Bursa Malaysia enhances Main Market Listing Requirements to facilitate offering of Islamic REITS and ETFs with Waqf feature

Bursa Malaysia Securities Bhd on 27 March 2023, announced enhancements to the Main Market Listing Requirements to facilitate the offering of listed real estate investment trusts (“REITs”) and exchange-traded funds (“ETFs”) with waqf feature (“Waqf Amendments”), with the said amendments taking effect on 3 April 2023. Waqf is an Islamic endowment that is typically linked with social development and public good objectives.
Under the Waqf Amendments, Bursa Malaysia has enhanced the post-listing disclosure framework of Islamic REITs and ETFs to provide transparency on the waqf arrangement. The Waqf Amendments requires, inter alia, an Islamic REIT or ETF to immediately announce any changes to the waqf arrangement disclosed earlier in the prospectus, disclosure document, information memorandum or product highlight sheet, together with reasons for the changes. These changes may include the following: 
  1. changes to the distribution policy such as the amount and percentage of the distributions to be channelled for waqf purposes; 

  2. changes to the waqf initiatives such as the identified projects or sectors to which the waqf distributions will be channelled; and 

  3. changes to the waqf recipient(s), the policies and processes relating to the selection of the waqf recipient(s), or the criteria for selection and the circumstances where the listed issuer will remove, replace or add additional waqf recipient. 
An Islamic REIT or ETF must also provide interim updates on the income distributions channelled for waqf purposes, in the quarterly report of the Islamic REIT or semi-annual report of the Islamic ETF and disclose how investors can obtain more information on the waqf recipient(s) and progress of the waqf initiatives in the annual report.
The Waqf Amendments, which complement the Guidelines on Islamic Capital Market Products and Services issued by the Securities Commission Malaysia on 28 November 20221, is part of the initiative to expand the waqf-featured fund framework (“WQ-FF Framework”) to listed Islamic funds such as REITs and ETFs. The WQ-FF Framework, which was introduced in November 2020, was initially applicable only for unit trust and wholesale funds, to enable the growth of the Islamic social finance segment and to develop waqf.
Bursa Malaysia chief executive officer, Datuk Muhamad Umar Swift said investors would soon have more opportunities to access a diversified suite of Shariah-compliant listed products with the expansion of the WQ-FF framework. He added that “Bursa Malaysia is particularly pleased to be part of the ecosystem providing an effective instrument to support our nation’s socio-economic development” and that “the enhancements will also promote the growth of waqf and sustainable and responsible investment assets, further cementing the exchange’s position as a leading global Islamic finance marketplace”.
Information relating to the Waqf Amendments may be obtained at Bursa Malaysia’s website which can be accessed here.
Alert prepared by Hafidah Aman Hashim (Partner) and Sharifah Shafika Alsagoff (Partner) of the Islamic Finance Practice of Skrine.
1 Our Alert on the Guidelines on Islamic Capital Market Product and Services can be read here.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.