The implications of public company requirements under Islamic Financial Services Act (IFSA) 2013 on Takaful Operators in Malaysia
by Muhammad Ikhbal Abdul Rahman; Rusni Hassan; Nurun Nadiah Mohamad
Middle East J. of Management (MEJM), Vol. 4, No. 4, 2017

Abstract: The recently introduced Islamic Financial Services Act 2013 (IFSA) requires all Takaful Operators in Malaysia to be incorporated as a public company in accordance with the provisions of Companies Act 1965. In contrast, under the repealed Takaful Act 1984, operators were allowed to assume as a private company as their choice of form of establishment. This article outlines the potential effects of such requirement to Takaful Operators in the country. The study finds such a requirement has both its merits and demerits. Despite the adverse risk of additional operational costs, being a public company, the Takaful Operator has the advantage of easier and comparatively cheaper access to capital over the long run. Moreover, such requirement would further enhance the corporate standing of the Takaful Operators as crucial financial information is available in the public domain. This would eventually lead to an increase in confidence amongst the operators' investors and participants.

Online publication date: Mon, 16-Oct-2017

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