Membership, Appointment and Composition
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| 8.1 | The Board shall nominate the members of the ISSC, and send the member’s appointment request to the HSA for approval prior to presenting its nomination to the general assembly.
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| 8.2 | The Company’s general assembly has the authority to appoint the ISSC members based on the Board’s nomination and after the HSA and the Central Bank’s approval.
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| 8.3 | The composition of ISSC members in a Company must not be less than (3) three members that meet the fit and proper criteria (as prescribed in this Standard).
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| 8.4 | Emirati members in the ISSC must not be less than one third.
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| 8.5 | The membership of each member in the ISSC is subject to the following:
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| a. | must not exceed three ISSC memberships in Takaful Insurance Companies inside the UAE,
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| b. | must not exceed a total of fifteen (15) ISSC (or equivalent committees) memberships in Islamic financial institutions and Takaful Insurance Companies inside and outside the UAE,
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| c. | only one member of the Company’s ISSC may have more memberships than what is stated in Article (8.5/b).
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| 8.6 | The HSA may exempt UAE nationals from the Article (8.5) if appropriate.
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| 8.7 | If a position of ISSC member becomes vacant, at any time, and that causes lack of quorum (more than the half), the Board must nominate a substitute member and seek approval as per the process in Article (8.2).
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| | However, if a position of ISSC member becomes vacant, at any time, and this leads to non-compliance with the Article (8.3) of this Standard, but it does not breach the quorum, the Board may appoint a member after obtaining approvals of the HSA and the Central Bank on the appointment. It is not required in this case to hold the general assembly for the appointment provided that the appointment is tabled to the general assembly for final approval in its next meeting.
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| 8.8 | The term of office for ISSC members shall be specified in the Company’s engagement letter with a minimum of three years, and may be renewed for a similar period based on the Board’s recommendation and after obtaining approvals of the HSA and the Central Bank, and presenting the same to the general assembly.
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| | The engagement letter must also specify the responsibilities of the ISSC members and their remuneration. The remuneration must not be linked to the performance of the ISSC members. Alongside the engagement letter, the Company must attach the ISSC charter.
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| 8.9 | The appointment of an ISSC member is valid for the said period, stated in Article (8.8), without the need to approach the HSA and general assembly for approvals every year. The approvals are required only in the following cases:
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| a. | First time appointment of the ISSC member/s; and
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| b. | Renewal of the appointment of the ISSC member/s for a similar period (three years).
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| 8.10 | The ISSC member must not serve the same Company as ISSC member for more than twelve years consecutively from the date of issuance of this Standard. The calculation of term period shall be restarted if membership is suspended for three years.
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Fit and Proper
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| 8.11 | Member of the ISSC must:
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| a. | be a Muslim individual (not a company);
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| b. | hold a bachelor degree (as a minimum) in Islamic Shari’ah, particularly in jurisprudence of financial transactions, from a university that is acknowledged in Shari’ah studies, or have a minimum of 10 years’ experience in Fatwas issuance related to jurisprudence of financial transactions;
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| c. | have proven competence and expertise, especially in jurisprudence of financial transactions;
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| d. | have a strong comprehension of insurance in general and Takaful Insurance in particular, and should have worked in the spectrum of Islamic finance and/or Shari’ah supervision for a minimum of ten (10) years whether in direct employment or advisory level, or at least fifteen (15) years of post-graduation experience in teaching and scientific research related to jurisprudence of financial transactions and Takaful Insurance;
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| e. | have good knowledge of the legal and supervisory framework related to financial and insurance activities in the UAE;
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| f. | be excellent in Arabic, and preferably to have good knowledge of English; and
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| g. | have good conduct and behavior, particularly with regard to credibility, integrity, and reputation in professional and financial transactions.
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| 8.12 | HSA may exempt UAE candidates from some of the clauses stated in Article (8.11) that would not impair their competence in performing their duties, provided that the candidate commits to the development and training required by the HSA.
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Termination or Resignation of ISSC Member
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| 8.13 | Termination or resignation of ISSC members requires a no-objection from the HSA and the Central Bank, before being presented to the general assembly for approval.
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| 8.14 | The request must clarify the reasons for termination or resignation of the ISSC member.
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Responsibilities of ISSC
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| 8.15 | The ISSC undertakes Shari’ah supervision of all businesses, activities, products, services, investments, contracts, documents, and code of conducts of the Company.
