The Composition of Shariah Committee Members of Islamic Banking Institutions in Malaysia: Legal Requirements and Practices

Abstract

The Shariah Committee plays an essential part in ensuring that Islamic banking institutions comply with Shariah. Establishing a Shariah Committee is a legal requirement as stipulated in the Islamic Financial Services Act 2013. The composition of the Shariah Committee is very important to ensure the effectiveness of the committee in carrying out its duties and responsibilities. To what extent the requirement of the law pertaining to the composition of Shariah Committee? Whether the Islamic banking institutions comply with the legal requirement pertaining to the composition of Shariah Committee? This article seek to analyse the existing legislation pertaining to the composition of Shariah Committee. Secondly, this study will analyse the composition of Shariah Committee of Islamic banking institutions in Malaysia. By employing legal research methodology and content analysis method, the study found that the existing law requires the institutions to appoint at least five members to sit as Shariah Committee. At the same time, the composition of Shariah Committee according to education background is also significant where majority of members should possess Shariah background. This study found that, majority of the institution comply with the requirement of the law to have at least five members. However, it is found that several Islamic banking institutions fail to comply with the requirement to appoint at least five members.