15. PUBLIC DISCLOSURE REQUIREMENTS
Guidance
(i) This Chapter implements the Pillar III of the Basel III framework and the corresponding IFSB Standard 22 on disclosures to promote transparency and market discipline for Islamic Banks. Pillar III is aimed at facilitating market discipline which is considered as one of the effective mechanisms to ensure safety and soundness of banks. This principle has been emphasised by the IFSB by publishing an exclusive standard on disclosure requirements which forms the basis for the requirements set out in this chapter, which include requirements for Islamic Banks to make periodic disclosures of relevant and material information about their business activities and data on risk exposures assumed by them.
(ii) The detailed requirements specifying the methodologies, parameters, and guidance in respect of the disclosure requirements for an Islamic Bank are provided in Appendix 4 of the IBB Module. It is suggested that this Chapter be read in conjunction with Appendix 4 of the IBB Module, to facilitate understanding of the regulatory requirements and compliance with them.
15.1. Disclosure requirement
An Islamic Bank must disclose all relevant data, both qualitative and quantitative data, to completely fulfil all the tables and templates set out in Appendix 4 of IBB Module.
15.2. Application to a Financial Group
(1) An Islamic Bank, which is a member of a Financial Group, according to Chapter 11, must ensure that the detailed disclosures specified in Appendix 4 of the IBB Module are made on a consolidated basis, at the level of the Financial Group.
(2) An Islamic Bank which is a Subsidiary of a regulated bank or Financial Institution or another Islamic Bank, which is already subject to equivalent public disclosure requirements, does not need to comply with the requirements in this Chapter to the extent that it meets those equivalent public disclosure requirements.
15.3. Disclosure policy
(1) An Islamic Bank must implement and maintain a written disclosure policy that:
(a) sets out the Islamic Bank’s approach for determining which of the disclosures set out in Appendix 4 of the IBB Module it needs to make;
(b) details the processes and procedures and its internal controls in relation to such disclosure details the medium for disclosure that most appropriately meets the purposes of this Chapter; and
(c) is approved by the Governing Body of the Islamic Bank.
(2) An Islamic Bank must ensure that appropriate verification, whether internal or external, is performed in relation to any disclosure, and take all reasonable steps to ensure its accuracy and timeliness.
(3) To the extent that any required disclosure is substantially similar to a disclosure required of the Islamic Bank under the International Financial Reporting Standards, a disclosure under such standards must be made to meet the requirement for disclosure under this Chapter.
15.4. Disclosure frequency, locations and omissions
(1) The disclosures set out in this Chapter must be made by the Islamic Bank at least once a year, other than disclosures of CET1 Capital, T1 Capital and T2 Capital, deductions from capital resources, Liquidity Coverage Ratio and Leverage Ratios which must be made on a quarterly basis.
(2) Reporting deadlines must be in accordance with quarterly and annual reporting obligations under Chapter 3. The required disclosures must be published concurrently with the periodic financial statements of the Islamic Bank.
(3) In cases where an Islamic Bank does not publish an financial report or statements in the period for which it is required to fulfil a disclosure requirement set out in this rules, the disclosure must then be published as soon as practicable. However, the time lag must not exceed more than 3 months from the end of the reporting period for the specific regulatory requirement.
(4) An Islamic Bank must, subject to (2), make these disclosures either in its annual report or periodic financial statements.
(5) An Islamic Bank may disclose the items marked as quantitative in Appendix 4 of the IBB Module in a medium or location other than its annual report or periodic financial statements, provided that:
(a) it has prior approval of the AFSA to do so;
(b) the annual report or periodic financial statements contain clear references to the location of such disclosures; and
(c) such disclosures are readily accessible by the market.
(6) An Islamic Bank may omit certain disclosures if the omitted item is:
(a) not material, in accordance with the concept of materiality under the International Financial Reporting Standards;
(b) proprietary in nature, and the disclosure of the relevant information to the public would undermine the Islamic Bank’s competitive position or render the Islamic Bank’s investments in products and systems less valuable; or
(c) confidential in nature, and the disclosure of the relevant information would violate or jeopardise confidentiality agreements with Clients or counterparties.
(7) Where in reliance upon (5)(b) or (c) above, an Islamic Bank omits an item that is marked as a quantitative disclosure in Appendix 4 of the IBB Module, it must disclose general qualitative information about the subject matter of that particular requirement, together with the reasons for the omission.