Home   Browse contents   View updates   Search  
     Quick search
Go
   

Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Islamic Finance Rules (IFR) [VER13/12-18]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Notices
Financial Markets Tribunal
Archive

BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • IFR 6 Islamic Collective Investment Funds

    • IFR 6 Guidance

      This chapter contains additional requirements that apply to a Collective Investment FundG operated or held out as being operated as an Islamic FundG . A Collective Investment FundG is defined in Article 11 of the Collective Investment Law 2010 (the Law). The definition in Article 11 of the Law is very wide and can capture some Islamic financial activities. However, under Article 12 of the Law, the DFSA can make Rules excluding certain arrangements or types of arrangements from constituting a FundG . Certain types of Islamic Financial BusinessG are not regulated as Collective Investment FundsG due to express exclusions provided. Key Islamic Financial BusinessG related exclusions under the collective investment regime are Managing InsuranceG , participation rights evidenced by SukukG certificates and managing PSIAsG .

      Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
      [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

    • IFR 6.1 Application

      • IFR 6.1.1

        (1) This section applies in the case of a Domestic FundG :
        (a) which is an Islamic FundG , to its Fund ManagerG and where appointed, its TrusteeG ; or
        (b) which is an Umbrella FundG with one or more Islamic Sub-FundsG , to its Fund ManagerG and where appointed, its TrusteeG in respect of those Sub-FundsG .
        (2) The requirements that apply to a conventional FundG under the Collective Investment Law 2010 and CIR apply equally to an Islamic FundG , except as otherwise provided in this chapter.
        (3) The requirements in MKT chapter 6 that apply to a conventional Listed FundG apply equally to an Islamic FundG , if it is or is to be a Listed FundG , except as otherwise provided in this chapter.
        (4) In this chapter, except where otherwise provided, any reference to a FundG is to an Islamic FundG or to an Islamic Sub-FundG of an Umbrella FundG as the case may be and any reference to a Fund ManagerG is a reference to a Fund ManagerG of such a FundG .
        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 RM272/2010 (Made 11th July 2010). [VER2/07-10]
        [Amended] DFSA RM220/2018 (Made 22nd February 2018). [VER13/12-18]

        • IFR 6.1.1 Guidance

          1. While the CIR module contains the key requirements relating to the management and operation of conventional Collective Investment FundsG , this module sets out the additional requirements that apply where such a FundG is managed or held out as being managed as an Islamic FundG . There are other requirements that applying to such firms which are found in other modules of the DFSA rulebook, such as the GEN module, COB module and PIB module.
          2. While section 3 contains the requirements that apply to Authorised FirmsG which are Fund ManagersG of Collective Investment FundsG , the requirements in this section mainly focuses on Shari'a compliance related requirements that apply at the FundG level. For example, while the systems and controls required under IFR section 3.3 relate to the systems and controls that a firm must have in order to comply with its Shari'a obligations, IFR Rule 6.1.3 sets out systems and controls that must be established and maintained at the FundG level.
          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • Systems and Controls

        • IFR 6.1.2

          (1) The Fund ManagerG of a FundG must establish and maintain systems and controls which ensure that its management of the FundG and the Fund PropertyG is Shari'a compliant.
          (2) A Fund ManagerG may, where it is practicable to do so, include the systems and controls required under (1) within those it is required to establish and maintain pursuant to IFR Rule 3.3.1.
          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

          • IFR 6.1.2 Guidance

            1. Article 38 of the Collective Investment Law 2010 requires the Fund ManagerG to establish and maintain systems and controls, including, but not limited, to financial and risk controls to ensure sound management of the FundG in accordance with the Fund'sG ConstitutionG and its most recent ProspectusG , taking due account of the nature, scale and complexity of the Fund'sG investments and operations.
            2. IFR Rule 3.3.1 requires a Fund ManagerG of Islamic FundsG to establish and maintain systems and controls to ensure its Shari'a compliance.
            [Added] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • Fund's Constitutional Documents

