I. Background

This refers to the related (1) Shariah Governance Regulations 2023 - Attachment 669.1   (2) More relevant QCs List is given Para IV for ready reference

II. Updated Commentary

A. General

1. Further to KQU 3897 of 7.5.26, being an Important matter, we would inform you about Draft Amendments in Shariah Governance Regulations, 2023 (Attachment 669.1) consist of 14 pages.

2. The draft amendments to the Shariah Governance Regulations, 2023 are proposed to be made by the Securities and Exchange Commission of Pakistan, in exercise of powers conferred under section 512 read with section 451 of the Companies Act, 2017 are published for information of all persons likely to be affected thereby and notice is hereby given that objections or comments, if any, received by the Commission within 14 days from the date of placement of the draft amendments on the website of the Commission.

B. Summary of Proposed Draft Amendments in Shariah Governance Regulations, 2023 and related matters

1. Scope & Applicability Expansion: (a) The regulations are clarified to apply in addition to other SECP regulations relating to Shariah-compliant companies and securities. (b) Reinforces that compliance requirements are not replacing but supplementing existing frameworks.

2. Institutional Structure Changes: (a) Strengthening of the Shariah Governance Framework for capital markets. (b) Greater formalization of Shariah supervisory arrangements across regulated sectors. (c) Introduction/clarification of roles of Shariah Supervisory Boards (SSBs) at institutional level.

3. Shariah Advisory Framework Enhancements: (a) Qualifications and eligibility criteria for Shariah Advisors have been refined. (b) Expanded clarity on: (i) Appointment process (ii) Professional conduct requirements (iii) Fit and proper criteria (c) Strengthening of independence requirements for Shariah advisors.

4. Shariah Screening of Securities: (a) More detailed and structured Shariah stock screening process. (b) Clarification of: (i) Screening methodology for listed securities (ii) Ongoing compliance monitoring (c) Strengthening consistency in determining Shariah-compliant securities.

5. Islamic Index Construction: (a) Introduction/clarification of a formal process for constructing Islamic indices at stock exchanges. (b) Ensures standardized methodology for index inclusion/exclusion criteria.

6. External Shariah Audit / Assurance: (a)Requirement and standardization of: (i) Independent Shariah assurance reports (ii) External review mechanism by Shariah auditors (b) Alignment with recognized professional standards (e.g., ICAP formats where applicable).

7. Regulatory Consolidation: (a) Integration of previously separate frameworks: (i) Shariah Governance Regulations, 2018 (ii) Shariah Advisors Regulations, 2017 (b) Objective: remove overlap and simplify governance structure

8. Expanded Powers & Functions of Shariah Advisors: (a)Shariah advisors are now allowed to: (i) Operate across multiple regulated sectors (ii) Provide broader advisory services beyond limited scopes (b) Their functions and responsibilities are redefined and expanded

9. Compliance & Reporting Strengthening: (a)Enhanced compliance obligations for: (i) Listed companies (ii) Asset managers (iii) Shariah-compliant securities issuers (b) More structured reporting and monitoring requirements.

10. Investor Protection & Market Confidence: (a) Emphasis on: (i) Transparency (ii)Market discipline (iii) Strengthening trust in Islamic finance framework (b) Designed to improve credibility and stability of Islamic capital markets

III. Multiplication 

Although all the Commentaries are limited to the extent of the Subscribed IDs only, however, your Goodself is allowed to share this QC to Impart Knowledge to the maximum Employees, Relatives, Groups, etc for Sadqa e Jaria.

IV. List of other relevant QC

(a) BFIC 322 of 7.9.25 about Summary of Shariat Court Decision against Interest & Insurance - Implementation Deadlines

(b) COQC 601 of 8.3.23 about Proposed Shariah Governance Regulations’ Consultation Paper 

V. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com.

Best regards for Here & Hereafter
Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (900+ Tax, Levies, Companies, Banking, Finance, Economy, Inflation, etc

Quick Commentary Service Provider and High Level 416+ Tax & Levies Laws Consultants) 

Head of Tax & Professional Excellence Services (Symbols of High Quality Practical Tax, Levies & Corporate Training for Beginners to High Levels' Professionals)