1. An independent committee named ‘Internal Shari`ah Supervision Committee’ shall be established within each Islamic Financial Institution. Such committee shall consist of experienced specialists and those with capability to issue fatwas in jurisprudence of Islamic financial transactions, including Islamic banking or Takaful insurance, as the case maybe. 2. The said committee shall undertake Shari`ah supervision of all business, activities, products, services, contracts, documents, business conduct charters and codes of ethics of the concerned institution and shall approve them and establish necessary Shari`ah controls, within the framework of the rules, principles and standards set by the Higher Shari`ah Authority, and in order to ensure compliance with the rules and principles of Islamic Shari`ah. Fatwas or resolutions issued by such a committee shall be binding, provided that they are consistent with and do not conflict with the resolutions and fatwas of the Higher Shari`ah Authority, in accordance with the provisions of item (8) of Article (24) of this decree-law. 3. The Central Bank, after consultation with the Higher Shari`ah Authority, may exempt any Islamic Financial Institution from establishing and appointing an Internal Shari`ah Supervisory Committee due to its size and the nature of its work, which may not require the establishment of such a committee, after ensuring that there are equivalent procedures that ensure compliance of this institution with the rules and principles of Islamic Shari`ah provisions – provided that the concerned institution is not a Bank, finance company, or Takaful Insurance company, and that its capital does not exceed the limits established by the Central bank from time to time. 4. The Internal Shari`ah Supervision Committee shall be appointed and dismissed by the general assembly of the Islamic Financial Institution, in accordance with the controls and standards issued by the Higher Shari`ah Authority. Names of members of the committee shall be submitted to the Higher Shari`ah Authority for approval, prior to presentation to the general assembly and issuance of decision approving their appointment or dismissal. The dissolution of this committee shall also be presented to the Higher Shari`ah Authority, before being presented to its general assembly. 5. Members of the Internal Shari`ah Supervision Committee are prohibited from holding any executive position in the institution referred to in item (1) of this article, or provide services to it outside of the Internal Shari`ah Supervision Committee’s scope of work, nor hold shares or have for themselves or for any of their relatives up to the second degree, any interests associated with it. 6. In cases where disagreement arises, over a Shari`ah opinion, between members of the Internal Shari`ah Supervision Committee, or disagreement between the Internal Shari`ah Committee and the board of directors of the concerned institution, over the compliance or non-compliance of a particular matter with the rules and principles of the Islamic Shari`ah, the disagreement shall be referred to the Higher Shari`ah Authority, whose opinion on the matter shall be binding and final. 7. Each Islamic Financial Institution shall establish two (2) independent divisions or sections for ‘internal Shari`ah control’ and ‘internal Shari`ah audit’, the size of which shall be commensurate with the nature of its business and activities to monitor and audit the concerned institution’s compliance with the rules and principles of the Islamic Shari`ah. Each division or section shall be headed by a competent Person appointed, dismissed, or have his resignation accepted by the board of directors of the concerned institution after obtaining the approval from the Internal Shari`ah Supervisory Committee and the Higher Shari`ah Authority.
Interpretation and application must be checked against the official text and current version.