        • IFR 6.1.3

          (1) The Fund ManagerG of a Domestic FundG that is a Public FundG must ensure that its Fund'sG ConstitutionG and ProspectusG are, and remain, approved by the Fund'sG Shari'a Supervisory BoardG .
          (2) The Fund ManagerG of an Exempt FundG must ensure that the FundG 's ConstitutionG and ProspectusG are, and remain, approved by the Fund ManagerG 's Shari'a Supervisory BoardG .
          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]

      • Islamic Financial Business Policy and Procedures Manual

        • Guidance

          A Fund ManagerG may, instead of having a separate Islamic Financial BusinessG policy and procedures manual both at the firm level and at the FundG level, maintain a single Islamic Financial BusinessG policy and procedures manual for the firm and the FundsG it manages.

          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

        • IFR 6.1.4

          The Fund ManagerG of a FundG must implement and maintain an Islamic Financial BusinessG policy and procedures manual for the FundG which addresses the following matters:

          (a) the manner in which the compliance function will be undertaken, in respect of Shari'a compliance;
          (b) the manner in which the Shari'a Supervisory BoardG will oversee and advise in regard to the Islamic Financial BusinessG conducted by the Fund ManagerG ;
          (c) the manner in which Shari'a Supervisory BoardG fatwas, rulings and guidelines will be recorded, disseminated and implemented and the internal Shari'a review undertaken;
          (d) the manner in which disputes between the Shari'a Supervisory BoardG and the Fund ManagerG in respect of Shari'a compliance will be addressed;
          (e) the process for approving those internal systems and controls which are in place to ensure not only that the Islamic Financial BusinessG is carried out in compliance with Shari'a, but that information is disseminated to UnitholdersG in an appropriate manner; and
          (f) the manner in which conflicts of interest will be identified and managed, including as prescribed in IFR Rule 6.2.4.
          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

    • IFR 6.2 Shari'a Supervisory Board for an Islamic Fund

      • IFR 6.2.1

        (1) A Fund ManagerG of a Domestic FundG that is a Public FundG  must, subject to (3), appoint a Shari'a Supervisory BoardG to its FundG that meets the following requirements:
        (a) the Shari'a Supervisory BoardG has at least three members;
        (b) the members appointed to the Shari'a Supervisory BoardG are competent to perform their functions as Shari'a Supervisory BoardG members of the FundG ;
        (c) any appointments, dismissals or changes in respect of members of the Shari'a Supervisory BoardG are approved by the Governing BodyG of the Fund ManagerG ; and
        (d) no member of the Shari'a Supervisory BoardG is a director or Controller of the FundG or its Fund ManagerG .
        (2) A Fund ManagerG may comply with the requirement in (1) by appointing to the FundG the same Shari'a Supervisory BoardG as it has appointed to the firm in accordance with IFR Rule 3.5.1, provided the requirements in (1) are also met.
        (3) A Fund ManagerG is not required to comply with the requirement in (1) where it relies, for the purposes of making investments for the FundG , on a widely accepted Shari'a screening process such as investing in securities included in, or recognised by reference to, an Islamic index, sukuk, or treasury instruments issued by a Shari'a compliant financial services provider regulated by a Financial Services RegulatorG .
        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]

        • IFR 6.2.1 Guidance

          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]

      • IFR 6.2.2

        (1) Subject to (2), the Fund ManagerG of a FundG must document the Fund'sG policy in relation to:
        (a) how appointments, dismissals or changes will be made to the Shari'a Supervisory BoardG ;
        (b) the process through which the suitability of Shari'a Supervisory BoardG members will be considered; and
        (c) the remuneration of the members of the Shari'a Supervisory BoardG .
        (2) If the Fund ManagerG , pursuant to IFR Rule 6.2.1(2), appoints to the FundG the same Shari'a Supervisory Board it has appointed to the firm, the documents required under IFR Rule 6.2.2(1) must be included in or otherwise form part of the records required under IFR Rule 3.5.2.
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.2.3

