The Shariah Advisory Council of Bank Negara Malaysia (the SAC) 177th Meeting

The SAC of Bank Negara Malaysia in its 177th meeting on 20th June 2017 deliberated on the following:


Concept and Mechanism that Give Similar Effect of Regulated Short-Selling (RSS) using Malaysian Government Investment Issue (MGII)

The SAC ruled that the concept and mechanism that give similar effect of RSS using MGII is permissible, subject to the following;

(a) It is structured based on bilateral binding promise (muwa`adah mulzimah) concept to execute the sale contract of MGII in the future;
(b) In the event that the promisor failed to fulfil the promise, the promisee has a right to claim only actual loss suffered; and
(c) The delivery of MGII and its counter-value shall take place on the agreed contract date.

Write-Off Mechanism for the Additional Tier 1 (AT1) and Tier 2 (T2) Sukuk

The SAC ruled that it is permissible for the sukuk investors under AT1 and T2 to undertake to waive/write-off their rights or interests in the underlying sukuk irrespective of whether the sukuk is structured as debt-based or equity-based.

This statement is to inform the ruling of 177th SAC meeting and its related discussions. The effective date of these rulings is subject to the effective date of revised Policy Document Regulated Short-Selling of Securities in the Wholesale Money Market; and revised Policy Document Capital Adequacy Framework for Islamic Banks (Capital Components) respectively which are expected to be issued on July 2017