IFR 6.1 IFR 6.1 Application
IFR 6.1.1 IFR 6.1.1(a) This IFR 6 applies in the case of a Domestic Fund:(i) which is an Islamic Fund, to its Fund Manager and where appointed, its Trustee; or(ii) which is an Umbrella Fund with one or more Islamic Sub-Funds, to its Fund Manager and where appointed, its Trustee in respect of those Sub-Funds.(b) The requirements that apply to a conventional Fund apply equally to an Islamic Fund, except as otherwise provided in this IFR 6.(c) In this IFR 6, except where otherwise provided, any reference to a Fund is to an Islamic Fund or to an Islamic Sub-Fund of an Umbrella Fund as the case may be and any reference to a Fund Manager is a reference to a Fund Manager of an Islamic Fund or a Fund Manager of an Islamic Sub-Fund of an Umbrella Fund.
Guidance(i) The Fund Rules contains the key requirements relating to the management and operation of conventional Collective Investment Funds. These Islamic Finance Rules set out the additional requirements that apply where such a Fund is managed or held out as being managed as an Islamic Fund. There are other requirements that apply to Authorised Persons managing Islamic Funds which are found in other modules of the ADGM Rulebook, such as the GEN Rulebook, COBS Rulebook and PRU Rulebook.(ii) While IFR 3 contains the requirements that apply to Authorised Persons which are Fund Managers of Collective Investment Funds, the requirements in this IFR 6 mainly focus on Shari'a compliance related requirements that apply at the Fund level. For example, while the systems and controls required under IFR 3.3 relate to the systems and controls that a firm must have in order to comply with its Shari'a obligations, IFR 6.1.3 sets out systems and controls that must be established and maintained at the Fund level.
Amended on (3 February, 2020).
Systems and controls
IFR 6.1.2 IFR 6.1.2(a) The Fund Manager of a Fund must establish and maintain systems and controls which ensure that its management of the Fund and the Fund Property is Shari'a compliant.(b) A Fund Manager may, where it is practicable to do so, include the systems and controls required under IFR 6.1.2 (a) within those it is required to establish and maintain pursuant to IFR 3.3.1.
Guidance(i) Part 5 of the Fund Rules requires the Fund Manager to establish and maintain systems and controls, including, but not limited to, financial and risk controls to ensure sound management of the Fund in accordance with the Fund's Constitution and its most recent Prospectus, taking due account of the nature, scale and complexity of the Fund's investments and operations.(ii) IFR 3.3.1 requires a Fund Manager of an Islamic Fund to establish and maintain systems and controls to ensure the Shari'a compliance of that Islamic Fund.
Fund's constitutional documents
IFR 6.1.3 IFR 6.1.3(a) The Fund Manager of a Domestic Fund that is a Public Fund must ensure that its Fund's Constitution and Prospectus are, and remain, approved by the Fund's Shari'a Supervisory Board.(b) The Fund Manager of an Exempt Fund must ensure that the Fund's Constitution and Prospectus are, and remain, approved by the Fund Manager's Shari'a Supervisory Board.
See Guidance note (iii) under IFR 6.2.1.
Islamic Financial Business policy and procedures manual
A Fund Manager may, instead of having a separate Islamic Financial Business policy and procedures manual both at the firm level and at the Fund level, maintain a single Islamic Financial Business policy and procedures manual for the Fund Manager and the Funds it manages.
The Fund Manager of an Islamic Fund must implement and maintain an Islamic Financial Business policy and procedures manual for the Fund which addresses the following matters:(a) the manner in which the compliance function will be undertaken, in respect of Shari'a compliance;(b) the manner in which the Shari'a Supervisory Board will oversee and advise in regard to the Islamic Financial Business conducted by the Fund Manager;(c) the manner in which Shari'a Supervisory Board fatawa, rulings and guidelines will be recorded, disseminated and implemented and the internal Shari'a review undertaken;(d) the manner in which disputes between the Shari'a Supervisory Board and the Fund Manager in respect of Shari'a compliance will be addressed;(e) the process for approving those internal systems and controls which are in place to ensure not only that the Islamic Financial Business is carried out in compliance with Shari'a, but that information is disseminated to Unitholders in an appropriate manner; and(f) the manner in which conflicts of interest will be identified and managed, including as prescribed in IFR 6.2.4.