The AAOIFI Governance and Ethics Board (AGEB) has granted in-principle approval for a new governance standard regarding the management of investment accounts during its 43rd meeting.
The session, conducted via video conference, also saw the board move to reissue the exposure draft for the development and governance of Sharia-compliant benchmark rates. This update includes new illustrative models designed to provide a more robust framework for the industry.
The newly approved Governance Standard (GS) 24, titled ‘Governance and Management of Investment Accounts,’ introduces a comprehensive framework designed to oversee investment accounts and other participatory investment instruments.
This standard is intended to complement AAOIFI’s existing Sharia and accounting benchmarks by strengthening Sharia compliance and safeguarding the interests of all stakeholders.
Furthermore, it ensures that profit and loss attribution remains accurate and fully aligned with both contractual and Sharia requirements.
During the deliberations, the board reviewed feedback from industry stakeholders regarding the initial exposure draft. Following this review, necessary amendments were made based on public comments, and the secretariat has been instructed to proceed with the final issuance once the remaining due process is finalised.
In addition to the investment account standards, the board reviewed the progress of the project focusing on Sharia-compliant benchmark rates. During the meeting, a new illustrative model was presented which utilises Islamic financial market data to outline the structure, computation mechanisms, and workflows required to derive a compliant rate. This adds to the existing model based on macro-level economic indicators discussed in previous sessions.
The board has approved the reissuance of the exposure draft for public consultation, incorporating both illustrative models. To further support the industry, the board also decided to develop additional research materials and models based on micro-economic variables, which will be released shortly in the form of a guidance note.
AGEB chairman Farrukh Raza noted that GS 24 is a vital standard that helps unify governance and control requirements across different jurisdictions.
He emphasised that such measures are essential for mitigating reputation risks within the Islamic finance sector and expressed confidence that the benchmark rate standards would lay the groundwork for practical, large-scale application.
AAOIFI secretary-general Omar Mustafa Ansari highlighted the transparency of the process, noting that the management of investment accounts standard underwent five public hearings and a roundtable session in multiple languages. He said that the organisation remains committed to incorporating industry insights to maintain the highest levels of Shari’ah compliance and governance.
The AAOIFI secretariat will publish the updated exposure draft on benchmark rates on its official website, along with the schedule for upcoming public hearings and feedback sessions.
avinash@gdnmedia.bh
&uuid=(email))