Companies, securities: Shariah-compliance certificate to be made mandatory: SECP

The Securities and Exchange Commission of Pakistan (SECP) will make it mandatory for the companies/entities to seek certificates of Shariah compliance from the commission to work as Shariah compliant companies, Shariah compliant securities and Islamic financial institutions. This condition has been specified in the draft Shariah Governance Regulations, 2018 issued by the SECP here on Friday.
The SECP has explained the certification of a Shariah compliant company or Islamic financial institution. No company or notified entity shall be called a Shariah compliant company or Islamic financial institution unless it obtains a certificate of Shariah compliance from the Commission under these regulations: Provided that the said regulation shall not apply to Takaful and Modaraba companies, SECP maintained.
The SECP said that a company or Islamic financial institution desirous of operating as a Shariah compliant company or Islamic financial institution shall make an application to the Commission as set out in Form A, to obtain a certificate of Shariah compliance, providing information as required therein, along with all the relevant documents and receipt evidencing the payment of non-refundable processing fee as prescribed in Schedule I.
The Commission, while assessing an application made to it shall have regard to the Shariah Screening Criteria as provided in these Regulations and any other condition as may be specified by the Commission from time to time. The Commission may, if it is satisfied that the company seeking permission to operate as a Shariah compliant company has fulfilled the minimum criteria, grant a certificate of Shariah compliance. The certificate of Shariah compliance granted under this regulation shall not be valid for the purpose of availing tax rebate under criteria prescribed in Income Tax Ordinance, 2001.
Scope of certificate of Shariah compliance: The scope of certificate of Shariah compliance shall be limited only to the areas identified as per Shariah Screening Criteria and shall not cover other activities of the company or notified entity. No security shall be called a Shariah compliant security unless a certificate of Shariah compliance has been issued by the Commission under these regulations, the SECP added.