Islamic Finance – Islamic Capital Finance - Implementing shariah governance: Islamic mutual funds2/21/2023 Islamic Finance – Islamic Capital Finance - Implementing shariah governance: Islamic mutual funds
Transfer of unapproved shares A Shari'ah-compliant stock may be held in the portfolio of an Islamic mutual fund even though it is no longer on the list of "authorised" stocks. The mutual fund's Shari'ah compliance officer, who is an essential component of the Shari'ah governance structure, is likely to have seen this. The Islamic mutual fund's SSB will then receive the information from the compliance officer and direct the fund management to sell the shares. If the current sale price is equivalent to or higher than the original share purchase price, as is frequently done in different jurisdictions, the disposition should take place right away. If the current market value of the shares is less than the initial cost of investment, the SSB may provide the fund management, in accordance with the relevant Shari'ah regulations, a reasonable amount of time to dispose of the shares. Any earnings that arise between the discovery and the disposal should be given to approved charity in order to avoid profiting from non-Halal income.
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