three types:

1. Takaful Insurance of persons and funds accumulation operations.
2. Property Takaful Insurance.
3. Liability Takaful Insurance.

Personal Takaful Insurance includes the following classes:

1. Family Takaful Insurance of all forms.
    
2. Health Takaful Insurance of all forms.
    
3. Personal Accident Takaful Insurance associated with family Takaful insurance.

Property and Liabilities Takaful Insurance includes the classes referred to in Article (5) of the Executive Regulation, provided that they do not include anything that contradicts Islamic Shari’ah Provisions.

9.1 The Company may not combine the business of Personal Takaful Insurance and the business of Property and Liability Takaful Insurance.

9.2 As an exception to Article (9.1) above, an existing Company that is licensed to carry out both types of insurance may continue to do so in accordance with the Article (25) of the Law.

Risk management and investment operations associated with Contributions shall be carried out by the Company on the basis of Wakala or Wakala and Mudaraba or any other form, provided that it is approved by the Central Bank and the HSA. The relationship between the Company and the Participant must be subject to these provisions stated in the Participation Membership Policy (“PMP”).

11.1 The Company shall develop Participation Membership Policy to offer it to those who wish to subscribe in the Participants’ Account for any type or class of Takaful Insurance. The policy must be signed by both parties and a copy should be given to the Participant. The following must be taken in consideration when preparing the PMP:

1. The PMP must be separate from the Takaful Insurance Policy, which must be consistent with the principles stated in the PMP.
2. The PMP must address the bases and rules governing the Takaful relationship between the Company and the Participant, including the legal nature of this relationship.
3. The PMP must elaborate that payments made by the Participant are made as donation (Tabarru’) commitment and/or investment for part of it, as applicable.
4. The PMP must name the account in which the Participant will participate in.
5. The PMP must disclose that the Company provides goodwill loan (Qard Hasan) when the assets of Participants’ Account are insufficient to repay the obligations incurred on such account.
6. The PMP must state the amount of Wakala fees due to Company and the method of its calculation, as well as the share of the Company from the Mudaraba profit or Wakala fees for investing the Participants’ Account and the method of calculating such share or fees.
7. The PMP must disclose the information that relates to the Company's policy for investing the portions allocated for investment from the Contributions, provided such policy is compliant with the Islamic Shari’ah Provisions.

11.2 The PMP mentioned in Article (11.1) must be approved by the Company's ISSC.

11.3 The PMP must then be presented to the Central Bank for approval before offering it to those concerned.
After soliciting the opinion of the HSA, the Central Bank may object to the PMP contents if incorporating any provisions in contrary to legal provisions or Islamic Shari’ah Provisions, or if containing an explicit prejudice to the interests of the Participants.

11.4 The Company must maintain a record of PMPs. Such record shall be subject to inspection and audit by the Internal Shari’ah Supervision Committee and the Central Bank.

12.1 The Company must form a committee to be called the Internal Shari’ah Supervision Committee (“ISSC”). The ISSC must consist of at least three members nominated and appointed as follows:

1. The ISSC members must be nominated by the Company’s board of directors.
2. The candidates' names and qualifications must be presented to the HSA at the Central Bank for approval at least forty-five days prior to the meeting of the Company's general assembly. In case the approval request is declined, the Company must nominate a substitute to the disapproved candidate.
3. The candidates' names must be presented to the Company's general assembly to approve their appointment as ISSC members and must inform the Central Bank of the names of those appointed as ISSC members within ten days after the general assembly meeting.
4. The ISSC membership term must be three years, which can be renewable.
5. The ISSC members must elect a chairman and vice-chairman from amongst them. The chairman shall represent the ISSC before the Company’s board of directors, its general assembly, the Central Bank, and the HSA.

12.2 In case a ISSC membership seat becomes vacant, the Company's board of directors must appoint a member to fill in the vacant membership to complete the duration stated in the Article (12.1/d), after presenting the nominee’s name and qualification to the HSA for approval. Such appointment must be presented to the general assembly of the Company in its first subsequent meeting for approval.

A candidate to be a member in the ISSC must meet the conditions and criteria adopted by the HSA and issued by the Central Bank under this Regulation. Previous provisions in this regard must apply until the relevant standards are issued by the HSA.

14.1 The ISSC must undertake the following:

1. Set the basic Shari’ah principles for the Company’s operations.
2. Review all the Company's transactions, the Takaful insurance products, policies, contracts, and documents which the Company uses in order to ensure compliance with the Islamic Shari’ah Provisions; and approve the same before placing them into practical use.
3. Review the Takaful insurance transactions and the investments conducted by the Company, and show to what extent they are compliant with the Islamic Shari’ah Provisions.
4. Approve any activity carried out by the Company or reject it, if such activity is not compliant with the Islamic Shari’ah Provisions.
5. Issue Fatwas, resolutions, and providing opinions in relation to Company’s activities presented to the ISSC. Insurance broker, surveyor, adjustor and consultant, and actuary - associated with a specific Takaful Insurance operation in a Takaful Insurance Company - may seek the opinion of the ISSC of the Company regarding the Islamic Shari’ah Provision for the operation they are involved in, and do that through the Company. The ISSC must provide them with its opinion through the Company.

