Waqf-Featured Fund Framework

In broadening the range of Islamic capital market products for Islamic social and impact investing, the SC issued a waqf-featured fund framework. This initiative facilitates the offering of unit trust funds and wholesale funds with waqf feature that integrates commercial and social objectives.

Introduction

Over a decade, development of waqf (Islamic endowment) via Islamic capital market has been one of key focus areas for the SC. Waqf-related initiatives include intellectual discourse/ engagements with stakeholders, book publication, introduction of the SRI Sukuk Framework that incorporates development of waqf assets as an eligible SRI project, and facilitating the public offering of the world’s first waqf shares.

The framework, introduced in November 2020, facilitates the offering of Islamic unit trusts and Islamic wholesale funds with a specific aim to channel a whole or a portion of income generated for waqf purposes.

The framework consists of additional requirements that have to be complied with by Islamic unit trust funds and wholesale funds. It provides guidance to the fund managers on investment objective, distribution policy, eligible waqf recipients, disclosure of relevant information in the offering documents, websites and periodic reports.

The requirements for the framework are included in the new chapter under the Guidelines on Unit Trust Funds and Guidelines on Unlisted Capital Market Products under the Lodge and Launch (LOLA) Framework.

Key Highlights of Requirements in the Framework

Key highlights of requirements in the framework are as follows:

Investment objective of the framework – To provide income and allow unit holders to channel all or part of the income distribution received for waqf purposes.
Specify eligible waqf recipients – This will be limited to all State Islamic Religious Councils (SIRCs) or organisation authorised by the SIRCs.
Disclosure in offering documents:

The investment objective which states that the fund is aimed to enable unit holders to channel all or part of the distribution for waqf purposes.
The percentage of distribution to be channelled for waqf purposes.
The name of the waqf recipient and waqf initiatives as well as disclosing how the investors can obtain more information on the waqf recipient and the progress of the waqf initiatives; and
Policies and processes relating to the selection of the waqf recipient and waqf initiatives and the circumstances where the fund will replace the waqf recipient, or add additional waqf recipient.

Disclosure in fund reports – The interim and annual report must disclose total amount distributed to waqf recipient, and where applicable, further breakdown of payment to each waqf recipient, and unit holders.
Disclosure on management company or fund management company’s website – The management company or fund management company must publish on its website information pertaining to details of the waqf recipient and link to the waqf recipient’s website.

Details and information on the Waqf-Featured Fund Framework can be found at the SC website in the revised Guidelines on Unit Trust Funds and the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework.

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