Sri Lanka-based Innovest Investments has introduced a Shari’ah-compliant investment plan that comprises of only Shari’ah-compliant stocks traded on the Colombo Stock Exchange (CSE).
With this scheme in operation, investors who prefer to avoid interest or Riba can now limit their investments to shares from a basket of Shari’ah-compliant companies.
Former Chairman of the Colombo Stock Exchange (CSE) and Finance Commission Ajit de S Jayaratne, Business Leader Dian Gomes and Oxford-educated Wealth Manager Arosha Gunasekera are the founders of Innovest Investment Management. This move is once again in keeping with the core principle of Innovest to serve all clients with equal respect.
Innovest will manage client portfolios for a stipulated duration with all investment decisions taken in consultation with the Investment Committee. Hisham Shariff, the Head of Investments at Innovest Investments, will be the coordinator of the Shari’ah Compliant Investment Plan.
The basic precept in this investment plan is that one can buy and sell shares subject to the condition that the company is undertaking a Halal business. If the major business of any company is not against Shari’ah, its shares can be purchased: provided the part of income representing interest is given to charity.
Among other things, preference shares with a fixed percentage of dividends, do not fulfil the principles of Shari’ah. The basic principle of distribution of profit is that no gain can be had without undertaking to bear the risk of loss.
Secondary market trading in shares that represent the underlying assets is permissible only as long as real assets and services constitute the majority of the total assets. If the capital is in liquid form, the shares may be sold only at face value, otherwise it would mean that money is being exchanged.