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What Shariah concept are microLEAP's Islamic Investment Notes based on?

microLEAP bases its Islamic Investment Notes on the concept of Commodity Murabahah (via Tawarruq arrangement). Tawarruq involves a purchase of assets or commodities on a deferred payment basis by way of Murabahah as the financing mode.

On top of that, microLEAP also utilises Wakalah (agency) contract as microLEAP acts as an agent (wakil) which intermediates issuer and investors in this peer-to-peer platform.

What is Tawarruq and what is Commodity Murabahah?

Murabahah refers to a sale and purchase of an asset where the acquisition cost and the mark-up are disclosed to the purchaser;

Tawarruq consists of two sale and purchase contracts. The first involves the sale of an asset by a seller to a purchaser on a deferred basis. Subsequently, the purchaser of the first sale will sell the same asset to a third party on a cash and spot basis.

What businesses are considered Shariah compliant / non compliant?

The following is the listing of Shariah non-compliant Business Activities issued by the Shariah and Fatwa Supervisory Committee of Masryef Management House, acting in its capacity as the Shariah Adviser to microLEAP. This listing is subject to revision and update from time to time. The list serves as a guide to microLEAP as the P2P platform provider on the types of business activities that microLEAP should not make available under its Islamic P2P platform. This list is only applicable to businesses and not individuals.

  1. Alcohol
  2. Gambling
  3. Pornography
  4. Tobacco and dangerous drugs
  5. Entertainment related companies – those proven to engage specifically in Shariah non-compliant activities, such as karaoke lounges serving alcohol, film production houses producing mainly illicit movies, cinemas that typically screen entertainment related movies.
  6. Pork and its by-products
  7. Food items that are prohibited under the teaching of Islam such as frogs, snakes, crocodiles
  8. Shariah non-compliant massage parlours that allow treatment from opposite gender
  9. Prostitution
  10. Interest-based lending, including credit sales with interest charges
  11. Conventional insurance and unit trust agencies
  12. Hotel – in particular those that offer alcohol, non-halal foods or any other non-compliant activities
  13. Production and distribution of idols, statues, and materials and place for worshipping other than Allah.
  14. For restaurants, a halal certificate from JAKIM is preferred but not required, so long the restaurant do not offer Shariah non-compliant foods and drinks, such as pork and liquor

Anything outside the non-compliant list will generally fall within Shariah compliant activities.

microLEAP’s Shariah Advisors will have final say on what is considered Shariah on microLEAP’s platform.

Who can invest in our Islamic Investment Notes?

Anyone who is a registered P2P Investor on microLEAP’s platform may invest in our Islamic Investment Notes. As long as you want to invest in businesses and industries that are both ethical and follow the principles of Shariah, please give our Islamic Investment Notes a try! 

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