The Securities & Exchange Commission of Pakistan (SECP) has directed the listed companies of Islamic Index of Pakistan Stock Exchange (PSX) to declare the status of their revenue levels and operational mode as per the Sharia-complaint regulations.
All companies listed on PSX-KMI All Share Islamic Index and KMI 30 Index are hereby strongly encouraged to comply with the requirements of the Fourth Schedule, Part I, Clause VI, Sub-clause 10 of the Companies Act, 2017 and ensure disclosure of mandatory information in the annual and half-yearly accounts as this compliance is required under the law, according to the notification issued by SECP.
Moreover, all listed companies at PSX are also encouraged to provide such disclosures on a voluntary basis, the notification further stated.
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The disclosure of required information shall assist in enabling the correct identification of companies that meet the Sharia screening criteria for their inclusion in Islamic indices. This will also help analysts and investors to come up with uniform decisions regarding Sharia compliance status as per the indices’ respective screening criteria.
Companies Act defines a Sharia-compliant company as a company that is conducting its business according to the principles of Sharia. Further, section 451 of the Companies Act and related Regulations outline the statutory requirements for a Sharia-compliant company.
1. Loans/advances obtained as per Islamic mode
2. Sharia-compliant bank deposits/bank balances
3. Profit earned from Sharia-compliant bank deposits/bank balances
4. Revenue earned from a Sharia business segment
5. Gain/loss or dividend earned from compliant Sharia-compliant investments
6. Exchange gain earned from actual currency
7. Mark up paid on Islamic mode of financing
8. Relationship with Sharia-compliant banks
9. Profits earned or interest paid on any conventional loan or advance
All listed companies and their subsidiaries shall follow the International Financial Reporting Standards in regard to financial statements as are notified for the purpose in the official Gazette by the Commission, under section 225 of the Companies Act, 2017 (Act).
In cases where a company has made export sales, the following disclosures are required to be made in respect of outstanding trade debts.
(i) Amount of export sales made in each foreign jurisdiction along with break up into confirmed LC, contract or other significant categories;
(ii) Name of company or undertaking in case of related party;
(iii) Name of defaulting parties, relationship if any, and the default amount; and
(iv) Brief description of any legal action taken against the defaulting parties