        (1) Subject to (2), the Fund ManagerG of a FundG must establish and retain, for six years, records of:
        (a) its assessment of the competency of the Shari'a Supervisory BoardG members;
        (b) the agreed terms of engagement of each member of the Shari'a Supervisory BoardG ; and
        (c) the matters in Rules IFR 6.2.1(1)(c) and IFR 6.2.2.
        (2) If the Fund ManagerG , pursuant to IFR Rule 6.2.1(2), appoints to the FundG the same Shari'a Supervisory BoardG it has appointed to the firm, the records required under IFR Rule 6.2.3(1) must be included in or otherwise form part of the records required under IFR Rule 3.5.3.
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

        • IFR 6.2.3 Guidance

          1. The records of the assessment of competency of Shari'a Supervisory BoardG members should clearly indicate, at least:
          a. the factors that have been taken into account when making the assessment of competency;
          b. the qualifications and experience of the Shari'a Supervisory BoardG members;
          c. the basis upon which the Fund ManagerG has deemed that the proposed Shari'a Supervisory BoardG member is suitable; and
          d. details of any other Shari'a Supervisory BoardsG of which the proposed Shari'a Supervisory BoardG member is, or has been, a member.
          2. If the Fund ManagerG is relying on IFR Rule 6.2.1(2), then the due diligence process, and the records maintained under Rules IFR 3.5.2 and IFR 3.5.3, should be augmented with the matters specified under IFR Rule 6.2.1(1).
          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.2.4

        (1) The Islamic Financial BusinessG policy and procedures manual must provide that:
        (a) a member of the Shari'a Supervisory BoardG is obliged to notify the Fund ManagerG of any conflict of interest that such member may have with respect to the FundG or the Fund ManagerG , and if appointed, or in the case of an Investment TrustG , the TrusteeG ; and
        (b) the Fund ManagerG will take appropriate steps to manage any such conflict of interest so that the Islamic Financial BusinessG is carried out appropriately and in compliance with Shari'a, the interest of a UnitholderG is not adversely affected and all UnitholdersG are fairly treated and not prejudiced by any such interests.
        (2) If a Fund ManagerG is unable to manage a conflict of interest as provided above, it must dismiss or replace the member as appropriate.
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.2.5

        The Fund ManagerG of a FundG must provide the DFSAG at its request with information on the qualifications, skills, experience and independence of the individuals who are appointed or proposed to be approved as members of the Shari'a Supervisory BoardG .

        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.2.6

        (1) The Fund ManagerG of a FundG must take reasonable steps to ensure that the Fund ManagerG and the Fund'sG EmployeesG :
        (a) provide such assistance as the Shari'a Supervisory BoardG reasonably requires to discharge its duties;
        (b) give the Shari'a Supervisory BoardG right of access at all reasonable times to relevant records and information;
        (c) do not interfere with the Shari'a Supervisory Board'sG ability to discharge its duties; and
        (d) do not provide false or misleading information to the Shari'a Supervisory BoardG .
        (2) If appointed, the TrusteeG must also take reasonable steps to ensure that its EmployeesG comply with (1)(a)–(d).
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

    • IFR 6.3 External Shari'a reviews and periodic reports

      • IFR 6.3.1

        A Fund ManagerG of a Domestic FundG that is a Public FundG , other than a FundG relying on the exemption in IFR Rule 6.2.1(3), must ensure that all Shari'a reviews of the FundG are undertaken by the Shari'a Supervisory BoardG in accordance with AAOIFI GSIFI No 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]

      • IFR 6.3.2

        (1) In the case of a Domestic FundG that is a Public FundG other than a FundG relying on the exemptions in IFR Rule 6.2.1(3), the Fund ManagerG must commission an interim and an annual report relating to the FundG operations from the Shari'a Supervisory BoardG which complies with AAOIFI GSIFI No 1.
        (2) The Fund ManagerG must deliver a copy of the annual interim report referred to in (1) to the UnitholdersG in accordance with CIR Rule 9.4.4 and must include the report of the Shari'a Supervisory BoardG in the annual report required under CIR Rule 9.4.5.
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
        Amended in accordance with Notice of Amendments to Legislation April 2011 [VER3/02-11]
        [Amended] DFSA RM139/2014 (Made 21st August 2014). [VER8/06-14]

