Can anyone also be benefited from the Participation Exemption if that person owns Islamic financial instruments?
In accordance with Shariah principles, a financial instrument may also avail itself of the Participation Exemption, provided that it qualifies as equity under the accounting standards promulgated by the Accounting and Auditing Organization for Islamic Financial Institutions. In cases where ownership interests involve Islamic financial instruments and the conditions for exemption are satisfied, income derived from these instruments shall be exempt pursuant to the Participation Exemption.
The pertinent accounting standards governing Islamic financial instruments are those promulgated by the Accounting and Auditing Organization for Islamic Financial Institutions, an autonomous international non-profit corporate entity dedicated to formulating accounting, auditing, governance, ethics, and Shariah standards applicable to Islamic financial institutions.
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