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"In terms of corporate governance, particularly financial institutions, it is generally argued that over- or under-regulation should be avoided. On one hand, tightness of regulation could prove to be counterproductive. Therefore, providing a degree of discretion for supervisors regarding how much legality to stipulate could be desirable. On the other hand, regulations need to be enforced by effective supervision, where the objectives must be clear and the mechanisms appropriate. Hence, the degree of regulatory authorities’ independence from governmental influence is important. Taking that in consideration, this research paper aim to present an analytical discussion in regard of the current Sharia Governance System in Islamic Finance and Banking Industry (IFB). In main, it points to the framework evolved by supportive international organizations, namely the IFSB and AAOIFI in their capacity as standard-setter bodies, which thought to be largely respected. In this context, it provides a case-study for particular countries, namely, Bahrain, UAE (Dubai), Kuwait, and Oman, where the trend emerged of having a so-called Higher or Central Sharia Authority regarding IFB. Since the announcements of establishing such bodies was only in recent years (2014-2019), the scope of their work and actual authorities worth examining. Without doubt, the existence of such bodies consist a step forward toward the enhancement of the Sharia-Governance and supervision Framework. On one hand, this study notes that they should assist in the harmonization of the IFB practices at the national level. This assumption is supported when taking in consideration the very recent Governance Standard of AAOIFI-8 about Central Sharia Boards, which was announced in summer of 2017. On the other hand, the study notes that limiting the scope of their work in such manner may not necessarily help in having stronger and more efficient Sharia Governance framework. Despite that, harmonization of Fataws should raise the credibility of the IFB nationwide, such bodies can minimize but cannot eliminate some practical and legal concerns surrounding the Sharia Governance and Supervision issues such as shortage of Sharia-Scholars, conflict of interest, the scope of SSBs supervision, the legal status of their pronouncements. At least, not without assigning real regulatory and supervisory powers to those bodies."
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