Technology-based securities crowdfunding has become a crucial innovation in supporting small and medium enterprises’ financing. In Indonesia, this mechanism is regulated by the Financial Services Authority (OJK), which also provides specific guidelines to ensure compliance with Sharia principles. This article will explain how Islamic securities crowdfunding conducts Sharia stock screening based on the applicable regulations.
Mechanism of Sharia Stock Screening
According to the Financial Services Authority Circular Letter (SEOJK) No. 3/SEOJK.04/2022, the mechanism and procedures for determining equity securities as Sharia securities in technology-based crowdfunding services are detailed. This procedure is an implementation of OJK Regulation No. 57/POJK.04/2020, which has been amended by OJK Regulation No. 16/POJK.04/2021. The goal is to provide a strong legal basis regarding the determination of equity securities as Sharia securities in technology-based crowdfunding services and to provide guidelines related to the mechanism and procedure for the determination of equity securities as Sharia securities.
Determination of Sharia Securities
Organizers conducting business activities based on Sharia principles are responsible for determining equity securities as Sharia securities. These organizers can be Sharia Organizers or Organizers with Sharia Crowdfunding Units. Sharia securities in crowdfunding services include equity securities issued by Sharia issuers or issuers who do not declare their activities and types of business and business management methods based on Sharia principles but meet the criteria for Sharia securities.
Sharia Organizers are responsible for ensuring that the issuers they bring to their crowdfunding platform conduct business in accordance with Sharia principles. This includes not engaging in businesses that contradict Islamic teachings such as riba (interest), gambling, or the production of haram goods like alcohol and pork products. Organizers must also ensure that issuers do not engage in transactions that contradict Sharia principles in the capital market.
Also Read: History of Crowdfunding from the Beginning to the 19th Century
Sharia Securities Criteria
To determine equity securities as Sharia securities, the securities must meet several strict criteria. The first criterion is that the issuer does not engage in activities and types of businesses that contradict Sharia principles. This means that the issuer must run its business in accordance with Islamic teachings and avoid all types of prohibited businesses.
The second criteria is that the issuer does not engage in transactions that violate Sharia principles in the capital market. This means that the issuer must avoid transactions involving riba, gharar (uncertainty), and maisir (gambling). The third criterion is that the issuer must meet certain financial ratios in accordance with Sharia principles. These may include low debt-to-equity ratios below 45% and low non-halal income ratios below 10%.
Determination Procedure
The procedure for determining equity securities as Sharia securities includes several stages. First, organizers must add provisions in the crowdfunding service agreement between the organizer and the issuer, including the issuer’s approval, the issuer’s commitment to maintaining compliance with Sharia criteria, and a resolution mechanism if the criteria are no longer met. Second, the determination of equity securities as Sharia securities is conducted at each issuance and periodically at least once a year. Organizers must ensure that the equity securities offered through their platform consistently meet Sharia criteria over time.
the Organizers also require to notify the Financial Services Authority accompanied by supporting documents when determining equity securities as Sharia securities in crowdfunding services. This is crucial to ensure transparency and accountability in the Sharia securities determination process.
Also Read: Islamic Crowdfunding-Based Agrarian Financing: Concept, Akad, and Benefits
Change in Islamic Securities Status
If the stock no longer meet Sharia criteria, the issuer must adjust business activities and/or financial structure to meet Sharia criteria within 90 days. During this period, the issuer must identify and address all issues causing non-compliance with Sharia principles. If the issuer fails to make the necessary adjustments within the specified time, they must repurchase the securities from investors or other parties who purchased the securities from investors within 150 days after the announcement that the securities no longer meet Sharia criteria.
Additionally, organizers must ensure that the issuer has fulfilled all obligations to all parties involved in the crowdfunding service before terminating the crowdfunding service agreement. Organizers must also announce on their website no later than two working days after learning that the equity securities no longer meet Sharia criteria.
Sharia stock screening in technology-based securities crowdfunding is strictly regulated by the OJK to ensure that all issued equity securities comply with Sharia principles. This process includes setting Sharia criteria, determination procedures, and handling changes in Sharia securities status, providing assurance to investors that their investments adhere to Sharia principles. Thus, Islamic securities crowdfunding not only offers an alternative financing option for small and medium enterprises but also ensures that these investments align with Islamic values.
Also Read:What are the differences between Securities Crowdfunding (SCF) and Stock Exchanges?
References
Financial Services Authority. (2022). *Surat Edaran Otoritas Jasa Keuangan Nomor 3/SEOJK.04/2022 tentang Mekanisme dan Prosedur Penetapan Efek Bersifat Ekuitas Sebagai Efek Syariah Dalam Layanan Urun Dana Berbasis Teknologi Informasi*. Retrieved from https://www.ojk.go.id
Financial Services Authority. (2020). *Peraturan Otoritas Jasa Keuangan Nomor 57/POJK.04/2020 tentang Penawaran Efek melalui Layanan Urun Dana Berbasis Teknologi Informasi*. Retrieved from https://www.ojk.go.id
Financial Services Authority. (2021). *Peraturan Otoritas Jasa Keuangan Nomor 16/POJK.04/2021 tentang Perubahan atas Peraturan Otoritas Jasa Keuangan Nomor 57/POJK.04/2020*. Retrieved from https://www.ojk.go.id
