Updated List of Securities Approved by SC’s Syariah Advisory Council
The Securities Commission (SC) today released an updated list of securities approved by its Syariah Advisory Council (SAC). The list of approved securities, which are listed on the Bursa Malaysia, will take effect from 30 April 2004 .
Fifty-five securities, newly classified by the SAC as approved securities, have been added to the list (Table 1). Ten securities which were in the previous list have been excluded (Table 2). The List of Securities Approved by the Syariah Advisory Council of the Securities Commission, which contains the names of the 743 approved securities is available on the SC website here.Table 1: Newly-classified approved securities
Table 2: Newly-classified non-approved securities
In classifying these securities, the SAC received input and support from the SC. The SAC has applied a standard criterion in focusing on the activities of the companies listed on the Bursa Malaysia. As such, subject to certain conditions, companies whose activities are not contrary to the Syariah principles will be classified as approved securities.
The approach and criteria in classifying the securities as well as the SAC’s advice on disposal of Syariah non-approved securities are also on the List.
A new feature in this latest list is the outline of the benchmarks used in determining the tolerable level of mixed contributions from permissible and non-permissible activities towards turnover and profit before tax of a company. The benchmarks, established by the SAC based on ijtihad (reasoning from the source of Syariah by qualified Syariah scholars) are:
a. The five-percent benchmark
This benchmark is used to assess the level of mixed contributions from the activities that are clearly prohibited such as riba (interest-based companies like conventional banks), gambling, liquor and pork.
b. The 10-percent benchmark
This benchmark is used to assess the level of mixed contributions from the activities that involve the element of “umum balwa” which is a prohibited element affecting most people and difficult to avoid. An example of such a contribution is the interest income from fixed deposits in conventional banks. This benchmark is also used for tobacco-related activities.
c. The 25-percent benchmark
This benchmark is used to assess the level of mixed contributions from the activities that are generally permissible according to Syariah and have an element of maslahah to the public, but there are other elements that may affect the Syariah status of these activities. Among the activities that belong to this benchmark are hotel and resort operations, share trading, stockbroking and others, as these activities may also involve other activities that are deemed non-permissible according to Syariah.
The latest list also provides an additional table, as below, which lists the names of securities of new companies that have replaced the listing status of previously-listed companies which were classified as Syariah-approved securities. The new companies do not automatically take over the Syariah status accorded by the SAC to the previously-listed companies. Their Syariah status will only be determined after sufficient information which are relevant and material have been obtained from the new companies.
The next updated list will be available in October this year.