Revision of screening for Shariah-compliant status

KUALA LUMPUR: The Shariah Advisory Council (SAC) of the Securities
Commission Malaysia (SC) has announced the adoption of a revised
screening methodology to determine the Shariah-compliant status of
listed companies.
In view of the developments and growing
sophistication of the Islamic finance industry since the introduction
of the current screening methodology in 1995, the SAC has revised the
methodology by adopting a two-tier quantitative approach which applies
the business activity benchmarks and the newly-introduced financial
ratio benchmarks.
The outcome of the revised methodology will be
reflected in the list of Shariah-compliant Securities by the SC's SAC
effective from November 2013.
In addition to the above two-tier
quantitative assessment, the existing qualitative assessment will
continue to be applicable while the release of the list of
Shariah-compliant securities will remain twice a year.
“The
revision to the screening methodology will further facilitate the
orderly development of the Islamic equity market and fund management
industry at both domestic and international levels, in line with the
growth strategies outlined under the Capital Market Masterplan 2,” said
Zainal Izlan Zainal Abidin, who is executive director of Islamic
Capital Market of the SC.