Based on the Journal written by Sherin Kunhibava "Legal Issues in Shariah Governance in the Islamic finance industry in Malaysia" , what is the main ideas or things that been highlighted this article?

. MY MAXIS 12:42 AM @ 52% CHAPTER 4_Legal... a LEGAL ISSUES IN SHARIAH GOVERNANCE IN THE ISLAMIC FINANCE INDUSTRY IN MALAYSIA Sherin Kuchiba Abstract In Malaysia, the Islamic Financial Services Act 2013 (IFSA). the Central Bank of Malaysia Act 2009 (CBMA) and the Shariah Governance Framework (SGF) prescribe the structures and processes required for the Islamic finance industry to ensure compliance with the Shariah (Islamic law). The Shariah Advisory Council of Bank Negara Malaysia (SAC)-the apex authority on Shari'ah matters relating to hanking and takaful passes rulings and advises Bank Negara Malaysia (BNM), Islamie financial institutions (IFTs), the courts and arbitrators or Shari'ah issues. The Sharial Committee (SC) of each IFI on the other hand, functions within the specific IFI to entire compliance of its operations with the Shariah. This research highlights current legal issues within the Islamic finance industry that should be addressed toimise the role that each organ play The research lughlights that the role of the SAC should be beyond just ascertainment of Islamic law and suggests the amendment of 3.57 of the CBMA. It also proposes to allow other persons to seck the expert advice of the SAC The enhanced role of monitoring and rectiling Shari'ah non-compliance and the distinct burden and liability of the SC is highlighted in this research. Also, the role of the Board of Directors (BOD) vis-a-vis the SC and their shared responsibility in relation to Shariah compliance is explored. Finally recommendations are stagested to overcome the legal issues raised Keywords: Shari'ah governance, Shariah Advisory Council, Shariah Committee, Shari'ah compliance, Board of Directors, Islamic finance industry Sherin Kunlihava, PhD, Consultant Wisdom Musanent Councy Sdn. Bhd. She can contact dinherin wisdom.com or sherinnihava@yahoo.com ISRA International Jamal af tilamic Finance + Vol 72-2015 55 Lepe in Sarah Gemte Finance Industry in Malaya ISRA omonlamatofalice Vol.2.2015 55 Lapses in Shariah Governance the Finance Industry Malaya 1. INTRODUCTION A comprehensive definition of Shari'ah govemance is as follows: ... structures and processes adopted in the Islamic financial services industry (IFS) to ensure compliance with Shariah rules and principles by Islamic financial institutions (IFSB, 2009), Shariah compliance is the sole objective of Shari'ah governance. In Malaysia. the Islamic Financial Services Act 2013 (IFSA), the Central Bank of Malaysia Act 2009 (CBMA), and the Shariah Governance Framework 2010 (SGF) prescribe the structures and processes that need to be followed by the Islamic finance industry to cnsure compliance with the Shari'ah (Kunhibava, 2012). Part 1.2 of the SGF provides that Shari'ah compliance is to be achieved through a two-tier Shari'ah governance infrastructure comprising two vital components, which are: a centralised Shariah Advisory Council (SAC) at Bank Negara Malaysia, governed by the CBMA, and an internal Shariah Committee (SC) formed in cach respective Islamic financial institution (IFT). Principles 1 and 2 of the SGF also define the duties and roles of the Board of Directors, management and the SC of an IFI in relation to ensuring Shariah compliance. Principle of the SGF in tum requires that an IFI have in place functions that provide a system of checks and balances within the IFI, including Shari'ah review, Shari'ah audit and Shariah risk management functions. Furthermore, Principle 7 requires a Sharlah research unit to be set up to perform research on Shari'ah matters The IFSA ensures Shari'ah compliance in Part IV where Shariah compliance is required by IFls; steps to report Shariah compliance are provided for the requirement to comply with standards and guidelines issued by Bank Negara Malaysia is declared; and inter alla, the duties and responsibilities of the SC are provided for (see Sections 28, 28(3), 29 and 30-36 of IFSA). Having introduced the background on Shari ah governance and how the CBMA, IFSA and SGF ensure Shari'ah governance. this article now moves on to highlight current legal issues faced by the Islamic finance industry in Malaysia. The legal issues that are highlighted are those that exist in the Shari'ah governance structures and processes. Possible remedies for improvement are also recommended in this paper, 56 ISRA International Journal of Tamic Finance L7.12.2015 Sheria nove Accordingly, the paper is structured as follows: Section II deliberates on the role of the SAC of BNM with repand to ascertainment of 4 of 26 Legale in Sharmace in the Islamic Finance Industry in Malaya The meaning of ascertainment of Islamic law' was explained by Justice Mohd Zawawi Salleh in the case of Mohamed Alias Ibrahim RHB Maybank Berhad [2011] 4 CU 654 (Mohamed Alias Ibrahim ) where the learned judge explained that the SAC under s.51 of the CBMA is to 'ascertain and not determine" Islamic law, and explained the difference between these two roles as follows (pp. 683- 4); [95] Act 701 is a federal law and its contents are consistent to the words employed in the Federal Constitution. In this sense, it can be seen that the SAC is not in a position to issue a new hukm Syuru' but to find out which one of the available hukm is the best applicable in Malaysia for the purpose of ascertaining the relevant Islamic laws concerning the question posed to them (emphasis added] [96] For example, in a matter where there are differences of opinion regarding the validity of a certain Islamic finance facility. SAC can be referred to ascertain which opinion of the jurist is applicable in Malaysia. This ascertainment of Islamic law will be binding upon the courts as per the Impugned Provisions. It will then be up to the courts to apply the ascertained law to the facts of the case. At the end of the matter, the application and final decision of the matter remains with the court. The court still has to decide the ultimate issues which have been pleaded by the parties. After all, the issue whether the facility is Shariah compliant or not is only one of the issues to be decided by the Court (emphasis added The leamed judge categorically stated that the mandate of the SAC is to find out which existing hukm (Islamic ruling) applies in Malaysia, in other words, the SAC does not have the mandate to issue a new hukm. The leamed judge concludes this because the word ascertainment is used in the Federal Constitution on the jurisdiction 1 The sue that Justice Mohd Zawawi Salleh was tyngdress was whether the provisions under 56 & 57 of the CHAMA were inconstitutional According to 8:36 the courts and attirators are required to refer to published rulings of the SAC refer to the SAC when faced with Shariah matter, and under 2.57 the ruling or vice of the SAC shall be binding on the court and who 58 ISRA Internal Semal of Islamic Finance.2.2015 Sri Kanibaya of a State as opposed to using the word 'determination' (p. 682) [87] The root word of ascertain used in section 51 of Act 701 is also similar to the word in Item 4(k) i.e. for the retinme of Islamic law and other ronal laws