The Securities and Exchange Commission of Pakistan has unveiled a series of significant proposed amendments to the Shariah Governance Regulations 2023. This regulatory move is designed to modernize the certification landscape and enhance the structural role of Shariah advisors within the corporate sector. By revising the existing framework the commission aims to create a more efficient pathway for businesses to achieve and maintain Shariah compliant status while simultaneously ensuring that the integrity of Islamic financial principles is upheld through more localized and expert oversight.
A central feature of the newly proposed changes involves a targeted restriction on commission level certification approvals. According to a comparative statement released by the regulator these top tier approvals would be reserved specifically for regulated entities that are already licensed registered or otherwise formally authorized by the commission. This shift suggests a more focused approach to oversight where the regulator maintains direct control over high level financial institutions while allowing for a more flexible and decentralized certification process for the broader corporate landscape. This move is expected to reduce administrative bottlenecks for companies seeking compliance status.
Under the revised framework companies intending to gain Shariah compliant status would be mandated to appoint a dedicated Shariah board or an authorized Shariah advisor prior to submitting their formal applications. This ensures that expert religious and technical guidance is integrated into the company’s operations from the very beginning. Furthermore the commission has proposed a major shift in responsibility where the primary task of Shariah review and final approval would rest with the company’s own internal board or advisor. By moving this responsibility away from the central commission the regulator is empowering professionals within the field to take a lead role in governance.
To accommodate the diverse range of businesses operating in the country the proposed amendments introduce a new category and special provisions for companies that are not directly categorized as regulated persons. For these unregulated entities the framework would permit certification to be granted directly by Shariah boards or advisors rather than necessitating a direct certification from the commission itself. This tiered approach recognizes the varying needs of different business sectors while maintaining a standardized level of Shariah adherence across the board through qualified professional intermediaries.
The regulator has emphasized that these updates are intended to strengthen the overall accountability and adherence to regulatory standards within the Islamic finance industry. One notable proposal includes the removal of the requirement for mandatory certification for any Shariah compliant company that is already officially registered as a Shariah advisor. This elimination of redundant paperwork is part of a larger effort to simplify the ease of doing business in Pakistan. As the Islamic finance sector continues its rapid expansion across banking capital markets and takaful these governance updates are viewed as essential for maintaining market confidence and fostering sustainable growth in Shariah compliant investment products.
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