A. Introduction

1. This appendix to the IBB Module sets out the rules, guidance and norms required to fulfil the regulatory requirements in respect of the regulatory requirements relating to public disclosure requirements set out in Chapter 15 of the IBB Module. These rules, guidance and norms supplement the regulatory requirements set out in the Rules in Chapter 15 of IBB Module. These elements convey the supervisory expectations of the AFSA regarding fulfilment of the public disclosure requirements for an Islamic Bank. The AFSA will use these rules, and key elements specified here to assess compliance with Chapter 15 of IBB Module.

2. The purpose of the requirements in this chapter is to ensure that minimum public disclosures are made available to market participants to assist them in forming an opinion on the risk profile and capital adequacy of an Islamic Bank.

B. Disclosure Policy

3. An Islamic Bank has discretion to determine the form of the disclosures required, and may choose to use graphical and other representations where appropriate.

4. The formal disclosure policy setting out internal controls and procedures for disclosure of information required to fulfill the rules in Chapter 15 of IBB, must be approved by the Governing Body of the Islamic Bank. The key elements of the disclosure policy must be disclosed along with the annual regulatory disclosures.

5. Information provided by an Islamic Bank to comply with the rules in Chapter 15 of IBB Module must be, at a minimum, subject to the same level rigour and diligence applied in the internal audit, review and internal control processes for the external financial reporting by the Islamic Bank (i.e. the level of assurance must be the same as for information provided within the management discussion and analysis part of the audited annual report).

6. An Islamic Bank is expected to provide narrative commentaries including but not limited to, commentaries to explain any significant changes occurring in quantitative disclosures between successive reporting periods.

7. An Islamic Bank must make the disclosures required to comply with the rules in Chapter 14 of IBB Module must be published in a stand-alone document that is readily accessible for market participants and any investor. An Islamic Bank may append the disclosures document with its annual audited report & financial statements. In such cases, the disclosures must be appended to the annual report as a distinct section or module which is easily identifiable to potential readers and investors.

8. An Islamic Bank making these disclosures must maintain records of the disclosures made by it and make those archives available, at least for a retention period specified by the AFSA in its GEN rules.

9. An Islamic Bank must disclose information that is material in the sense that its omission or misstatement could influence an investor or a market participant relying on that information for the purpose of making legitimate economic or risk assessments, and/or decisions regarding compliance with Sharī’ah requirements. A qualitative judgment (use test) based on the needs of the investor or that of the market participant should be used as the appropriate benchmark of materiality. The Islamic Bank should determine the level of materiality threshold used in deciding its disclosures and the same must be disclosed as part of the formal disclosure policy referred in paragraph 2 above.

C. Signposting

10. An Islamic Bank may make the required disclosures in a dedicated document separate from the documents in which they are mandated by Rule 15.3 (3) to make the disclosures the tables required by this Chapter, provided the criteria specified in paragraph 11 are met. In such cases, the Islamic Bank must signpost clearly in the mandated periodic statements, as to where the separate disclosure requirements can be accessed. This signposting must include:

(a) the title and number of the disclosure requirement;

(b) the full name of the separate document in which the disclosure requirement has been published;

(c) a web link, where relevant; and

(d) the page and paragraph number of the separate document where the disclosure requirements can be located.

11. The information disclosures required and prescribed tables may be disclosed by an Islamic Bank in a separate dedicated document other than that required by the rules in Chapter 15 of IBB Module, provided the document is clearly signposted and all of the following criteria are met:

(a) the information contained in the signposted document should be equivalent in terms of presentation and content to that required in the template and capable of enabling users to make meaningful comparisons with information disclosed;

(b) the information contained in the signposted document is based on the same scope of consolidation as the one used in the disclosure requirement; and

(c) the disclosure in the signposted document is mandatory.

12. An Islamic Bank can only make use of signposting to another document if the level of assurance on the reliability of data in the separate document are equivalent to, or greater than, the internal assurance level required for regulatory disclosure document required by the rules in Chapter 15 of IBB Module.

D. Detailed disclosure requirements

13. An Islamic Bank must, in order to fulfil its disclosure requirement specified in Chapter 15 of the IBB Module, complete all the tables and templates specified in IFSB Standard 22 on disclosures to promote transparency and market discipline for Islamic Banks, except the tables and templates in Section 9 of the standard on consumer protection.