Securities Commission (“SC”) Malaysia has introduced the Shariah Screening Assessment Toolkit for the Unlisted Micro, Small and Medium Enterprises (“MSMEs”)(“the Toolkit”) as guidance in screening the Shariah status of the MSMEs in the unlisted market. SC released the Toolkit on 5 August 2021. This is part of SC’s ongoing efforts to enhance the ecosystem for Shariah-compliant fundraising activities through equity crowdfunding (“ECF”) and peer-to-peer financing (“P2P financing”).
The intention of releasing the Toolkit is to benefit the ECF and P2P financing platform operators, Shariah advisers, as well as any interested parties. Additionally, the Toolkit includes a series of assessment questions based on the Shariah screening methodology for the MSMEs and endorsed by the Shariah Advisory Council (“SAC”) of SC.
Shariah Screening Assessment Toolkit Questions
The Toolkit has a total of 6 questions, divided into 2 sections: Business Activity Benchmarks and Financial Ratio Benchmarks:
- Is the company involved in Shariah-compliant and Shariah non-compliant business/activities?
- Contribution from Shariah non-compliant activities exceed the Benchmarks?
- The company place cash in the conventional account(s) and/or instruments?
- The total cash placed in the conventional account(s) and/or instruments(s) exceed the benchmark?
- Does the company have interest-bearing debt?
- Does the total interest-bearing debt exceed the benchmark?
The answers to the questions above are based on available financial information and other supporting details. For example, the breakdown of turnover and profit before tax (“PBT”) of the businesses/activities.
Note that the assessment result does not require endorsement from the SAC of SC. Also, the Toolkit does not take into account the qualitative aspect of the Shariah screening methodology. Instead it is based on quantitative assessment.
To perform the assessment, you can download the full released document of the Toolkit from SC’s website. Watch this space for more updates on Shariah screening assessment.