الهيئة العامة للرقابة المالية

Board Decree No. 42 of 2019 was issued by the FRA to establish the rules governing the formation and membership requirements of Sharia Supervisory Committees for Sharia-compliant sukuk issuances. This Decree was issued considering the enactment of Sukuk Law No. 17 of 2018 and its Executive Regulations, and pursuant to Law No. 10 of 2009 regulating the supervision of non-bank financial markets and instruments.

In response to the increasing demand from companies operating in non-bank financial activities for Sharia-compliant products and contracts and following the growing success of Islamic finance in meeting investors’ needs, Board Decree No. 177 of 2022 was issued to amend the aforementioned Decree so that it covers both sukuk and other Sharia-compliant non-bank financial products.

The Central Sharia Supervisory Committee is composed of five members, including distinguished scholars in Islamic jurisprudence as well as specialists with extensive experience in legal, financial, and banking fields. A member of the Central Committee may serve as a chair or member of a subordinate Sharia Supervisory Committee; however, such a member must abstain from voting on decisions concerning matters related to the subordinate committee of which they are a member.

The Committee is responsible for the following:

• Approving Sharia-compliant sukuk issuances submitted by issuing entities and providing Sharia oversight over these issuances and the utilization of their proceeds. The committee also reviews the quarterly reports submitted to the FRA by subordinate Sharia Supervisory Committees within institutions operating in non-bank financial activities that approve sukuk issuances compliant with Islamic Sharia, covering the period from issuance until redemption, in accordance with the disclosure rules and standards issued by the FRA.
• Approving the issuance of Sharia-compliant non-bank financial products.
• Approving the registration of subordinate Sharia Supervisory Committees in the dedicated registry covering all non-bank financial activities.
• Supporting the development and advancement of Sharia-compliant instruments and products within the non-bank financial sector.

The Central Sharia Supervisory Committee also undertakes the following responsibilities:

• Collaborating with the FRA to develop standard templates for contracts and agreements relating to sukuk issuances and other Sharia-compliant financial instruments, contracts, and products, ensuring that they are free from any prohibitions that go against Sharia.
• Establishing standards, frameworks, and general Sharia principles governing sukuk issuances and other Sharia-compliant non-bank financial instruments and products.
• Providing Sharia opinions and classifications on sukuk issuance applications according to their level of compliance with Islamic Sharia, highlighting potential risks to safeguard the rights of sukuk holders, and submitting such opinions to the FRA’s Board of Directors. The Committee may also present practical recommendations to the issuing entity to correct deficiencies or amend the classification where possible.
• Providing Sharia opinions and classifications on requests and reports periodically submitted by the FRA or subordinate Sharia Supervisory Committees.
• Offering advisory opinions on periodic reports submitted by subordinate Sharia Supervisory Committees within non-bank financial institutions, to verify the continued compliance of sukuk issuances with Islamic Sharia principles from the date of issuance until redemption, in accordance with Sharia rules and the disclosure standards issued by the FRA.
• Examining Sharia-related issues that may arise during the lifecycle of sukuk issuances, as well as issues related to Sharia-compliant non-bank financial products (where applicable), and proposing appropriate solutions.
• Reviewing inquiries submitted by subordinate Sharia Supervisory Committees within non-bank financial institutions and issuing “Fatwas” (Sharia rulings) regarding the listing, trading, or redemption of sukuk issuances, as well as matters relating to Sharia-compliant non-bank financial products or other issues requiring Sharia guidance.
• Assisting the FRA in developing training programs for members of subordinate Sharia Supervisory Committees and relevant professionals within non-bank financial institutions to enhance their understanding of Islamic financing structures and the jurisprudential and Sharia aspects related to sukuk issuances and Sharia-compliant financial products.
• Establishing governance rules and operational guidelines for subordinate Sharia Supervisory Committees.
• Developing a database covering Sharia-compliant non-bank financial activities in Egypt and other Islamic countries, including a compilation of relevant fatwas and references.
• Undertaking necessary measures to coordinate with central Sharia supervisory committees in Islamic countries.
• Submitting an annual report to the FRA’s Board of Directors on the Sharia compliance of sukuk issuances and Sharia-compliant non-bank financial products currently in the market. This report is prepared based on comprehensive studies and the periodic reports submitted by approved subordinate Sharia Supervisory Committees. It also outlines the Committee’s efforts to promote and develop Sharia-compliant non-bank financial products.
• Issuing internal regulations governing its operations and meeting procedures.