CSE Shariah Screen Report, By Guardian Investment House (GIH)

About GIH:

Guardian Investment House (Pvt.) Limited or GIH is a boutique Islamic investment management and advisory company based in Colombo, Sri Lanka.

The company specializes in structuring and managing shariah complaint traditional and alternative investments on a fiduciary basis for individuals and corporate ; as well as engage in financial advisory activities for corporations, governments and/or government related entities (GRE’s) on investments, divestments, project evaluation and feasibility, project finance structuring and cross-border fund raising.

GIH has a dedicated in-house research division to assist GIH on its business activities, by providing top-of-the line market intelligence.

Introduction:

Guardian Investment House (GIH) has carried out an extensive screening of the Colombo Stock Exchange (CSE) with a view to identifying shares that are Shariah compliant based on the methodology approved by the unified Shariah scholars of Islamic banks in the UAE. The screening process consists of two stages with stage one being the “Qualitative Screening” and stage two “Quantitative Screening”.

Qualitative Screening

Will NOT invest in equities and securities issued by companies whose income from activities relating to any of the following sectors:

• Conventional banking or insurance or any other interest related activity;
• The manufacture or distribution of alcohol products
• The manufacture or distribution of arms;
• Gaming or gambling;
• The production, packaging, processing, or any other activity relating to pork or pork products and other non halal meat;
• Companies engaged in any other activities not permissible under Shariáh (for example: Hotels & Resorts)
• Equities or other securities issued by companies whose activities relate in any way to the production or
• distribution of pornographic material

QUANTITATIVE SCREENING

Will NOT invest in shares of listed companies with the following financial ratios:

• Interest bearing debts > 30% of Total assets;
• Income from interest bearing or non-Shariáh compliant activities > 5% of their total income;
• Tangible assets < 30% of total asset base. Thus, intangible assets such as cash balances (including bank account balances), receivables, and marketable securities > 70% of the company’s total asset base;
• Interest bearing bank account balances >30% of Total assets

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