How often is the Shariah-compliant securities list updated?

The Securities Commission Malaysia's Shariah Advisory Council reviews and releases an updated list of Shariah-compliant securities twice a year, typically in May and November, based on the latest available financial statements.

What happens if a stock I hold becomes non-compliant?

When a previously compliant stock is reclassified as non-compliant, Shariah guidelines generally permit an investor to hold and dispose of it within a reasonable period rather than requiring an immediate sale — the precise treatment depends on the guidance an investor's own Shariah adviser or fund follows, so this isn't a substitute for that advice.

Is the business-activity test or the financial-ratio test more important?

Neither alone is sufficient — a company must pass both. Failing the business-activity benchmark disqualifies a stock regardless of its financial ratios, and vice versa.

Where can I find the official list of Shariah-compliant stocks?

The Securities Commission Malaysia publishes the official list via its Shariah-compliant securities pages, and Bursa Malaysia also references the same Shariah Advisory Council determinations — always check the current official list rather than relying on a third-party summary.

Shariah-Compliant Stock Screening: How Malaysia's SC Methodology Works

This page presents educational screening criteria and worked examples only — not investment advice or a recommendation to buy or sell any security.

What Shariah screening means

Shariah screening is the process of determining whether a listed company's business and finances meet Islamic investment principles. In Malaysia, this isn't left to individual funds to interpret — the Securities Commission Malaysia (SC) sets a single, published methodology, and its Shariah Advisory Council (SAC) applies it to every company listed on Bursa Malaysia. This gives Malaysian investors a centralised, official, government-endorsed list of Shariah-compliant securities, refreshed twice a year — similar in spirit to the regulator-endorsed screening bodies some other Islamic finance markets also maintain.

The two-part SC Malaysia test

The SC's Shariah-compliant securities screening methodology applies two independent tests. A company must pass both to be classified as Shariah-compliant — passing one does not offset failing the other.

1. The business-activity benchmark

The SAC first looks at what the company actually does. Core businesses considered non-compliant include conventional banking and lending, conventional insurance, gambling, liquor and pork-related products, non-halal food and beverages, tobacco, and other activities deemed non-permissible under Shariah principles. If a company's core business falls into one of these categories, it fails at this stage regardless of its financial ratios.

For companies with some exposure to these activities through a subsidiary or minor business line rather than as their core business, the SAC applies additional benchmarks — including a five-sector activity benchmark and a mixed-contribution benchmark — to assess how material that exposure is.

2. The financial-ratio benchmarks

A company that passes the business-activity test is then assessed on two financial ratios, both measured against total assets:

Cash and interest-bearing items over total assets — conventional cash and deposits placed in conventional accounts or instruments.
Interest-bearing debt over total assets — conventional borrowings and other interest-bearing liabilities.

Each ratio must stay below the threshold the SC sets in its published methodology. A company can operate a fully permissible core business and still fail this stage if its conventional cash or debt levels are too high relative to its asset base — which is why the ratio test matters as much as the activity test.

How Bursa Malaysia applies the methodology

The SC's Shariah Advisory Council is the body that makes the compliance determination; Bursa Malaysia references these SAC determinations in its own Shariah screening methodology and in products built around the Shariah-compliant universe, such as the FTSE Bursa Malaysia EMAS Shariah Index. In other words, the classification originates with the SC/SAC — Bursa Malaysia does not run a separate, competing screen.

How to check if a stock is Shariah-compliant

The most reliable way to check a specific stock's status is to consult the current official list published by the Securities Commission Malaysia directly, since the list is updated twice yearly and a stock's status can change between updates. Bursa Malaysia's own Shariah governance materials are a useful second reference point for understanding how the classification is applied at the exchange level. Third-party screeners and platforms can be a convenient starting point, but treat the SC's own published list as the definitive source, particularly before making any decision based on a stock's Shariah status.

A worked example of the ratio test

To illustrate how the financial-ratio benchmarks work mechanically — using illustrative, hypothetical figures rather than any real company's actual reported financials — consider a company with total assets of RM1 billion. If its conventional cash and deposits amount to RM150 million (15% of total assets) and its interest-bearing debt amounts to RM200 million (20% of total assets), both ratios would need to sit below the SC's published thresholds for the company to pass this stage of the test. This is a simplified illustration of the mechanism only — the SC's published methodology is the authoritative source for the actual threshold values and their application.

For screening criteria on other metrics, see the Screeners section, and for the broader process of opening an account to invest on Bursa Malaysia, see the Learn hub.

Sources

This page summarises publicly available regulatory methodology. It is not written or reviewed by a named stockscreener.asia team member — for the authoritative, current version of this methodology, always refer directly to the primary sources below.