The 301st Shariah Advisory Council of the Securities Commission Malaysia Meeting (7 May 2026)

CLASSIFICATION OF RENTAL INCOME FROM TENANTS OPERATING CINEMA BUSINESS ACTIVITIES

The classification of rental income derived from tenants operating cinema businesses activities becomes a key consideration in the Shariah screening review of Public Listed Companies (PLCs) that are principally engaged in property investment activities. Although the property investment activities may be Shariah compliant, the leasing of premises to cinema operators necessitates an assessment of the Shariah status of rental income generated therefrom. In particular, due consideration is accorded to the extent of exposure to Shariah non-compliant elements associated with cinema business activities in determining the appropriate classification of such rental income for Shariah screening purposes.

In this regard, the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC) deliberated on the Shariah classification of such rental income. In its deliberation, the SAC considered the indirect nature of the PLCs’ involvement, whereby the income is generated from leasing arrangements rather than from the ownership, management or operation of cinema businesses.

This document belongs to Securities Commission Malaysia (SC). Full access to the original source is available here: https://www.sc.com.my/development/icm