Oman’s New Shariah Governance Framework for Investment Funds

Oman’s new Executive Regulation of the Securities Law contains an important development for Shariah-compliant collective investment funds. Articles 179–186 set out how Shariah oversight should be organised, what the Shariah committee is expected to do and how its independence must be protected.

The provisions are brief, but their effect is wider than the appointment of a Shariah committee. They make Shariah compliance an ongoing governance responsibility for both the fund board and the investment manager.

The regulatory context

The Securities Law was promulgated by Royal Decree 46/2022. The Financial Services Authority subsequently issued Decision E/11/2026 promulgating its Executive Regulation. The Decision was published in Official Gazette No. 1658 on 26 July 2026 and came into force the following day.

The new Regulation repealed the 2009 Executive Regulation of the Capital Market Law and the 2018 regulation governing real estate investment funds, while preserving the existing provisions governing crowdfunding platforms.

Within this broader framework, Articles 179–186 deal specifically with the Shariah supervision of collective investment funds operating in accordance with Islamic Shariah.

Shariah compliance is an ongoing obligation

Article 179 requires the fund board and investment manager to ensure that the fund’s investments and activities comply with Islamic Shariah at all times.

This goes beyond approving the fund at launch or screening its initial investments. Shariah compliance must continue throughout the fund’s life: when investments are selected, while they are held, as transactions are carried out and when the fund reports to investors.

In practice, this requires a working process for pre-investment review, ongoing monitoring, escalation of possible non-compliance and periodic reporting. A Shariah approval at the establishment stage, by itself, would not meet the wider purpose of the framework.

Three ways to organise Shariah oversight

The Regulation gives funds flexibility by allowing three oversight models:

• Shariah supervisory committee established specifically for the fund;

• the existing Shariah supervisory committee of the investment manager; or

• a specialised Shariah supervisory institution, or another institution with its own Shariah committee.

The model can therefore reflect the size and nature of the fund. A large or complex fund may need a dedicated committee, while another fund may find an external arrangement more proportionate.

Committee composition and independence

If the fund establishes its own Shariah supervisory committee, it must have an odd number of at least three competent members. The members must be independent of the investment manager, and none may also sit on the fund’s board.

A majority of the members is required for a valid meeting, and decisions are made by majority vote. The committee may invite other people to attend where their expertise is helpful, but they do not have voting rights.

The Regulation also addresses how the committee operates. Members must act with integrity, fairness, due care and diligence. The term of membership is five years. Meetings may take place in person or through modern technology, and resolutions may be approved by circulation if the required documents are provided to all members and each member’s position is properly recorded.

Where the same individual serves on committees for several funds managed by one investment manager, that person must exercise independent judgement for each fund.

Oversight covers more than investments

Article 181 gives the Shariah committee a broad mandate. It must advise on investment matters and verify that the fund is managed in accordance with Islamic Shariah. Its review also covers the fund constitution, prospectus, structure, investments and other operational matters.

The committee must review the investment manager’s or custodian’s report on the fund’s Shariah compliance and investment transactions. It must then prepare its own report stating whether the fund operated in accordance with Islamic Shariah during the relevant financial period. This report is included in the fund’s annual or interim report.

Shariah oversight therefore extends across the full fund structure. It includes the documents on which the fund is built, the assets in which it invests, the way it operates and the information ultimately disclosed to investors.

Independence must work in practice

Article 186 prevents the fund board, investment manager and other service providers from interfering with the committee’s work. They must give the committee access to the relevant records, information and documents, and provide the assistance it needs.

This is a practical point, not merely a governance statement. A committee cannot give a reliable opinion if it receives incomplete information or is consulted only after key decisions have already been made. Effective independence depends on timely access, clear reporting lines and the ability to raise concerns without management influence.

Closing view

Articles 179–186 provide a clearer institutional basis for the Shariah governance of collective investment funds in Oman. They define who is responsible, how oversight may be arranged, what the committee must review and the independence and access it needs to perform its role properly.

For fund sponsors and managers, the immediate task is to translate these requirements into arrangements that are proportionate, properly documented and effective in practice.

Ihkam Advisors supports fund sponsors, boards and investment managers with Shariah governance frameworks, fund structuring, document review, investment-screening processes and periodic Shariah compliance arrangements.

References

• Securities Law promulgated by Royal Decree 46/2022

• Financial Services Authority Decision E/11/2026 issuing the Executive Regulation of the Securities Law, particularly Articles 179–186

• Official legislation record — Ministry of Justice and Legal Affairs

Disclaimer: This article is intended for general information and does not constitute legal advice, a Shariah opinion or advice on the circumstances of a particular fund or transaction.