What to Do When Your Stock Loses Shariah-Compliant Status in Malaysia

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This is one of the great features of Bursa Malaysia, especially for Muslim investors, as Bursa Malaysia has the Shariah Advisory Council of the Securities Commission (MPS).
The MPS panel convenes twice a year, in MAY and NOVEMBER, to audit the Shariah compliance status of all companies listed on Bursa Malaysia.
The MPS SC panel members are highly distinguished individuals, including Datuk Dr. Mohd Daud Bakar (Executive Chairman of Amanie Group), Associate Professor Dr. Aznan Hasan (Associate Professor at IIUM Institute of Islamic Banking and Finance (IIiBF) International Islamic University Malaysia), Dr. Zaharuddin Abdul Rahman (Chief Executive Officer of Elzar Shariah Solution Sdn. Bhd.) and others.
Reference at Members of the Shariah Advisory Council
So as investors, we need not worry about the halal aspect as there is a dedicated body that monitors this every year.

In this case, any profit generated after the new Shariah status takes effect must be channelled to baitulmal or charitable organisations.
On 30 NOVEMBER 2016, STOCK A became non-Shariah compliant. The stock value at that time was RM2,500. Therefore, the RM1,500 profit can be kept and does not need to be cleansed because the profit was generated during the period when the stock held SHARIAH-COMPLIANT status.
However, if you did not sell on 30 NOVEMBER 2016, and instead sold STOCK A on 31 DECEMBER 2016.
The holding value at that time was RM2,600. Therefore, you may only take RM2,500. The RM100 must be disposed of because that RM100 profit was generated when STOCK A had already become NON-SHARIAH COMPLIANT since 30 NOVEMBER 2016.
In other words, you only need to know the date when the Shariah status changed to non-Shariah compliant.
If the invested capital has not yet generated any profit, the stock may still be held until it returns to the original capital value (break even).

For example, you bought STOCK B on 10 JANUARY 2014 at a value of RM1,000.
On 30 NOVEMBER 2014, STOCK B became non-Shariah compliant. The stock value at that time was RM800. Therefore, the stock can still be HELD until it reaches the break-even point of RM1,000.
Then, for example, on 31 JANUARY 2015, STOCK B reached a value of RM1,000. You may then sell and take all your holdings because it equals your original capital, even though this stock was declared NON-SHARIAH COMPLIANT on 30 NOVEMBER 2014.
If a Shariah-compliant stock you purchased changes its status to non-Shariah compliant, understand the 2 scenarios explained above. Refer to or contact your respective state religious office directly for the purpose of cleansing or disposing of profits that are non-Shariah compliant.
If you open an Islamic-type CDS account, you need not worry about accidentally purchasing non-Shariah compliant stocks because the Islamic account type automatically has an auto reject feature that prevents the purchase of non-Shariah compliant stocks.
You should refer to the Shariah Advisory Council (MPS) decision. If the stock is at a loss, you may hold it until break even and then sell. If it is in profit, the profit earned after the announcement must be disposed of through the state religious body.
Shariah-compliant stocks are typically marked with a circular symbol next to the counter name on your trading platform. If there is no such symbol, the stock is not Shariah-compliant.
Yes, Islamic-type CDS accounts have an auto reject function that automatically prevents you from purchasing stocks that are not Shariah-compliant.
The Shariah Advisory Council of the Securities Commission typically convenes twice a year, in May and November, to update the list of Shariah-compliant stocks on Bursa Malaysia.
Successful stock investment begins with knowledge and the right account. Do not wait any longer — take action now.
Open a CDS Account: Open an Mplus CDS account today to start investing in Shariah-compliant stocks.
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