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Law Harmonisation Committee

The Law Harmonisation Committee Report 2013

The Law Harmonisation Committee has released the Law Harmonisation Committee Report 2013 today. This Report documents the current phase of the Committee’s initiatives since its inception in 2010 where the focus is on overcoming impediments to efficient conduct of Islamic finance which may still exist within certain laws. A total of 9 issues concerning 17 laws were reviewed. After extensive consultation and research, recommended amendments were made on 4 issues which have since been escalated to the relevant government ministries, department and agencies. These resulted in the recommendations to:

  • Introduce provisions in court rules on imposition of late payment charges on judgment debts in Islamic financial cases as permitted by the Shariah Advisory Councils of Bank Negara Malaysia and Securities Commission
  • Allow better access to financing (particularly Islamic financing) for consumers where it involves the charging of reserve lands through recommended amendments to reserve land legislations at all states
  • Facilitate Islamic financing involving landed property through recognition of Islamic finance in the National Land Code 1965
  • Facilitate introduction and usage of innovative and more globally accepted Shariah-compliant product structures for the Islamic money market through appropriate modifications in the Companies Act 1965 that would enable a more efficient conduct of collateralised commodity murabahah transactions.

The first recommendation has been fully implemented whilst the remaining ones are in the process of being implemented.

The Committee has also concluded that 4 other issues do not require any amendments to the existing statutes.  A final issue, involving the implications of wa’ad on the Contracts Act 1950, the Civil Law Act 1956 and the Specific Relief Act 1950 would be resolved in due course as it requires further research on the Shariah aspects, where the findings will be issued at a later date.

In the next phase, the Committee will focus on consequential legal issues that may arise from the issuance of Shariah contracts and operational standards that would be released before the end of the year pursuant to the Islamic Financial Services Act 2013.

See also: The Law Harmonisation Committee Report 2013

Law Harmonisation Committee
Bank Negara Malaysia
7 October 2013