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In this situation, the issue is whether the dividend received by Ali was tainted or not.
It is clear that SAC adopts a two tier quantitative approach in order to determine whether
the securities are Shariah Compliance or not. We aware that the contribution of Shariah noncompliant activities will be computed and compared against the overall revenue and profit before
taxation of a company. The two tier quantitative approach taken by the SAC which is the
Business Activity Benchmarks (BAB) and Financial Ratio Benchmark (FRB). Any investment
being made at any conventional banking must comply with the maximum 5 percent benchmark
as declared by the SAC via Business Activity Benchmark.
In the issue here, the income of the company was only 4 percent which was coming from
the conventional bank. By relying on the regulation by the SAC, the quantum of 4 percent was
still under 5 percent benchmark as stipulated in the Business Activity Benchmark. Thus, the
dividend received by Ali was not tainted
In the issue if the dividend received by Ali was tainted, there are methods needs to
comply in order to clean the dividend. The SAC advises investors who invest based on Shariah
principles to dispose of any Shariah non-compliant securities which they presently hold, within a
month of knowing the status of the securities. Any gain made in the form of capital gain or
dividend received before or after the disposal of the securities has to be channeled to baitulmal
and / or charitable bodies. The investor has a right to retain only the investment cost.
Here, there are two ways of disposing the said securities. Firstly, the investor must
dispose the securities within six months of effective date. If the price is equal or more than the
investment cost, the investor has to liquidate holdings within six months. Dividends received and
capital gain from disposal can be kept by investors. In case if the price is less than the investment
cost, the he or she may hold until price of securities equal or exceeds investment cost. The
dividend received can be used to expedite disposal. It allowed for the investors to subscribe or to
receive any new issue of securities by the company.

In case if the disposal of the non Shariah securities to be made after six months after
effective date, in the issue where the price is higher than the investment cost, the investors must
liquidate immediately. Dividends received prior to and difference between investment cost and
the closing price on the announcement date of the latest list can be kept. Again, excess profit
which was the dividends received after and difference between disposal price and closing price
of announcement date to be channeled to baitulmal and charitable bodies. In the issue where the
price is less than the investment cost, it is allowed hold until the price of securities equal to
investment cost .Dividends received can be used to expedite the disposal. In addition, it is
allowed to subscribe to/receive any new issue of securities by the company e.g. rights, special,
bonus to expedite disposal