17 December 2020

On 12 November 2020, the Securities Commission Malaysia (“SC”) launched a new framework to facilitate the offering of Islamic funds with waqf features to enable the growth of the Islamic social finance segment. An Islamic fund with waqf feature refers to an Islamic fund that allows its unit holders to retain their rights over the units purchased and waqf all or part of the distribution of the income received.

Waqf is an Islamic endowment instrument typically linked with social development and philanthropic objectives. The waqf-featured fund framework (“Framework”) will broaden the range of innovative Islamic capital market products and provide the public access to Islamic funds that allocate whole or part of the fund’s returns towards socially impactful activities via waqf.

The framework, which is applicable to existing and newly-launched unit trust and wholesale funds, sets out, among other things:

  • the primary investment objective of a fund with waqf feature which is to provide income and allows its unit holders to channel all or part of the distribution of the income for waqf purposes;
  • eligible waqf recipients; and
  • disclosure requirements.

Further details and information on the Framework can be found in the revised Guidelines on Unit Trust Funds and the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework.