InvestmentIslamic Finance

How to buy halal stocks – stock screening method

IFG has been inundated with requests to shed some light on how exactly Muslims can go about analysing whether a particular share is halal to invest in – this article will enable you to do that. We can’t promise that this will be an easy read, but we are keen to empower you with the tools you need to do help you ascertain whether or not a company is sharia compliant or not.

We understand that many of you will also want to go a bit further than this article, and have a guided course in which we explain with video tutorials all of the steps below. We also delve into the intricacies of what to do when it comes to grey areas.

If you want to go it alone, we’ve laid out everything for you below.

The Criteria

There are broadly five key criteria that a company must pass in order to be considered a sharia-compliant halal investment. These are screening criteria according to Mufti Taqi Usmani, which must be met in order for a company’s shares to be a halal Islamic investment.

  1. The Business

The first and perhaps most obvious is simply the business of the investee company. Your average Muslim, or even non-Muslim in today’s wonderfully diverse environment, can tell you that it is haram to invest in a company whose main business is alcohol, gambling, pork, night club activities, etc. These are things that we can unequivocally say are haram to invest in without the need for detailed analysis. So the main business of the company cannot violate the Sharia, which rules out many obvious choices like alcohol immediately.

There is a slightly greyer area of companies in the financial services sector such as banks and insurers or even, say, stock brokers themselves. These are probably best judged on a case-by-case basis rather than having a blanket policy, but the safest option with grey areas is to avoid.

Additionally, the capital planning of the company must have been executed already; meaning the assets are existent and business processes are ongoing. Put simply, this means that the plans to buy machinery, factories have been carried out; so you are not simply investing in the ‘idea’ of these assets, they are now tangible and the business has started running.

So if you can put a tick in this section, you carry on to the second criterion.

  1. Income from non-sharia compliant investments

What about (as it is in very many cases), when the overall business is halal, but the company also has haram elements involved in the running of it? This can be because they have an element of interest-based income or they are borrowing on interest, for example. This is known as income from non-Sharia compliant investments.

The rule of thumb is that the income from these Haram investments cannot exceed 5% of the gross revenue of the company. So there are two figures to check here: 1) income from non-sharia compliant investments; 2) gross revenue.

The investor has to check the annual reports to determine what percentage of haram income was received and consequently give away that same percentage of his profits to charity. And the final condition is that the investor must voice his opposition to these Haram activities, either written or orally, perhaps at the annual shareholder meeting.

Side Note:
The process we just mentioned of an investor giving away a portion of his profits to charity is known as purification. It is important to define what we mean by ‘profits’. In this scenario, we are describing it as both dividends that the stock yields, and also capital gain-which is the price of the share increasing. The reason I highlight it is that there is some difference of opinion among scholars as to whether purification is done on solely on dividends or also on capital gain.

The case for purification on capital gain is because some contend that the market price of the share reflects an element of the benefit from haram activities of a company. However, the fact that we even bought the shares shows that the majority of the company assets are halal which means that the share price is based on the large proportion of halal assets and not on the small ignorable quantity of assets from haram income. Thus purification on capital gain is arguably not needed. However, the safest option is just to purify both dividends and your capital gain on a sale.

  1. Interest-bearing debt to total assets

The third criteria is interest-bearing debt to total assets of the company. The total interest bearing debt should not exceed 33% of total assets. This metric is quite simple to remember, but what is interesting about this one is that extremely successful (non-Muslim) investors also apply this criteria to their stock screens. In fact they used exactly the same percentage of 33% acceptable debt, as opined here by Mufti Taqi. The likes of Benjamin Graham, widely considered as one of the greatest investors of the 20th century, emphasised this metric very strongly in his famous book ‘The Intelligent Investor’. The same principles regarding debt financing were emulated by his student, the famous Warren Buffett, who is still alive today.

The specific amount of interest-bearing debt might not always be made explicitly clear on the accounts. Sometimes, for instance, ‘borrowings’ as listed on the accounts might be interest-free loans from directors. It is therefore vital to check the supplemental notes to the accounts which will break things down further and tell you specifically.

Let’s look at an example from a company that’s been in the news a lot over the last week or so. This is from their last annual accounts:

sharia screen halal investmen

You can see firstly that their borrowings stood at £688.7m (£96.7m+ £592m). You can also see that it points you in the direction of ’19’ which stands for ‘note 19’ (of the accounts). ‘Current liabilities’ means debts due in the next 12 months and non-current liabilities are those due beyond that time frame.

Once you scroll all the way down to note 19, you will find the breakdown of borrowings as follows:

We can see from the above that all of their borrowings are interest-bearing. Since we not sure whether the finance lease was structured in a sharia-compliant manner, we will add this to interest-bearing borrowings too. We are also assuming the overdraft carries an interest charge.

Carillion’s total assets are in the accounts as £4.43bn. Thus, we calculate the percentage as follows: (£688.7m/£4.43bn)*100 = 15.5%.

Since this figure is less than 33%, Carillion is fine on this front.

n.b. this article is only correct at the time of publication – of course numbers will change over time.

  1. Illiquid assets to total assets ratio

Moving onto the illiquid assets to total assets ratio; any asset that can’t be converted into cash very quickly (close to prevailing market prices), is said to be illiquid. A common example is real estate, so a company might have office blocks or factories etc. In the circumstance where they are undercapitalised, a company might have to resort to a fire sale of illiquid assets, where they are sold well below market prices. This example helps us demonstrate how illiquid assets are very hard to sell quickly, but also close to the market price.

