ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has given legal backing to the Islamic Financial Institutions, offering Islamic financial services, including Shariah-compliant companies and Shariah-compliant securities to achieve the constitutional objective of eradication of Riba and Islamization of the economy.

The SECP has issued Shariah Governance Regulations, 2023 through S.R.O. 1314 (I)/2023 on Tuesday.

Under the new regulations, every company shall, prior to claiming to be a Shariah-compliant company, by whatever name called, obtain a declaration in the form of a Shariah compliance certificate from the Commission in accordance with the provisions of these regulations.

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The new regulations said that any company desirous of obtaining a declaration in the form of a Shariah-compliance certificate shall make an application to the Commission, as set out in Form A, along with documents as mentioned therein and receipt evidencing the payment of non-refundable processing fee, as prescribed in Schedule I.

A company declared as Shariah-compliant by the Commission shall admit that raising loans on interest is prohibited, whatsoever the amount, and it shall endeavour to settle the interest-bearing loan at the earliest possible time and shall not take any further interest-based loan in ordinary course of business.

Provided that in case of a dire need, such loans may be raised with specific approval of the Shariah supervisory board or the Shariah advisor, as the case may be and the board of directors with complete disclosure in the annual financial statements and annual report, the SECP added.

Copyright Business Recorder, 2023