The amended Capital Markets and Services Act 2007 (Act) institutionalises in law the pivotal role of the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC) as the authority for all Shariah matters relating to the Islamic capital market (ICM).
The amendments to the Act, which came into effect on 1 April 2010, give the SAC statutory recognition and mandate, empowering it in its role to ensure Shariah compliance on matters pertaining to ICM business or transactions, according to an article in Bank Negara Malaysia's electronic newsletter.
The article, entitled 'Amendments to Capital Markets and Services Act 2007 Institutionalises Role of Shariah Advisory Council in Malaysian Islamic Capital Market', reads:
The Act, as amended by the Capital Markets and Services (Amendment) Act 2010, contains comprehensive provisions relating to the role of the SAC and the Shariah governance process for the ICM. The amendments further give the SAC the mechanism to ensure legal certainty and comfort regarding Shariah rulings in the Malaysian ICM.
The SC's Chairman, Zarinah Anwar, is confident that the amendments will strengthen the SC's SAC as the law recognises it as the authority for the ascertainment of Shariah principles for ICM business or transactions. The SAC since its establishment has not only been an enabler but also a catalyst for innovation in the ICM on both the domestic and international front
The Act, amongst others, details out the functions of the SAC including "...to ascertain the application of Shariah principles on any matter pertaining to ICM business or transaction and to issue a ruling upon reference made to it; to advise the Commission on any Shariah issue relating to ICM business or transaction; to provide advice to any person on any Shariah issue relating to ICM business or transaction...".
In accordance with provisions of the Act, members of the SAC are duly appointed by His Majesty the Yang di-Pertuan Agong of Malaysia, and are qualified in the field of Fiqh al-Muamalat (Islamic law relating to financial transactions); Islamic jurisprudence; Islamic finance and other relevant disciplines.
The new provisions also enable any licenced person, stock exchange, future exchange, clearing house, central depository, listed corporation or any other persons to refer matters to the SAC for its advice and ruling which shall be binding on the person or entity concerned.
Another important provision of the Act relates to any proceedings before any court or arbitrator concerning a Shariah matter in relation to ICM business or transaction. In such a case, the court or the arbitrator is obliged to take into consideration any ruling of the SAC or refer such matter to the SAC for its ruling.
Where a ruling given by a SC-registered Shariah adviser to a person engaging in any ICM business or transaction is different from the ruling given by the SAC, the ruling of the SAC shall prevail.Any source
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