By FARA AISYAH / Pic By MUHD AMIN NAHARUL
A TOTAL of 686 securities have been included in an updated list of Shariah-compliant counters that was released by Securities Commission Malaysia (SC) yesterday as approved by its Shariah Advisory Council (SAC). The updated list takes effect on Nov 24, 2017, and the Shariah-compliant securities constitute 76% of the total 902 listed securities on Bursa Malaysia as at Nov 20, 2017.
The list includes 33 newly classified Shariah-compliant securities and excludes 22 from the previous list issued in May 2017.
The newly classified Shariah-compliant securities are Advancecon Holdings Bhd, AirAsia X Bhd, Asia Bioenergy Technologies Bhd, Bina Puri Holdings Bhd, George Kent (M) Bhd, HSS Engineers Bhd, Inta Bina Group Bhd, Kejuruteraan Asastera Bhd, Lotte Chemical Titan Holding Bhd, Luxchem Corp Bhd, Old- Town Bhd and Tan Chong Motor Holdings Bhd among others.
Meanwhile, the 22 newly classified Shariah non-compliant securities are AE Multi Holdings Bhd, BCM Alliance Bhd, Bertam Alliance Bhd, BTM Resources Bhd, Careplus Group Bhd, Dancomech Holdings Bhd, DiGi.Com Bhd, Eden Inc Bhd, Eversendai Corp Bhd, Global Oriental Bhd, Gunung Capital Bhd, HCK Capital Group Bhd, Heng Huat Resources Group Bhd, Jiankun International Bhd, Kim Loong Resources Bhd, Malaysian Bulk Carriers Bhd, PUC Bhd, SEG International Bhd, Sona Petroleum Bhd, Techfast Holdings Bhd, Tiong Nam Logistics Holdings Bhd and Wintoni Group Bhd.
“These refer to securities which were earlier classified as Shariah-compliant, but due to certain factors, such as changes in the companies’ business operations and financial positions, are subsequently reclassified as Shariah non-compliant,” SC said in a statement yesterday.
The SAC also advises investors who invest based on Shariah principles to dispose of any Shariah non-compliant securities which they presently hold, within a month of knowing the status of the securities.
Any gain made in the form of capital gain or dividend received, before or after the disposal of the securities, has to be channelled to baitulmal and/or charitable bodies.
The investor has a right to retain only the investment cost, which may include brokerage cost or other related transaction cost.
This guidance also applies to Islamic funds such as Islamic unit trust funds, Islamic wholesale funds and others.
Should the disposal of the Shariah non-compliant securities causes losses to the fund, the fund management company must bear the losses by ensuring the loss portion be restored and returned to the fund.
However, investors are allowed to hold their investments in the Shariah non-compliant securities if the market price of the said securities is below the investment cost.
It is also permissible for the investors to keep the dividends received during the holding period until such time when the total amount of dividends received and the market value of the Shariah non-compliant securities held equal the investment cost.
The SAC adopts a two-tier quantitative approach, which applies the business activity benchmarks and the financial ratio benchmarks, in determining the Shariah status of the listed securities.
Hence, the securities will be classified as Shariah-compliant if their business activities and financial ratios are within these benchmarks.
The full list is updated twice a year, based on the companies’ latest annual audited financial statements.
The next updated list will be made available in May 2018, based on the review of the audited financial statements released up to March 31, 2018.