14.2 The ISSC may undertake other responsibilities that may be required by the HSA and issued by the Central Bank under this Regulation.

The ISSC resolutions are binding on the Company. The ISSC must have the right to access, at any time, all Company's records, contracts, and documents. The ISSC may require clarifications as it deems necessary to perform its tasks and the Company's senior management must provide such clarifications. In case the ISSC was not enabled to perform its functions, it must state that in a report to the board of directors. If the board of directors fails to meet the ISSC’s request, it must notify the HSA, whose resolution must be binding on the Company.

The Company must set, by a resolution of its board of directors, the charter for the ISSC. The charter must be in accordance with the format set by the HSA, and a copy thereof must be sent to the Central Bank for approval.

17.1 The ISSC must prepare an Annual Shari’ah Report to the Company's general assembly, and it must be in accordance with the format set by the HSA, indicating the compliance of the Company with the provisions of Islamic Shari’ah in all its businesses and activities.

17.2 The ISSC must provide the HSA with a copy of the Annual Shari’ah Report no later than one month prior to the date of the general assembly of the Company, in order to make any comments.

Internal Shari’ah Control must be established in each Company according to what is required by the HSA and issued by the Central Bank.

19.1 The HSA shall establish the Shari’ah general rules, standards, and Shari’ah principles for the businesses and activities of Companies. It shall undertake supervision and oversight on the ISSCs and the Shari’ah controls of Companies.

19.2 The HSA shall state its opinion regarding the regulations and standards issued by the Central Bank pertaining to the Companies’ activities.

Companies subject to the provisions of this Regulation must bear the expenses of the HSA, including remunerations, allowances and expenses of its members, and the mechanism of funding its establishment and continuity of its functioning, as determined by the board of directors of the Central Bank.

The Companies practicing all types and classes of Takaful Insurance must undertake to adopt complete separation between the personal Takaful Insurance business on the one hand, and the property and liability Takaful Insurance business on the other hand, in terms of technical, financial, and administrative aspects. In particular, there should be two accounts (or more) for the Participants completely separated per the type of insurance practiced by the Company.
The funds available in each account must be allocated to meet the account’s liabilities and management expenses.

The Contributions in the family Takaful insurance must be divided into two accounts:

1. Investment Account: to which the portion of Contributions allocated for investment in this type of Takaful Insurance must be transferred.
2. Risk Coverage Account: to which the portion of Contributions allocated for risk coverage in this type of Takaful Insurance must be transferred.

23.1 One or more accounts called (Participants’ Account) must be opened with the Company per the non-family Takaful insurance types and classes. The accrued Contributions must be recorded in such account(s), in addition to the investment revenues realized from investing the funds accumulated in the said account(s).

23.2 Due compensations and benefits must be paid from the Participants' Account in accordance with the terms and conditions of Takaful Insurance Policies.

23.3 Inputs and outputs of such account(s) must be determined in accordance with the applicable accounting rules.

23.4 The assets and liabilities of the Participants’ Account should be completely separate from the Company's assets and liabilities, and should not include the deposit required in accordance with Article (42) of the Law.

24.1 After soliciting the opinion of the ISSC, the Company must establish the rules under which Participants share the surplus realized in the Participants’ Accounts, either collectively for all accounts or individually for each account subject to complete separation between the family Takaful insurance accounts and other accounts; and provided that Participants in one account may not share in the surplus realized in the other account.

24.2 The surplus in the Participants’ Accounts must be determined with the knowledge and approval of the Company's actuary.

24.3 The Company may retain a portion of the surplus to form a contingency provision to counter future contingent circumstances, in addition to the technical provisions stated for in the Law as well as the instructions issued thereunder.

24.4 The Company must not distribute profits to the shareholders from any surplus realized by the Participants’ Accounts, except for the consideration collected by the Company for managing such accounts as prescribed under the Participation Membership Policy or as an incentive in accordance with the Central Bank’s instructions in this regard.

25.1 After obtaining the approval of the competent authorities in the UAE, the Company must develop by-laws defining the eligible Participants who have the right to attend the Company's general assembly meetings of the Company. This must include setting the criteria to be met by the Participant to have the right to attend such meetings, either in terms of the size of his/her Contribution, the period of dealing with the Company, or other criteria. Such by-laws must be submitted to the Central Bank for approval.

