Principle 9 Companies Which Refer to Themselves as "Islamic" Must Follow the Principles Of Islamic Shari'a
Companies which are guided by the principles of Islamic Shari'a have additional responsibilities to their stakeholders. Companies which refer to themselves as "Islamic" will be subject to additional governance requirements and disclosures to provide assurance to stakeholders that they are following Shari'a Principles. In ensuring compliance with Shari'a principles, each company should establish a Shari'a Supervisory Board consisting of at least three Shari'a scholars.
Recommendation: In addition to its duties outlined in Principle 3 and Appendix B, the Audit Committee shall communicate and co-ordinate with the Company's Corporate Governance Committee and the Shari'a Supervisory Board ("SSB") (where applicable) to ensure that information on compliance with Islamic Shari'a rules and principles is reported in a timely manner.
Recommendation: The Board shall set up a Corporate Governance Committee (see also Principle 8). In this case the Committee shall comprise at least three members to co-ordinate and integrate the implementation of the governance policy framework. This Corporate Governance Committee shall comprise at a minimum of:
i. an independent director to chair the Corporate Governance Committee. The Chairman of the Corporate Governance Committee should not only possess the relevant skills, such as the ability to read and understand financial statements, but should also be able to coordinate and link the complementary roles and functions of the Corporate Governance Committee and the Audit Committee;
ii. a Shari'ah scholar who is an SSB member for the purpose of leading the Corporate Governance Committee on Shari'ah-related governance issues (if any), and also to coordinate and link the complementary roles and functions of the Corporate Governance Committee and the SSB; and
iii. an independent director who can offer different skills to the committee, such as legal expertise and business proficiency, which are considered particularly relevant by the BOD for cultivating a good corporate governance culture, and deemed "fit and proper" by the concerned supervisory authorities, where applicable.
Recommendation: The Corporate Governance Committee shall be empowered to:
i. Oversee and monitor the implementation of the governance policy framework by working together with the management, the Audit Committee and the SSB; and
ii. Provide the BOD with reports and recommendations based on its findings in the exercise of its functions.