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The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), in collaboration with the Central Bank of Bahrain, is gearing up to host its 22nd Annual Sharia Boards Conference early next week.
AAOIFI is a Bahrain-based organisation that plays a central role in establishing Sharia compliance standards for the Islamic finance industry.
Scheduled for Sunday and Monday at the Crowne Plaza in Manama, the two-day event is expected to be a major gathering for the global Islamic finance industry, attracting over 1,000 participants both in person and virtually.
The conference, a key platform for discussing Sharia compliance in financial practices, will be conducted primarily in Arabic with simultaneous translation available in English and other languages. The event promises to be a vital platform for Islamic finance professionals, scholars, and regulators to discuss critical issues surrounding Sharia compliance and its practical application within the industry, said organisers.
Key discussion topics on the agenda include Sharia issues in sukuk and potential challenges in implementation of the new sukuk standard; Rules for issuing service agency sukuk with underlying assets of shares; Zakat on sukuk with its common structures; Impact of the Sharia standards on the practices of Islamic financial institutions and Stipulating of excess on a loan to be made by a third-party.
The Sharia and sukuk session will delve into the current state and future of the sukuk industry, exploring its role as a Sharia-compliant investment tool. Discussions will focus on implementing the new AAOIFI Sukuk standard, addressing challenges and its impact on categorising underlying assets. The role of Sharia boards and regulatory bodies in ensuring compliance will also be a key point.
A dedicated session on ‘Service agency sukuk with share-based assets’ will explore the framework for issuing sukuk with underlying assets of shares, particularly in relation to buy-back and Bayul Wafa transactions. The permissibility of using mixed shares and the responsibilities of the service agent will be addressed, along with the impact on appointing the agent as an investment manager.
The conference will explore who is liable for Zakat (Islamic alms) on various Sukuk structures, differentiating between ownership for trading and investment purposes. Methods for determining the underlying asset value for Zakat calculation and the impact of profit-sharing structures will also be discussed.
A dedicated session will examine the global standing of Sharia standards in Islamic finance, focusing on balancing quality, inclusivity, and regulatory oversight. Discussions will explore the impact of mandatory adoption of these standards on Sharia compliance within institutions, the roles of Sharia boards, and the importance of legal and technical expertise.
The conference will delve into the permissibility of a third-party guaranteeing excess payment on a loan.
The session will explore various scenarios, such as the borrower’s obligation to purchase from the guarantor, varying excess amounts based on installment payments, and the third-party profiting from the transaction.
The legalities of government involvement and contemporary applications of such stipulations will also be addressed.
avinash@gdnmedia.bh
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