Centre for Shariah Reference in Islamic Finance - Pusat Rujukan Shariah Bagi Kewangan Islam

Centre For Shariah Reference in Islamic FinancePusat Rujukan Shariah Bagi Kewangan Islam

187th SAC Meeting (27 August 2018) : Application of Musyarakah Contract in Managing Expense Strain of a Takaful Operator

The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 187th meeting on 27 August 2018 decided that the application of musyarakah contract between a retakaful operator and takaful operator in managing the expense strain of the latter arising from the implementation of ‘Minimum Allocation Rate’ requirement is permissible, subject to the following conditions:

  1. The musyarakah capital contribution especially in the form of cash, shall not be treated and accounted as an up-front wakalah fee as such treatment is inconsistent with the nature of a musyarakah contract;
  2. The musyarakah capital shall be ring-fenced and shall not commingle with other capital in the shareholders’ fund; and other funds especially the tabarru` fund;
  3. Determination of profit and loss from the musyarakah must reflect the actual profit and loss of the identified portfolio, which must be ring-fenced from other portfolios; and
  4. The in-kind musyarakah capital (if any) must be valued in monetary terms at the inception of the musyarakah contract.

Please refer to the attachment for further information.

186th SAC Meeting (31 July 2018) : Distribution of Takaful Fund’s Surplus in the Event of a Winding Up of a Takaful Operator

186th SAC Meeting (31 July 2018) : Distribution of Takaful Fund’s Surplus in the Event of a Winding Up of a Takaful Operator

The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 186th meeting on 31 July 2018 decided that the distribution of a takaful fund’s surplus (after meeting all of the takaful participant’s rights and takaful fund’s liabilities) in the event of a winding up of a takaful operator (TO) to the takaful protection fund managed and owned by Malaysia Deposit Insurance Corporation (PIDM) is permissible, provided that such surplus shall first be utilised to cover the deficit of any other takaful funds and the liability of the failed TO.

Please refer to the attachment for further information.