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flourish, by cultivating a conducive environment for product innovation and flexibility while
ensuring compliance with Shariah principles. Figure 4.1 summarizes the roles of these 2
Shariah authorities.
Figure 4.1: Malaysia’s Shariah Governing Bodies
MALAYSIA’S SHARIAH
REGULATORY BODIES
Islamic Banking and Takaful Islamic Capital Market
Shariah Advisory Council of
BNM
Shariah Advisory Council of
SC
Objective: Established in May
1997, the committee is
responsible to advise on
matters relating to Islamic
banking and takaful business
or any other Islamic finance
area that is supervised and
regulated by BNM.
Objective: Established in May
1996, the committee is
responsible to advise on
matters pertaining to Islamic
capital market.
Sources: BNM, SC
Based on our observation, several SAC resolutions differ from the opinions of Shariah experts
in other countries. According to the Resolutions of the Securities Commission Shariah Advisory
Council (Second Edition), these variations exist due to differences in time and place, and the
divergence in the needs and background of a country. Regardless of the difference, each
jurisdiction (e.g. Malaysia and GCC countries) has evolved to accommodate the requirements
of its domicile country, with each having expanded rapidly over the years in the development
of its Islamic finance landscape.
2. Requirement of Identified Assets, Ventures and/or Investments
The Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework
(2015) set out the asset requirements ― whether tangible or intangible ― for sukuk issuance
related to the contracts of bay’ bithaman ajil (BBA), murabahah, istisna’ and ijarah:
a) The identified asset and its use must satisfy Shariah requirements.
b) If the identified asset is subject to any encumbrance or is jointly owned with another party,
prior consent must be obtained from the charge or joint owner.
c) Where the identified asset is in the form of a receivable, it must be mustaqir (established
and certain) and transacted on the spot, either in the form of cash or commodities.
In relation to sukuk issuances based on musharakah , mudarabah and wakalah bil istithmar, the
ventures and/or investments must also comply with the SC’s specific Shariah requirements.