25.2 The Participants mentioned in Article (25.1) must be invited to attend the said meetings via the approved method in this regard, and they should be provided with all documents presented to the general assembly.

25.3 The aforesaid Participants must have the right to attend and discuss matters arising. without having voting rights in the meetings.

A Participant in the Takaful Insurance Accounts must have the right to receive a copy of the Actuary’s report on reviewing the Takaful Insurance Accounts, and the Company must meet his/her request within ten business days.

27.1 In case the Participants Account’s assets are insufficient to meet the account’s liabilities, the Company must provide a Qard Hasan to the Participants’ Account. This commitment in providing a Qard Hasan is not a contractual commitment towards the Participants’ Account but its purpose is to comply with this Regulation. The ISSC must ensure this commitment is not taken into account when determining the Wakala fee.

27.2 The obligation to provide the Qard Hasan must be comprehensive subject to a maximum equal to the total of the Company’s shareholders equity.

27.3 The Company has the right to recover this Qard Hasan from the realized surplus(s) in subsequent periods whether in one payment or several installments as decided by the Company's general assembly, and after obtaining the approval of the ISSC.

27.4 In case the Company does not provide a Qard Hasan to meet a loss realized in the Participants’ Account(s), the Company must notify the Central Bank and carry out the necessary action within fifteen days from the date of notification. If the Company fails to do so, the Central Bank may take such actions deemed necessary, including the suspension of the Company from carrying out business for a period it deems appropriate.

28.1 The Company must ensure that its outbound or inbound Takaful reinsurance business (“Retakaful”) must be compatible with the Takaful Insurance basic principles and in pursuance to the directives and decisions of the ISSC.

28.2 The Company may only cede the outbound reinsurance business to Retakaful or Takaful Insurance Companies. In case such Companies do not have the adequate capacity, or due to the requirements of distributing the liabilities and risks to a proper number of Companies, the Company has the right to deal with reinsurance Companies, as per the standards approved by the HSA and issued by the Central Bank under this Regulation.

28.3 The Company may share the risks liability with Takaful Insurance Companies or insurance Companies as needed inside and outside the UAE.

29.1 The Company must establish a Zakat fund to deposit the Zakat due on the Company's transactions as permissible under its articles of association.

29.2 The Zakat fund must have an independent account from the other Company's accounts, whether those related to the shareholders or Participants. The ISSC must approve the method of managing the account.

29.3 Disbursement from Zakat fund account must be made under a decision of the Company's board of directors, and in accordance with the Islamic Shari’ah Provisions as approved by the ISSC.

29.4 The Company’s board of directors must develop by-laws to regulate the operation and management of Zakat fund, provided that members appointed to manage it must not receive any remuneration for their work in managing or supervising the fund.

29.5 In all cases, the Company must calculate the Zakat due on the shareholders and must disclose it, after the approval of the ISSC, within the annual financial statements.

In case it has been proven that the Company has carried out business not compliant with the Islamic Shari’ah Provisions, the Company must be required to rectify its status in line with the Islamic Shari’ah Provisions within thirty days from the date of notification. If the Company fails to do so, the appropriate legal actions may be taken, including the suspension of the Company from carrying out business. Anyone proven to have been involved in an intentional Shari’ah breach shall be held accountable.

The Company must obtain prior approval from the Central Bank regarding changes in the control over the Company. The control over the Company means having the capability whether directly or indirectly, to control the Company's decisions and its financial and Takaful policies.

32.1 The provisions of the Law, in particular the provisions of Articles (71) and (72) thereof, shall apply to the procedures and method of transferring the Takaful Insurance portfolio.

32.2 The Takaful Insurance portfolio may be transferred only to another Takaful Insurance Company that practices the same type and classes of the Takaful Insurance as practiced by the Company.

This Regulation shall cancel and supersede the decision No. (4) of the Insurance Authority' Board of Directors for the year 2010 on the Takaful Insurance Regulations.

34.1 Violation of any provision of this Regulation may be subject to supervisory action and sanctions as deemed appropriate by the Central Bank.

34.2 Without prejudice to the provisions of the Law, supervisory action and sanctions by the Central Bank may include withdrawing, replacing or restricting the powers of Senior Management or members of the Board, providing for the interim management of the Company, or barring individuals from the UAE insurance sector.

The Regulatory Development Division of the Central Bank shall be the reference for interpretation of the provisions of this Regulation.

This Regulation shall be published in the Official Gazette in Arabic, and shall come into effect one month from the date of publication.

1. A Company must comply fully with the provisions of this Regulation within the effective date.
2. If the Company was not able to demonstrate full compliance within the effective date, then the Company must submit a plan within the effective date, to the Central Bank containing the steps that the Company will take in order to demonstrate full compliance. The Central Bank will decide on the adequacy of the proposed plan.