ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has restrained the Shariah compliant companies/securities from carrying out non-permissible business activities including interest based-lending.

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

The SECP has also notified the minimum Shariah screening criteria for Shariah compliant companies and securities. The core business activities of the company shall not include Shariah non-permissible business activities.

SECP issues Shariah compliance certificate to licenced NBFC

Under the new regulations, Shariah non-permissible business activities shall include but not be limited to conventional financial institutions including conventional banks, and insurance, interest based-lending, gambling and betting, liquor and liquor-related activities, pork and pork-related activities, non-halal food and beverages, Shariah non-compliant entertainment, tobacco and tobacco-related activities, and other activities that are deemed Shariah non-permissible.

The company does not state in its memorandum of association that one of its objectives is to deal in Shariah non-permissible business activities.

The Commission may, through a notification, require a Shariah-compliant company, a class of Shariah compliant companies, an Islamic financial institution or a class of Islamic financial institutions to form, constitute, appoint, or engage a Shariah supervisory board within a stipulated period, comprising at least two persons who meet the fit and proper criteria of a Shariah scholar member and other requirements as provided in these regulations.

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.

Copyright Business Recorder, 2023