Example of Shariah Compliant Securities become Non Shariah Compliant Securities

As mention above, a benchmark has been set in order to become a Shariah Compliant Securities
and it has to be followed by all the companies. This benchmark has been made in protecting the
sanctity of the Shariah Compliant Securities from prohibited activities such as riba, gharar
(uncertainty) and any other prohibited activities. The list will be updated in May and November
every year by the Shariah Commission (SC) that has been approved by the Shariah Advisory
Council (SAC).

The list in Bursa Malaysia that has been updated at 30 November 2018 represent 76 percent from
902 securities listed and contains 689 Shariah Complaint Securities. In the updated list, 34
securities has been issued from the previous list which is in May 2018 and 33 new securities has
been classified as shariah compliant securities. The list of these securities can be checked at the
official website of SC. All of the list is not permanent throughout the year as they will be checking
the financial statement twice every year.

A few name of securities that has become the shariah compliant securities is Seni Jaya
Corporation, Nova Wellness Group Berhad and many more. A few big names that has been
issued in the shariah compliant securities is Caring Pharmacy Group Bhd, Country Heights
Holdings Bhd and any other 31 securities. As a consumer, we still can still use their services or
consume their food if it is a food company even if the company is listed in non shariah compliant
securities, it is just that the investors can’t invest in the companies because of its clear element in
prohibited business or activities in profit

An example can be seen by the famous café Old Town White Coffee during the November 2016
list when they lose their shariah compliant securities. This is because from the financial statement,
the company fail to follow the benchmark for the profit in conventional activities to be under 33
percent from the overall profit. Therefore, their company can’t be listed as one of the shariah
compliant securities. However, even the company is in the list of non shariah compliant securities,
we as a consumer can still eat at the café because it not compromise the Halal status of the food
as that part falls under Jabatan Kemajuan Islam (JAKIM) and not the SC. In this case, Old Town
White Coffee comeback in November 2017 as a shariah compliant securities.
At the time of the announcement when old town is a non shariah compliant, its shares fall as much
as 7.4%. On Thursday, 24th November 2016, the share Old Town’s shares is RM2.02 but by
Friday it turn out to be only RM1.87. There is RM0.15 difference in a day. By this thing can be
seen that there are quite a number of investors who choose a shariah compliant securities and
how its impact a company’s stocks value.

On that time, a lot of Muslims investors decided to sell the stocks on that time even the value of
their stocks is less than the investment costs. The investors who have the stocks less than the
investment cost on 24th November should have wait first and not selling their stocks and wait until
the break even to avoid loss in profit. Break even time means is when the time of one’s investment
will equal with the investment costs. After they fail in maintaining their shariah compliant status
on that time, their market value of the company’s capital is falling more than 60 million in ringgit.

As a conclusion, it can be seen that how important a company is in maintaining their shariah
compliant status to prevent any loss in profit. By the list that has been made by the Security
Commission shows the impact of the stock’s value can be up and down in an instance because
its change from a shariah compliant to non shariah compliant. Shariah compliant securities is
important especially to the Muslims investors as it’s help us in protecting our self from involving
in forbidden activities and get the blessings of Allah in our life.