Shariahgovernance practices at Islamic fund management companies

Purpose - The purpose of this paper is to explore theShariahgovernance practices of Islamic fund management companies (IFMCs) in Malaysia, with the principal goal of reviewing the need for a comprehensiveShariahgovernance framework for the Islamic fund management industry. Design/methodology/approach - The study was conducted using a qualitative approach via 14 semi-structured interviews with three companies (i.e. Company A, Company B and Company C) involving face-to-face interviews, telephone interviews and emails. Data from the interviews were recorded and later analysed using content analysis. Findings - The study finds thatShariahgovernance processes among the IFMC examined are well-managed; and the current regulations issued by the regulators are sufficient to ensure theShariahcompliance of Islamic fund management industry. In spite of the absence of a comprehensiveShariahgovernance framework for the industry, mostShariahfunctions (i.e.Shariahrisk management,Shariahreview andShariahaudit) are performed by the parent company, except forShariahresearch. Nevertheless,Shariahresearch is not an important function in Islamic fund management because the investment instruments are generally selected from a predetermined list ofShariah-compliant investment options. Practical implications - The study offers an overview ofShariahgovernance practices in the Islamic fund management industry to policymakers and practitioners for the future development ofShariahgovernance practices among IFMC. Originality/value - This is the first paper to studyShariahgovernance practices in the Islamic fund management industry in Malaysia.