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  • Chapter Five: Responsibilities and Duties of the Shariah Committee

    • Article 10: Responsibilities of the Shariah Committee

      The committee shall be responsible for all its decisions related to Shariah matters. The board must rely on the committee for issuing Shariah decisions related to engaging in Islamic banking activities. The committee shall perform the following tasks: 
       
      1.It shall supervise the compliance of Islamic banking transactions with the Shariah principles and rules. Shariah compliance reports and internal Shariah audit observations should enable the committee to identify issues that require attention and, where appropriate, propose corrective measures.
       
      2.It shall issue decisions on Shariah matters so that the bank can comply with the Shariah principles and rules.
       
      3.It shall ensure that the Shariah policies and procedures developed by the bank are consistent with the Shariah principles and rules.
       
      4.To ensure that Islamic banking products are Shariah compliant, the committee shall approve the following:
       
       a)The terms and conditions contained in the forms, contracts, agreements and other legal documents used in executing the transactions.
       
       b)The product manual, marketing advertisements, illustrative pamphlets and brochures used to describe the product.
       
      5.The committee shall assess the compliance and internal Shariah audit work to ensure compliance with the Shariah aspects. Such assessment is part of the tasks related to submitting the reports on assessment of Shariah compliance.
       
      6.The related parties of the bank such as its legal consultant, external auditors, or consultant entities may seek advice from the Shariah committee on Shariah matters related to the bank operations, and the committee shall provide the necessary assistance in this regard.
       
      7.It shall inform the board, and recommend appropriate corrective actions, if it is proven to the committee that the bank has engaged in Islamic banking activities that are not Shariah compliant.
       
      8.The committee shall inform SAMA of cases in which Shariah non-compliant activities are not effectively or adequately addressed or no corrective actions are made by the bank.
       
      9.It shall prepare an annual report on the compliance of the banking Islamic activities of the bank with the Shariah principles and rulesand submit it to the board.
       

    • Article 11: Responsibilities and Duties of the Chairperson

      Without prejudice to the functions of the committee, the chairperson shall lead the committee, supervise the progress of its work, and effectively perform its duties, which are: 
       
      1.Ensuring that the committee members receive complete, clear, correct and not misleading information on a timely manner.
       
      2.Verifying that the committee has discussed all Shariah matters submitted to it effectively and on a timely manner.
       
      3.Encouraging the committee members to carry out their tasks effectively.
       

    • Article 12: Responsibilities and Duties of the Shariah Committee Members

      1.Attending committee meetings and providing a legitimate excuse when absent after notifying the chairperson in advance.
       
      2.Knowing clearly the duties and responsibilities arising from membership in the committee.
       
      3.Dedicating sufficient time to carry out their responsibilities and to prepare for and participate in committee meetings effectively.
       
      4.Enabling other committee members to express their views freely, encouraging the deliberation of certain topics, and taking opinions of specialists from the relevant department and others if the need arises.
       
      5.Informing the board immediately and fully about any direct or indirect interest in the business and contracts executed for the bank, or the direct or indirect engagement in any business that would compete with the bank.
       
      6.Refraining from disclosing any confidential information obtained through their membership in the committee.