The Securities Commission Malaysia (SC) launched a new framework on 12 November to facilitate the offering of Islamic funds with waqf features to enable the growth of the Islamic social finance segment.

The development of waqf was identified as one area of significant potential for social development, greater public good and wealth distribution, in the SC’s Islamic Fund and Wealth Management Blueprint, launched in 2017.

The Waqf-Featured Fund 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.

Waqf is an Islamic endowment instrument typically linked with social development and philanthropic objectives. The SC said the framework, which came into force today, will integrate commercial with social objectives and enable investments for the greater good of society.

The framework is applicable to existing and newly launched unit trust and wholesale funds. It sets out eligible waqf recipients and disclosure requirements in order to promote transparency of investors’ investments and the waqf distribution.

Over the years, the SC has made efforts to facilitate the development of waqf through several initiatives by organising thought leadership platforms, including hosting a dedicated industry roundtable in collaboration with the Oxford Centre for Islamic Studies, introducing the Sustainable and Responsible Investment (SRI) Sukuk framework that incorporates the development of waqf assets as an eligible SRI project, as well as facilitating the offering of the world’s first waqf shares.

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.