×

Feedback Form

የምንረዳዎ ነገር ይኖር ይሆን? ሀሳብ፣ አስተያየት፣ ጥያቄ ካልዎት ይጻፉልን። እናመሰግናለን!

CLOSE ×

Thank you for your feedback!

ለሰጡን አሰተያየት እናመሰግናለን!

Yaada nuu kennitaniif galatoomaa!

  1. Home

Requirement for Securities Shariah Advisers in Ethiopia's Islamic Capital Market

Introduction

As Ethiopia’s capital market expands with the new Ethiopian Securities Exchange, understanding the unique role of Securities Shariah Advisers becomes vital. This guide details the requirements and regulations for Securities Shariah Advisers, emphasizing their role in ensuring compliance with Shariah principles.

A Securities Shariah Adviser is a professional who provides expert guidance on the compliance of financial instruments and transactions with Islamic law (Shariah). This role involves evaluating and endorsing securities, investment products, and financial practices to ensure they adhere to principles such as the prohibition of interest (riba), excessive uncertainty (gharar), and unethical investments. Shariah Advisers play a crucial role in the Islamic finance industry, helping to create and maintain products that meet the ethical and legal standards of Shariah, thereby ensuring the trust and confidence of Muslim investors.

Eligibility Criteria for Securities Shariah Adviser License

The eligibility criteria for a Securities Shariah Adviser License are similar to those for a Securities Investment Adviser License:

  • Entities: Share companies, private limited companies, one-person private limited companies, general partnerships, limited partnerships, or limited liability partnerships must hold valid registration or permits.
  • Individuals: Applicants must be at least 18 years old and meet the competency requirements for a Securities Shariah Officer as specified in the Competency Framework for Capital Market Service Providers.

Authorized and Prohibited Activities of Shariah Adviser

Securities Shariah Advisers are authorized to:

  • Provide Shariah expertise and advice on Islamic capital market products and activities.
  • Ensure compliance with Shariah legislations and directives.
  • Apply ijtihad (intellectual reasoning) to ensure adherence to Shariah principles.

They are prohibited from:

  • Managing or maintaining investors' funds.
  • Acting as advisers for entities issuing Islamic capital market products if they are employees of such entities.

Advertisement Restrictions on Shariah Adviser

Securities Shariah Advisers must adhere to strict advertising standards to prevent misleading statements:

  • Advertisements must not contain untrue statements or be misleading.
  • Testimonials and references to past profitable recommendations are restricted unless fully compliant with specified conditions.
  • Any representation of graphs, charts, or formulas must include prominent disclosures about their limitations.
  • Statements offering free reports or services must ensure there are no hidden obligations.

Appointed Representatives of Sharia Adviser

Entities licensed as Securities Shariah Advisers must appoint a qualified Securities Shariah Officer, licensed by the Authority, to ensure compliance with Shariah principles and effective governance.

Conclusion

Navigating the complex regulatory landscape of Ethiopia’s emerging capital market requires a thorough understanding of the eligibility, responsibilities, and limitations of Securities Investment Advisers, Securities Robo Advisers, and Securities Shariah Advisers. Adhering to these guidelines ensures compliance, enhances transparency, and trust in the Ethiopian Capital Market. 

Share this post:

Share on Facebook Share on Telegram Share on LinkedIn

Related Posts