        • IFR 6.3.2 Guidance

          Although the Fund ManagersG of Exempt FundsG and Qualified Investor FundsG are not subject to the Shari'a review process required under IFR section 6.3, they would need to ensure that the Exempt FundG or Qualified Investor FundG continues to meet the Shari'a requirements, particularly for the purposes of their annual and interim reports, which are required to be prepared under CIR section 9.4. However, the manner in which they demonstrate to the UnitholdersG of the FundG how they achieve such compliance is a matter left to negotiation (i.e. subject to contractual terms) between the UnitholdersG and the Fund ManagerG .

          [Added] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
          [Amended] DFSA RM139/2014 (Made 21st August 2014). [VER8/06-14]

    • IFR 6.4 Internal Shari'a Review

      • IFR 6.4.1

        (1) The Fund ManagerG of a Domestic FundG that is a Public FundG must perform an internal Shari'a review to assess the extent to which the FundG complies with fatwas, rulings and guidelines issued by the Fund'sG Shari'a Supervisory BoardG .
        (2) The Fund ManagerG must perform the internal Shari'a review in accordance with AAOIFI GSIFI No. 3.
        (3) The Fund ManagerG of an Umbrella FundG which has an Islamic Sub-FundG must, to the extent possible, perform the internal Shari'a review in accordance with AAOIFI GSIFI No. 3 and must document the manner in which it will conduct that part of the internal Shari'a review that is not conducted in accordance with AAOIFI GSIFI No. 3.
        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]

        • IFR 6.4.1 Guidance

          1. Although the Fund ManagersG of Exempt FundsG and Qualified Investor FundsG are not subject to the specific internal Shari'a requirements under section 6.4, they would need to ensure that the Exempt FundG or Qualified Investor FundG continues to meet the applicable Shari'a requirements. However, the manner in which they demonstrate to the UnitholdersG of the FundG how they achieve such compliance is a matter left to negotiation (i.e. subject to contractual terms) between the UnitholdersG and the Fund ManagerG .
          2. GSIFI No. (3) (Internal Shari'a Review) establishes standards and provides guidance on the internal Shari'a review in institutions that conduct business in conformity with Shari'a. The standard covers the following:
          a. objectives;
          b. internal Shari'a ReviewG ;
          c. independence and objectivity;
          d. professional proficiency;
          e. scope of work;
          f. performance of the internal Shari'a ReviewG work;
          g. management of the internal Shari'a ReviewG ;
          h. quality assurance; and
          i. elements of an effective internal Shari'a ReviewG control system.
          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]

      • IFR 6.4.2

        The Fund ManagerG must ensure that the internal Shari'a review referred to in this section is performed by the internal audit function of the FundG or the compliance function of the FundG and that the individuals or departments involved in performing the review are competent and sufficiently independent to assess compliance with Shari'a.

        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

        • IFR 6.4.2 Guidance

          For the purposes of assessing competency of personnel or departments which perform the internal Shari'a review, Fund ManagerG should consult AAOIFI GSIFI No. 3 paragraphs 9 to 16 inclusive.

          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.4.2 [Deleted]

        [Deleted] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.4.3 [Deleted]

        [Deleted] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

    • IFR 6.5 Additional Disclosure in a Prospectus of an Islamic Fund which is a Public Fund

      Amended in accordance with Notice of Amendments to Legislation April 2011 [VER3/02-11]

      • IFR 6.5 Guidance

        Chapter 14 and in particular Rule 14.3.1 of the CIR module set out the Public Fund ProspectusG requirements. In addition to complying with those requirements as applicable to the particular FundG , the Fund ManagerG of an Islamic FundG that is a Public FundG must comply with the additional requirements set out in this section. If an Islamic FundG is to be a Listed FundG , it must comply with chapter 6 of MKT and also comply with the additional requirements in this chapter.

