Sharia-based Entity in Islamic Financial Institutions between Real and Virtual Independence – Kuwait as an Example
Dr. Adnan Ali Amulla
Assistant Professor – Kuwait International Law School
Abstract:
The Fatwa and Sharia-based censorship plays an important role in guiding Islamic financial institutions to work according to Sharia law through providing Sharia-based directions and opinions about the activities, products, and services offered by Islamic banking and capital markets. However, this study tackles many obstacles that obstruct the work of Sharia-based institutions – such as the direct and indirect dominance of the boards of directors – leaving negative impact on the independence and neutrality of these entities.
To solve the problems, this study both assesses the current status of the Sharia-based entity in Islamic financial institutions and recommends some solutions to bridge the gap in achieving the independence of such entities. Moreover, the study proposes some peculiar requirements and conditions related to the members of the Sharia-based entity as well as the violations and abuse of power of the boards of directors.
The study also recommends establishing a new Sharia-based entity in Islamic financial institutions. If adopted, the new Sharia-based entity will, hopefully, fulfill the conditions required for the independence and objectivity of Sharia-based entities.