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IFR 6.2.1 Guidance



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The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

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1. In appointing a Shari'a Supervisory BoardG for the purposes of IFR Rule 6.2.1(1), the Fund ManagerG should consider the previous experience and qualifications of the proposed Shari'a Supervisory BoardG members to assess whether the proposed Shari'a Supervisory BoardG member is competent to advise on the activities undertaken by the Islamic FundG . If the Fund ManagerG is appointing the same Shari'a Supervisory BoardG as it has appointed to the firm pursuant to IFR Rule 6.2.1(2), the Fund ManagerG should still consider whether the requirements in both Rule IFR 3.5.1(1) and IFR 6.2.1(1) are met in respect of that board.
2. If the Fund ManagerG is relying on Shari'a screening methodologies such as the Dow Jones Shari'a index, such screening is generally regarded as widely accepted and accessible. However, if less widely known methodologies are used, the Fund ManagerG should be able, upon request by the DFSAG , to demonstrate to the satisfaction of the DFSAG the grounds on which it considers the particular methodology used to be acceptable and reliable.
3. Although the Fund ManagersG of Exempt FundsG and Qualified Investor FundsG are not subject to the requirement for the appointment of a Shari'a Supervisory BoardG for such a Fund, they would need to ensure that the Exempt FundsG or Qualified Investor FundsG they manage continue to meet the applicable Shari'a requirements applicable to the FundG . They may use a member of the Shari'a Supervisory BoardG appointed at the firm level for the purposes of ascertaining compliance with the Shari'a requirements. The manner in which they demonstrate to the UnitholderG of the Exempt FundG or Qualified Investor FundG as to how they achieve such compliance is a matter left to negotiation (i.e. subject to contractual terms) between the UnitholdersG and the Fund ManagerG .
4. An External Fund Manager may not be able to take advantage of IFR 6.2.1(2), unless it has a Shari'a Supervisory Board appointed at the firm level. In contrast the Fund Manager of an External Fund will be able to use its Shari'a Supervisory BoardG to meet the Shari'a Supervisory BoardG requirement relating to the FundG as set out in IFR 6.2.1(2).
Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
[Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
[Amended] DFSA RM139/2014 (Made 21st August 2014). [VER8/06-14]