        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 RM220/2018 (Made 22nd February 2018). [VER13/12-18]

      • IFR 6.5.1

        A Fund ManagerG of an Islamic FundG which is a Public FundG must state in the Fund'sG ProspectusG :

        (a) that all the operations in relation to the FundG will be conducted in accordance with Shari'a;
        (b) if the Fund has a Shari'a Supervisory BoardG appointed to it, the names of the members of the Shari'a Supervisory BoardG and their qualifications and experience and, whether or not the Fund Manager'sG Shari'a Supervisory BoardG is appointed to the FundG pursuant to IFR Rule 6.2.1(2);
        (c) if the FundG does not have a Shari'a Supervisory BoardG appointed to it pursuant to IFR Rule 6.2.1(3), what widely acceptable screening methodologies are used by the FundG to ensure Shari'a compliance with respect to investments made for the FundG , and the board that has approved them;
        (d) if applicable, the manner and frequency of Shari'a reviews;
        (e) how earnings prohibited by Shari'a will be disposed of;
        (f) whether Zakah is the responsibility of the FundG or the responsibility of the UnitholdersG ;
        (g) the additional disclosure, if applicable, prescribed under IFR section A1.1 of App 1; and
        (h) in place of the disclaimer required under CIR App 7 for conventional FundsG , a prominent disclaimer in bold, on the front page of the ProspectusG , as follows:

        "The DFSAG does not accept responsibility for the content of the information included in the ProspectusG , including the accuracy or completeness of such information. The liability for the content of the ProspectusG lies with the IssuerG of the ProspectusG and other PersonsG , such as ExpertsG , whose opinions are included in the ProspectusG with their consent. The DFSAG has also not assessed the suitability of the SecuritiesG to which the ProspectusG relates to any particular investor or type of investor and has not determined whether they are Shari'a compliant. If you do not understand the contents of this ProspectusG or are unsure whether the SecuritiesG to which the ProspectusG relates are suitable for your individual investment objectives and circumstances, you should consult an authorised financial advisor."
        (i) If the Islamic FundG is not a Listed FundG , in addition to the disclaimer specified in (h), an additional statement that:

        "The SecuritiesG to which this ProspectusG relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of such SecuritiesG should conduct their own due diligence."
        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 RM106/2012 (Made 23rd December 2012). [VER6/12-12]
        [Amended] DFSA RM220/2018 (Made 22nd February 2018). [VER13/12-18]

        • IFR 6.5.1 Guidance

          1. A Fund ManagerG should consider providing additional information to support the statement under IFR Rule 6.5.1 (a) as indicated in 2 and 3 below.
          2. The Fund ManagerG should provide sufficient details setting out the basis upon which the FundG has been approved and certified as Shari'a compliant by its Shari'a Supervisory BoardG . Such details should include the basis of the underlying principles, i.e. the Fatwas or rulings, including reference to any relevant Ijtihad, Ijma, Qiyas or other. Where applicable, reference should be made to any Islamic indices to be used. In addition, where applicable, the screening process and any filters used should be identified.
          3. The Fund ManagerG should set out each of the key features of the FundG and explain the rationale for determining why each of these features are considered Shari'a compliant by the Fund'sG Shari'a Supervisory BoardG .
          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 RM106/2012 (Made 23rd December 2012). [VER6/12-12]

    • IFR 6.6 [Deleted]

      [Deleted] DFSA RM139/2014 (Made 21st August 2014). [VER8/06-14]

      • IFR 6.6 [Deleted]

        [Deleted] DFSA RM139/2014 (Made 21st August 2014). [VER8/06-14]

      • IFR 6.6.1 [Deleted]

        [Deleted] DFSA RM139/2014 (Made 21st August 2014). [VER8/06-14]

    • IFR 6.7 Investments in Other Funds

      • IFR 6.7.1

        (1) An Islamic FundG which is a Public FundG may invest in UnitsG of another FundG only where the Fund ManagerG has taken reasonable care to determine that:
        (a) the other FundG is the subject of an independent annual audit conducted in accordance with relevant IFRS or other standards as applicable;
        (b) the other FundG has mechanisms in place to enable UnitholdersG to redeem their UnitsG within a reasonable time; and
        (c) the other FundG is prohibited from having more than 20% of its value in the UnitsG of FundsG .
        (2) The Fund ManagerG must also have ascertained that there is a proper and disclosed basis for asset valuation and the pricing before investing in UnitsG in the other FundG .
        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 RM106/2012 (Made 23rd December 2012). [VER6/12-12]

