Question 1

In conducting Shariah-compliant financial screening for mixed businesses, different jurisdictions have introduced official tolerated levels determined by stipulated ratios. Mention and discuss, by citing examples, instances that could trigger Shariah non-compliance. (Total: 25 Marks)

Question 2

Double Dream Bhd. is a public listed company having business in real estate and supply of various machinery to small and medium enterprise business in Selangor. Double Dream is planning to get its share listed as Shariah Compliance Securities to be traded in Bursa Malaysia. Advise the company on the procedure adopted by the Securities Commission Malaysia to screen the company to identify Shariah-compliant stocks and shares. (Total:25 Marks)

Question 3

"KUALA LUMPUR: Islamic financial institutions in Malaysia need a re-think of risks faced by their organizations, and how to manage them proactively. Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus touched on this in her keynote speech at the Global Islamic Finance Forum 2018 yesterday, stressing that non-traditional risks such as social, political, and environmental risks are threats that cannot be ignored. She said she believes "the true mark of a sustainable financial system ultimately lies in the extent to which the market's and management's view of risks reflect sustainability factors." Research, the governor said, also indicates there are benefits to managing these risks more proactively. She cited an International Finance Corporation survey of banks which showed around 86% of respondents who integrated social and environmental risks in their business had yielded positive results." - Governor Bank Negara,

Based on the article above, answer the following questions:

(a) Do you agree that Islamic financial institutions need to manage the non-traditional risks such as social, political, and environmental risks stated in the article? Justify your answer with examples. (15 marks)

(b) Is risk management is vital in Islamic commercial transactions? Explain and illustrate your answer. (10 marks)

(Total:25 Marks)

Question 4

"TRUST is a valuable commodity, and it permeates everything from a boardroom decision involving a merger and acquisition to the simplest act of making a promise to call your loved ones. Any decision, especially one made by a boardroom, needs to ensure that stakeholder trust is present and that it will not lead to unnecessary and excessive risks. Malaysia is currently facing a trust deficit that is cutting across both public and private sectors a quick glance at the headlines is evidence of that. This trust deficit is due to the abuse of trust and has to be rectified through good corporate governance.

According to the Institute of Corporate Directors Malaysia (ICDM) chairman Tan Sri Zarinah Anwar, trust deficits can be combated through good corporate governance, particularly at the boardroom level. In fact, good governance corporate expectations continue to be the focus of regulators, investors, and other stakeholders, who all demand that companies commit to ethical behavior and act with integrity."

Based on the statement above, answer the following questions.

(a) What is the definition of good corporate governance? Justify with examples from the different sources. (10 marks)

(d) Do corporate governance positions need to have a collective agreement(shurah) in the Islamic Financial Institution to improve public trust? Explain and illustrate your answer. (15 marks)