FRI, 30 SEPT, 2022-theGBJournal| According to the Securities and Exchange Commission (SEC), Nigeria, ‘’ the Non-interest Capital Market activities in recent times are exponentially increasing. The market is witnessing the entrance of more asset managers, emergence of i-REIT, listing of sovereign Sukuk on the Exchanges, issuance of corporate Sukuk, emergence of shariah advisory function etc. These developments coupled with the necessity of shariah services for the market affirms the critical need for a framework/guideline to set a minimum standard for persons (corporate or individual) seeking to provide shariah advisory services for Non-Interest Capital Market activities.’’
‘’The guideline is essential for the development of this nascent sector, as it will promote transparency and confidence, whilst creating a level playing field for all participants in the market. Further to the above, a review exercise on the SEC existing Rules on shariah governance undertaken by the Standing Committee of Deepening Non-interest Capital Market led to the recommendation that rules be drafted to provide for the registration and regulation of shariah advisory services in line with international best practices.’’
The new guidelines define the scope of products and services which require the services of a Shariah Adviser, and it include all Islamic/Non-Interest Capital Market Products and Services as may be approved by the Commission from time to time, the Appointment of Shariah Adviser and Criteria for Registration and Renewal of Registration.
It also sets out criteria for who qualifies under the new rules to provide Shariah Advisory services and his/her experience.
There are requirements for Non-Resident Individual Shariah Adviser- A Fund Manager or Issuer or any other capital market operator who seeks to appoint a non-resident individual Shariah Adviser, the roles and responsibilities of a Shariah Adviser, Restrictions on Shariah Adviser, the Procedures of Registration and Renewal of Registration, Registration Fees as well as Registration Fees, exemption and sanctions.
SEC Nigeria said in justifying the reasons for the new guideline, that Shariah governance is crucial considering that compliance with Shariah rules and principles is raison d’être of the Non-interest Capital Market operations/transactions.
SEC explained that the provision of the rules is in line with local and international best practices. The regulatory organization in the Nigerian Financial System such as CBN, NAICOM had issued such guidelines to provide clear and good Shariah governance in their respective sectors.
‘’Making the Shariah Advisory service a registrable function in the market will assist in effective implementation of the proposed consolidation of the Shariah governance rules and will also be an additional source of revenue to the Commission.’’
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