    • IFR 6.8 [Deleted]

      [Deleted] DFSA RM106/2012 (Made 23rd December 2012). [VER6/12-12]

      • IFR 6.8.1 [Deleted]

        [Deleted] DFSA RM106/2012 (Made 23rd December 2012). [VER6/12-12]

        • [Deleted]

          [Deleted] DFSA RM106/2012 (Made 23rd December 2012). [VER6/12-12]

    • IFR 6.9 [Deleted]

      [Deleted] DFSA RM106/2012 (Made 23rd December 2012). [VER6/12-12]

      • IFR 6.9.1 [Deleted]

        [Deleted] DFSA RM106/2012 (Made 23rd December 2012). [VER6/12-12]

        • [Deleted]

          [Deleted] DFSA RM106/2012 (Made 23rd December 2012). [VER6/12-12]

    • IFR 6.10 Periodic Reports of an Islamic Fund

      • IFR 6.10 Guidance

        CIR Chapter 9 of CIR sets out the periodic reports and related requirements. These are additional requirements that apply to Islamic FundsG .

        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]

      • IFR 6.10.1

        In addition to the matters specified in CIR section 9.4, an annual report of an Islamic FundG , other than a FundG which is an Umbrella FundG , must contain the report specified in IFR Rule 6.3.2(2).

        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

    • IFR 6.11 Islamic Real Estate Investment Trusts (Islamic REITs)

      • IFR 6.11.1

        (1) A Fund ManagerG must ensure that it does not call, or otherwise hold out, a FundG as being an Islamic Real Estate Investment TrustG or as being an Islamic REITG unless it is a Public Property FundG which is constituted in accordance with (2).
        (2) An Islamic REITG is a Public Property FundG which:
        (a) is constituted either as an Investment CompanyG or as an Investment TrustG ;
        (b) is primarily aimed at investments in income generating Real PropertyG which complies with Shari'a principles; and
        (c) distributes to the UnitholdersG at least 80% of its audited annual net income.
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.11.2

        (1) A Fund ManagerG of an Islamic REITG must ensure that it distributes to the UnitholdersG as dividends each year an amount not less than 80% of its audited annual net income.
        (2) The PersonsG providing oversight functions in respect of the FundG must determine if any;
        (a) revaluation surplus credited to income, or
        (b) gains on disposal of Real PropertyG ,
        shall form part of net income for distribution to UnitholdersG .
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.11.3

        Where an Islamic REITG holds any Real PropertyG via one or more Special Purpose VehiclesG , the Fund ManagerG must ensure that each Special Purpose VehicleG distributes to the FundG all of its income as permitted by the laws and regulations of the jurisdiction where the Special Purpose VehicleG is established.

        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

      • IFR 6.11.4

        (1) A Fund ManagerG of an Islamic REITG must ensure, subject to (2), that any investment made in respect of property under development whether on its own or in a joint venture is undertaken only where the REITG intends to hold the developed property upon completion.
        (2) The total contract value of the property under development in (1) must not exceed 30% of the net asset value of the Fund PropertyG of the Islamic REITG .
        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]

        • IFR 6.11.4 Guidance

          For the purposes of this Rule, the DFSA would not consider property development activities to include refurbishment, retrofitting and renovation.

          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]

      • IFR 6.11.5

        A Fund ManagerG of an Islamic REITG may borrow either directly or through its Special Purpose VehicleG up to 50% of the gross asset value of the FundG provided that such borrowings are Shari'a compliant.

        Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
        [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
        [Amended] RM160/2015 (Made 9th December 2015). [VER9/02-16]

        • IFR 6.11.5 Guidance

          1. The gross asset value of a FundG should be calculated as the total value of the Fund PropertyG based on the most recent valuation under CIR Rule 8.4.1(1), but without making the deductions provided for in the other paragraphs of that Rule.
          2. As there are no specific risks that arise by virtue of a FundG being an Islamic FundG , the prudential requirements that apply to a Category 3 firm as set out in the PIB module apply to such Fund ManagersG . However, if the underlying assets of the FundG are invested in financial products or instruments that are Islamic and have certain features which would raise any prudential risks, it is the responsibility of the Fund ManagerG to address such risks. The DFSA would provide any additional clarifications regarding such matters upon request.
          Derived from DFSA RM69/2010 (Made 1st March 2010). [VER1/03-10]
          [Amended] DFSA RM72/2010 (Made 11th July 2010). [VER2/07-10]
          [Amended] RM160/2015 (Made 9th December 2015). [VER9/02-16]

    • IFR 6.12 Islamic Money Market Funds

      • IFR 6.12.1

        CIRG Rules 13.8.1(2) and (3) and 13.8.2 apply to a Fund ManagerG of an Islamic FundG that is a Money Market FundG as if a reference to:

        (a) a DepositG or a DebentureG includes an Islamic financial instrument or product with similar economic characteristics to a DepositG or a DebentureG ; and
        (b) an interest rate reset date is, in relation to an Islamic financial instrument or product, a reference to the date on which the rate of profit of return for that instrument or product is reset.
        [Added] RM160/2015 (Made 9th December 2015). [VER9/02-16]

        • IFR 6.12.1 Guidance

          A Fund ManagerG of an Islamic Money Market FundG must comply with the overriding obligation in CIR Rule 13.8.1 to ensure that the Fund'sG investment strategy is consistent with the investment objectives of a Money Market FundG as set out in CIR Rule 3.1.11. It must also comply with other applicable requirements for Money Market FundsG such as the requirement to include a warning in the Fund Prospectus under CIR Rule 14.4.7.

          [Added] RM160/2015 (Made 9th December 2015). [VER9/02-16]

    • IFR 6.13 Islamic Exchange Traded Funds ("ETFs")

      • IFR 6.13.1

        (1) A FundG is an Islamic Exchange Traded FundG or Islamic ETFG if it:

        (a) is constituted as an Open-ended Public Fund;
        (b) has its UnitsG available for trading throughout the day on an exchange that meets the criteria in (2);
        (c) has at least one market maker (Authorised ParticipantG ) who:
        (i) purchases and redeems 'creation UnitsG ' of the FundG from the Fund ManagerG ; and
        (ii) is prepared to buy and sell UnitsG of the FundG throughout the day on the relevant exchange; and
        (d) meets the Shari'a related requirements in this chapter.

        (2) An exchange meets the requirement in (1)(b) if it is:

        (a) operated by an Authorised Market InstitutionG ;
        (b) regulated by a Financial Services RegulatorG in a jurisdiction that is a signatory to the IOSCO Multilateral Memorandum of Understanding for sharing information; or
        (c) regulated by a Financial Services RegulatorG in a jurisdiction which has entered into a bilateral memorandum of understanding with the DFSA for sharing information.

        (3) A Fund ManagerG , or any PersonG making an OfferG of a UnitG of FundG or otherwise marketing a FundG , must not describe the FundG in its offer document or marketing material as an "Exchange Traded FundG " (or "ETFG ") or otherwise hold out the FundG as being an Exchange Traded FundG or ETFG , unless the FundG meets the criteria in (2).

        (4) The Fund ManagerG of an Islamic ETFG must ensure that the FundG has an investment objective and strategy, which is to track the performance of a specified index or benchmark as specified in its ProspectusG .

        Derived from DFSA RM220/2018 (Made 22nd February 2018). [VER13/12-18]

        • IFR 6.13.1 Guidance

          A Fund ManagerG of an Islamic ETFG is required to comply with the requirements applicable to a conventional FundG so far as they apply to that ETFG – see IFR Rule 6.1.1.(2).

          Derived from DFSA RM220/2018 (Made 22nd February 2018). [VER13/12-18]