🔖Shariah Governance
The fundamental principles of tabarru` mutual protection are widely accepted by Islamic scholars worldwide, including The Islamic Fiqh Academy, the Higher Council of Saudi Ulemas, the Fiqh Council of the World Muslim League, and the First International Conference for the Islamic Economy. In practice, the operational models of Islamic financial institutions still require regular auditing to ensure compliance with Shariah principles.
At Takadao, every business decision and technical foundation is guided by a deep understanding of Islamic principles as well as integrity to ensure end-to-end Shariah compliance.
The First Layer of Defense is the Top Management who set the tone and whose primary goal is to enhance value and ensure that there are no violations of Shariah standards.
Shariah governance extends to products, service, systems and processes as well as people. Other important aspects include training the concerned staff and creating an overall culture of Shariah compliance.
The main objectives of our Shariah governance are to:
Provide a structure and a system for governing all the business activities of the company in order to ensure Shariah compliance at all times and at all levels
Enable Takadao to be acknowledged as Shariah compliant by the stakeholders, including the general public
Protect our company from financial and reputational loss on account of Shariah non compliance.
Such governance includes arrangements to incorporate effective and independent oversight of Shariah compliance of the business activities. In order to verify that the organization and its operations are in the scope and parameters of Islamic Principles, Top Management relies on the guidance of internal and external Shariah Advisors.
The Second Layer of Defense is incumbent on the Shariah board who offers guidance and advice to the management of Takadao. They have complete ownership of ensuring Shariah compliance within the organization and possess veto power over any products, features, or services that they determine to be non-compliant. Their involvement extends to research and development, particularly due to the decentralized finance environment being a relatively new and evolving industry.
The responsibilities of the Shariah Board include monitoring the company commercial and social responsibility models, broadspectrum strategic intent, general commercial activities, product offering and services, throughout the company’s development lifecycle and through its lifetime. It also includes, screening of protocols and marketing material among other documents to ensure that they are in compliance with the Islamic legislation.
All important determinations concerning Shariah compliance are given the necessary consideration, Significant Shariah decisions and approvals undergo a thorough endorsement process. This entails obtaining support and approval from the majority of the board members, with a minimum requirement of at least 3 members. This approach guarantees that decisions related to Shariah compliance are carefully deliberated upon and receive the collective agreement and backing of the board. Members must continuously develop and strengthen their knowledge and understanding of Islamic finance, as well as keep abreast of the developments that may impact Islamic financial business, to fulfill their responsibility.
Their collective expertise allows for a comprehensive evaluation of the organization's offerings and ensures a well-rounded understanding of the intersection between Shariah principles and the evolving financial landscape.
While the Shariah board primarily serves an advisory role, their decisions and recommendations regarding Shariah compliance carries a binding authority. This means that the management must adhere to the directives and guidelines provided by the Shariah board and hold the account for ensuring that the company operates in a manner that upholds the integrity and adherence to Shariah principles. This responsibility includes integrating Shariah compliance into the organization's policies, procedures, and practices, as well as overseeing day-to-day activities with a commitment to upholding the approved Shariah standards.
The Third Layer of Defense is incumbent on the external Shariah auditors who bring an independent evaluation of the level of compliance. Those Islamic economists and financial scholars will advise Takadao on matters relating to Shariah compliance and recommend general guidelines, consistent with Shariah law. Any verdict issued by the Shariah advisors in relation to any Shariah related matter would be final and enforceable by the Management.
Last updated