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| | The ISSC issues resolutions and Shari’ah Fatwas that are binding upon the Company. The members of the ISSC are accountable for the resolutions and Fatwas they issue to the Company, and their compliance with the standards and resolutions issued by the HSA.
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| 8.16 | The ISSC must monitor, through the Internal Shari’ah Control Division and Internal Shari’ah Audit Division, the Company’s compliance with Islamic Shari’ah Provisions.
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| 8.17 | The ISSC must hold at least four meetings per year, and at least one meeting per year with the Company's Board, in accordance to the format charter approved by the HSA.
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| 8.18 | The ISSC shall decide on Shari’ah matters that relate to all businesses and activities of the Company, including its policies, internal regulations and code of conduct, and this includes carrying out the following responsibilities:
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| a. | Reviewing the Takaful Insurance operating model, underlying contracts and supporting materials (e.g. underwriting and claims settlement manual/guidelines etc.).
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| b. | Reviewing and approving the policy and procedures that govern Takaful Insurance Accounts (e.g. segregation of accounts and transparent financial resources flow between the accounts etc.), surplus distribution, and deficit coverage
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| c. | Reviewing and approving the Company’s products, services and marketing materials.
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| d. | Reviewing and approving the investment policy and the Shari’ah screening criteria to ensure the compliance of the investment activities in both shareholders’ accounts and Participants’ Accounts, with the Islamic Shari’ah Provisions.
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| e. | Reviewing and approving the Retakaful agreements concluded by the Company to ensure their compliance with the Islamic Shari’ah Provisions.
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| f. | Setting controls for ceding to conventional reinsurance on an exceptional basis, and the permission to add the revenues from the conventional Reinsurance to the Participants’ Account.
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| g. | Setting controls for co-insurance with the conventional insurance companies.
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| h. | Reviewing the Zakat calculation and specifying the amount of Zakat due on each share of the Company.
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| i. | Reviewing the charity account before granting the approval for disposal.
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| j. | Reviewing the financial statements of the Company to ensure compliance with Islamic Shari’ah provisions.
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| k. | Preparing an annual Shari’ah report.
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| l. | Continuous monitoring the Company's business and activities, through Internal Shari’ah Control Division and Internal Shari’ah Audit Division, in terms of its compliance with the Islamic Shari’ah Provisions.
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| 8.19 | In fulfilling its responsibilities, the ISSC may engage the experts and consultants with appropriate expertise in the relevant fields (e.g. insurance, law, accountancy and investment management) as required. The said experts and consultants may attend and contribute to ISSC meetings without voting on the Fatwa or resolution.
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| 8.20 | In case a Shari’ah non-compliance issue is identified, the ISSC must review and approve:
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| a. | remedial measures, if such remediation is feasible.
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| b. | the treatment required by Shari’ah for the outcome of the Shari’ah non-compliance issue if the remediation is not feasible.
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| c. | preventive measures to avoid reoccurrence of such issues.
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| | Reporting the above to the Company’s Board or its relevant committee. If the Company fails to address the proposed remedial action, the ISSC must report it to the HSA or the Central Bank.
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| 8.21 | The ISSC must review and approve all business operations, products, services investments, and financial securities that the Company executes, issues, manages, promotes, or offers to its customers (Participants and potential Participants) in order to ensure the compliance with the Islamic Shari’ah provisions. The approvals from other ISSCs, within or outside the UAE, in relation to the above, should not be used as a substitute to the ISSC approval.
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Annual Shari’ah Report
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| 8.22 | The ISSC must issue an annual Shari’ah report stating the extent of Company’s compliance with Islamic Shari’ah Provisions. It should be published within the financial statement in the Company’s disclosures and other means possible, in accordance with this Standard and requirements issued by HSA.
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| 8.23 | The annual Shari’ah report of the ISSC must contain the main components specified by the HSA.
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| 8.24 | The annual Shari’ah report must be submitted to the HSA for review and approval prior to presenting the same at the general assembly.
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Performance Assessment of ISSC
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| 8.25 | The Company in coordination with the Chairperson of the ISSC shall develop an assessment for ISSC based on the following aspects:
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| a. | Shari’ah and scholarly aspects in terms of the member’s participation in decision making, discussions, and review of contracts, documents and reports submitted to the ISSC. This represents 70% of the assessment.
