As part of the Capital Market Authority's ("CMA") strategic objectives to develop the capital market, and based on the Capital Market Law issued by Royal Decree No. (M/30), Dated 2/6/1424H, the CMA's Board issued its resolution approving the Instructions for Shariah Governance in Capital Market Institutions (the "Instructions").

The Instructions aims to set the rules and standards for Shariah governance in Capital Market Institutions that provide, wholly or partially, products or services that are compliant with the rules and principles of Shariah.

The main elements of the Instructions are as follows:

a) Regulating the responsibilities of the board of directors or equivalent and the executive management in Capital Market Institutions that provide, wholly or partially, products or services that are compliant with the rules and principles of Shariah.

b) Regulating the work of Shariah Committee, including the provisions for its formation, membership, meetings, and responsibilities, and defining the functions and tasks of the chairperson of the Shariah Committee, and the tasks and duties of its members.

c) Regulating the Shariah Committee's independence and its reporting structure, and defining the tasks of Shariah compliance and internal Shariah audit functions.

d) Regulating the procedures for the development process of products and services that are compliant with the rules and principles of Shariah.

The CMA Board Resolution included that the Instructions shall be effective as of the date of their publication, except paragraphs (2) and (7) of Article (3), and paragraph (6) of Article (8) of the Instructions, which shall become effective as of 13/12/1444H corresponding to 01/07/2023G.

This comes after the CMA published the draft Instructions for Shariah Governance in Capital Market Institutions on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform) affiliated to the National Competitiveness Center and the CMA's website for public consultation for a period of (15) calendar days.

It should be noted that the CMA, in the course of its periodic review of the rules and regulations it issues, will evaluate the effect of implementing these Instructions, including determining the appropriateness of amending the guiding Articles to become mandatory Articles, and will take into consideration the results of such evaluation as part of the CMA's continuous efforts to develop the capital market.

The Instructions for Shariah Governance in Capital Market Institutions can be viewed via the following link:

The Instructions for Shariah Governance in Capital Market Institutions