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The IFSB issues the Exposure Draft of the Revised Guiding Principles on Corporate Governance for Institutions Offering Islamic Financial Services (Banking Segment) (ED-30)

Date posted: 22 March 2023

22 March 2023, Kuala Lumpur - The Islamic Financial Services Board (IFSB) has today issued the Exposure Draft (ED-30) of the Revised Guiding Principles on Corporate Governance for Institutions Offering Islamic Financial Services (Banking Segment) standard, for a 60-day public consultation period starting from 22 March until 20 May 2023. The IFSB invites comments from central banks, regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), academics and other interested parties.

The Revised Guiding Principles on Corporate Governance are designed to facilitate institutions offering Islamic financial services (IIFS) in the banking segment, in identifying areas where governance structures and processes are required and to recommend best practices in addressing these issues. The Guiding Principle address some additional areas of governance not covered by IFSB-3 (Guiding Principles on Corporate Governance) issued in 2006, to provide a complete set of guidance that are also aligned with the BCBS Corporate Governance Principles for Banks. 

The ultimate objective of the Guiding Principles is to strengthen integrity and resilience of IIFS by enhancing the effectiveness of their corporate governance frameworks, reinforce international best-practices and positively contribute to financial stability and sustainable economic growth.

More specifically, the objectives of the Guiding Principles are to: 

• Provide guidance on areas where minimum governance structures and processes are required for a sound corporate governance framework, including effective Sharī`ah governance mechanisms.
• Protect the interests of stakeholders in conformity with public interest – amongst stakeholders, primary concern should be given to (a) depositors, (b) unrestricted Investment Account Holders (IAH), (c) restricted IAH, and (d) shareholders respectively.
• Strengthen IIFS’ transparency and accountability to enhance stakeholders’ trust and confidence.
• Promote financial sustainability by implementing a holistic approach to include financial and non-financial criteria.

The IFSB will be conducting an online public hearing and a roundtable as part of the public consultation process. Participation in the online public hearing is free and open to all. Details will be announced in due course. 

The softcopy of ED- 30 is available on the IFSB website, https://www.ifsb.org/exposure.php. The IFSB Secretariat invites all interested parties, especially members of the IFSB, to send their comments to the IFSB Secretariat through email to public_consultation@ifsb.org by 20 May 2023 at the latest.