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| b. | Organizational aspect in terms of members’ attendance of meetings and adherence to meeting schedule (dates and times), and other procedures prescribed by the ISSC charter, in line with this Standard. This represents 30% of the assessment.
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| | The Company should inform each ISSC member upon appointment and at the beginning of each financial year about the assessment criteria.
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| 8.26 | At the end of the financial year, the Chairperson of the ISSC shall provide the HSA with a report on performance assessment taking into consideration the instructions issued by the Central Bank that relates to development and training of individuals who work in Shari’ah Supervision in Islamic financial institutions.
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| 8.27 | Based on the performance assessment, the Company may encourage the ISSC members to attend/participate to any relevant program/training that relates to global development in Takaful Insurance and Insurance.
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ISSC Charter
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| 8.28 | The Company must adopt a charter for the ISSC that defines details of decision making process and their implementation, and sets adequate methods to fulfill ISSC’s responsibilities without prejudice to the requirements of this Standard, and in accordance to the template approved by the HSA.
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ISSC Independence
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| 8.29 | ISSC members must be independent in conducting their responsibilities. The following controls and guidelines, as a minimum, must be observed to ensure the independence of ISSC members:
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| a. | A member of the ISSC must not have a first-degree relative as member of a Company’s Board or Senior Management in the Company.
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| b. | A member of the ISSC must not be an owner/shareholder of/in a company that provides consultancy or Shari’ah services to the Company where he/she acts as member of ISSC.
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| c. | A member of the ISSC must not be employees of the Company or any of its Affiliates when serving as member of the ISSC and should not provide services to the Company outside the scope of the ISSC’s assigned functions.
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| d. | A member of the ISSC shall not accept any allowance from the Company or its Affiliates other than the allowance he/she receives for being member of the ISSC, the allowance for attending ISSC meetings, and other matters related thereto. If a service or product is offered to a member of the ISSC, such member shall be treated as ordinary customers and shall not receive any preferential treatment.
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| e. | A member of the ISSC or his/her first or second-degree relatives, shall not own a share equal to/or more than 5% of the Company.
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| f. | A member of the ISSC must not hold controlling interests in companies’ shares and/or other investments in which the Takaful Insurance Accounts’ funds are invested in.
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| g. | The entitlement to ISSC allowances shall not be conditional on achieving certain results, or linking it to the results of the services provided by the ISSC (conditional remuneration).
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| 8.30 | In case of conflict of interest, including non-compliance with Article (8.29), a member of the ISSC must do the following to resolve the said case:
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| a. | disclose any conflict of interest cases, to the ISSC, related to his/her family members or business partners or companies he/she has interest in;
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| b. | where there is a temporary conflict of interest, abstain from participating in the relevant discussion, decision or action; or
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| c. | if the issue remains unresolved, the ISSC member with the issue of independence impairment must notify and report to the Company’s Senior Management in writing to take the necessary actions.
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| 8.31 | The Company must immediately notify the Central Bank if it becomes aware of any material information that may negatively affect the independence of any ISSC member.
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Accessibility
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| 8.32 | The ISSC members have the right to access at any time all the records, contracts and documents of the Company, and it may request the clarifications it deems necessary to perform its responsibilities, and the Company’s Senior Management must provide such clarifications and information.
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| 8.33 | In the event that the Company fails to enable the ISSC to perform its responsibilities, the ISSC must state the same in a report and submit it to the Company’s Board or the Board’s audit committee. If the ISSC’s request has not been addressed, the ISSC must inform the Central Bank and the HSA.
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Confidentiality
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| 8.34 | A member of the ISSC must not disclose Confidential Information of the Company unless such disclosure is required by the Central Bank or by law.
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Consistency
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| 8.35 | The ISSC members should strive to achieve unanimity in relation to the resolutions and Fatwas. The ISSC shall not resort to majority vote unless members are unable to reach unanimity within a reasonable period.
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| 8.36 | In cases where disagreement arises over a Shari`ah opinion, between members of the ISSC, or disagreement between the ISSC and the Board, over the compliance or noncompliance of a particular matter with the provisions of Islamic Shari`ah, the disagreement shall be referred to the HSA, whose opinion on the matter shall be final.
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