"Section 65(3) In carrying out its functions or duties under this Division—
(a) the board of directors of an institution shall have regard to
the interests of, as the case may be, depositors, investment
account holders and takaful participants of the institution or
participants; and
(b) the board of directors of a licensed takaful operator shall, in
the event of conflict between the interest of the takaful
participants and the shareholders, give priority to the interest
of the takaful participants."
Under Division 2 on Corporate Governance in IFSA, section 65(3) emphasizes that BOD duties and responsibilities shall be more towards the interest of customers particularly takaful participants in the case of takaful business. It further states that in the event of conflict between the interest of shareholders and participants, BOD shall give higher priority to the interest of participants. This is very interesting provision as it will have impact on areas like surplus distribution, and qard hasan. CEO and management shall give the appropriate advise to BOD for approval which shall in most situation favors the participants.
Nevertheless, the spirit of this provision has been well practiced by all Shariah boards or committees as they will, at all times, ensure that the interest of public is well taken care of under equity, fairness, transparency and honesty.
