Updated List of Approved Securities by SC's Syariah Advisory Council

Kuala Lumpur, 23 December 1997

The Syariah Advisory Council (SAC) of the Securities Commission (SC) has approved an updated list of securities listed on the Kuala Lumpur Stock Exchange (KLSE) which have been classified as approved securities. The list will take effect from today. The list of 476 securities approved is as in the Appendix.

In classifying these securities as approved securities, the SAC applied a standard criteria, focusing on the core activities of the companies listed on the KLSE. Hence, companies whose activities are not contrary to the Syariah principles will be classified as approved securities. Securities will be excluded from the list of approved securities based on the following criteria :

i. operation is based on riba such as commercial and merchant banks and financial institutions;
ii. operation involves gambling;
iii. activities which involve the manufacture and/or sale of haram products such as liquor, non-halal meats and pork; and
iv. operation which has the element of gharar (uncertainty) such as conventional insurance business.
As for companies whose activities comprise both permissible and non-permissible elements, the SAC applied several additional criteria, i.e.
v. the core activities of the company must be activities which are not against the syariah as outlined in the four criteria above. Furthermore the haram element must be very small compared to the core activities;
vi. public perception or the image of the company must be good; and
vii. the core activities of the company have importance and maslahah to the Muslim Ummah and the country, and the haram element is very small and involves matters such as `umum balwa, `uruf and the rights of the non-Muslim community which are accepted by Islam.

In classifying these securities, the SAC received input and support from the SC. The SC gathered information about the companies from various sources such as company annual financial reports, responses to a survey form which was issued to obtain detailed information and through inquiries made to the respective company's management. SC through the SAC, will continue to monitor the activities of all companies listed on the KLSE from time to time to determine their status.

As a guide to investors, the SAC would like to advise investors on when they should dispose securities which have not been approved. If at the time the announcement is made, the value of the securities held exceeds the value when it was purchased, the investor who holds such non-approved securities must liquidate it immediately. On the other hand, if the value of the securities at the time of the announcement is lower than the value at the time it was purchased by the investor, the investor can hold on to those securities until the initial capital investment is realised. This is based on the taubat (repent) guidelines and on the acquisition of initial capital from the riba-based assets as outlined by Allah s.w.t. in the Holy Quran.

All queries should be forwarded to the Corporate Affairs Unit of SC.

SECURITIES COMMISSION MALAYSIA