KUALA LUMPUR, Aug 28 (Reuters) - Malaysia’s stock market regulator announced long-awaited guidelines for socially responsible sukuk, or Islamic bonds, aimed at helping firms raise money for projects in areas such as renewable energy and public hospitals.
The initiative, known as “SRI sukuk”, was first announced by Prime Minister Najib Razak in his annual budget speech last October
This could expand Malaysia’s sukuk marketplace, the world’s largest, by attracting Western firms and investors familiar with the concept of socially responsible investing but cautious about sukuk.
The Securities Commission on Thursday listed an extra set of rules for SRI sukuk, in addition to the existing guidelines on all sukuk.
SRI sukuk may be used to finance projects that conserve energy, use renewable energy such as wind and solar, build public hospitals, schools or affordable housing, and develop awqaf properties.
Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims in the form of land, cash or other valuables.
The issuer of an SRI sukuk is required to hire an independent party to evaluate the project and disclose this information within its prospectus, if the sukuk is open to retail investors.
Issuers also will have to publish an annual report to detail the amount of funds that have been used on the project. (Reporting By Al-Zaquan Amer Hamzah; editing by Jane Baird)