There are varying opinions as to what percentage illiquid assets should constitute of total assets. You might be wondering why this is an issue for sharia compliance: well if a company has purely liquid assets, let’s say just £5m of cash in the bank and no other assets, it can Islamically only be sold at par value. Here, Mufti Taqi is of the opinion that the illiquid assets should be at least 20% of total assets.

Illiquid assets are usually found on the balance sheet of the accounts and include things like goodwill, property, plant and equipment, intangible assets, and basically anything that you think fits the definition of illiquid according to the above. To get the percentage, simply add up the figures for illiquid assets, divide by total assets, and multiply by 100. You want it to be 20% or more.

  1. Net liquid assets v market capitalisation

The final criteria is Net Liquid Assets Vs. Market Capitalisation.

This criteria is one that is rarely actually relevant but we cover here for completeness.

Before I describe what the criteria is, let me illustrate the logic behind the criteria. Firstly, Net Liquid Assets = Total Assets – (Tangible Fixed Assets + Inventory) – Liabilities. To keep things simple, let’s think of net liquid assets as cash. In Shariah, it is not permissible to exchange money for less or more money (as we’ve seen in criterion 4). For example it is not allowed that I purchase a box for 50 pounds, when it contains 70 pounds inside. This is essentially what is happening if the value of the net liquid assets exceeds the market capitalisation of a company, where you end up buying a share which actually represents more money than what you actually paid to buy that share.

So the criteria given by Mufti Taqi, is that the value of the net liquid assets per share should not exceed the market price per share, or to avoid an extra calculation, net liquid assets should not exceed the market capitalisation. It is possible that this could happen, for example with a holding company which has purely liquid assets. But for the most part, the companies we’ll be covering in the FTSE 100 shouldn’t have this problem.

Practical Application

Now, as promised, let us apply these criteria to a company.

Rio Tinto is a multinational mining company. I am not going to go into detail about the company itself, but briefly, this company is a leading global mining and metals group that focuses on finding, mining, processing and marketing the Earth’s mineral resources. If you want some practical experience, you can open the accounts yourself here.

Step 1 – The business

We can quickly deduce that the main business of this company doesn’t go against the Shariah, as mining and processing natural resources are acceptable activities.

Step 2 – income from non-sharia-compliant investments

Let’s look at the annual report 2016 to check income from non-shariah-compliant investments. We can see in the income statement (p.110 of the annual report) that finance items (anything interest related) adds up to $83m, which as a proportion of the $33.781bn of revenues is 0.246% – much less than the 5% requirement of income from interest.

Step 3 – interest-bearing debt to total assets ratio

Turning to the balance sheet (p.113), we want to look at total debt of the company. For Rio Tinto, the total assets figure is $89.263bn.

Most annual reports have a current liabilities and long-term liabilities section. We consider both, as the short-term liabilities of the previous year give us a guide for short term liabilities this year. In this case Rio Tinto has $18.392bn in interest-bearing debt and $89.263bn in total assets which gives a debt/asset percentage of 20.6%% which is less than 33% so we are still fine.

So far, so good.

Step 4 – Illiquid assets to total assets ratio

Still looking at the balance sheet we can see that illiquid assets are valued at $66.165bn (by adding up property, plant, equipment, goodwill, intangible assets and inventories). They make up 74.1% of total assets ($89.263bn), which is greater than 20% so we give another criteria the green light.

Step 5 – net liquid assets v market capitalisation

Finally we consider net liquid assets which are $15.086bn. In this scenario, we consider ‘liquid’ to be current assets, as these are almost certain to be converted into cash in the short term with no loss in value. We need to remember that liquidity is on scale, with things like cash being very liquid and real estate as fairly illiquid. This $15.086bn is below the market capitalisation of $57.866bn.

Thus, all conditions are met, and it is permissible to invest in this company.

Summarised this looks like:

Activity: Mining, processing, marketing
Income from haram sources (must be <5%): 0.246%
Illiquid assets to total assets (must be >20%): 69.4%
Net liquid assets to market cap: 15.086bn to 57.89bn therefore fine
Zakatable assets as a percentage of total assets 21.159bn of zakatable assets out of total assets 89.263bn is 23.7% .

Zakatable assets is not something we have discussed. A quick example to show how we actually use the 23.7% figure. Say your shares are worth $100. Then $23.70 are zakatable, so you simply work out 2.5% of $23.70, and give that to charity.

But how to actually work out zakatable business assets?

Firstly, we need to make a distinction between your intentions when buying shares. Are you buying them as a long-term investment for dividends or are you buying them with the sole intention of reselling them for a higher price in the short term?

In the latter case, it is generally accepted that your entire shareholding is subject to 2.5% Zakat.

This is because your shares themselves are assets you want to sell for profit. So if you bought £1000 of shares and the market value at the time your zakat is due is £1250, you will pay zakat on the £1250 even if you have not sold. So here, you would pay 2.5% of £1250 which is £31.25.

In the former case, i.e. you are purchasing shares as a long term investment, you can actually go ahead and work out zakatable business assets, to lower the amount of Zakat paid each year.

These assets include cash, inventories, strong debts (money owed to the business which is likely to be repaid) and raw materials.

There is no need to overly worry about calculating this figure exactly, and in Rio Tinto’s case I simply went to the balance sheet, added all current assets and some of the non-current assets. The non-current assets which I picked were: inventories, deferred tax assets, trade and other receivables, tax recoverable, other financial assets and assets of disposal groups held for sale. This is how I arrived at the figure of $21.159bn. To summarise: current assets + some non-current assets + assets of disposal groups held for sale.

Slightly confusing? Not to worry; if you don’t want to get bogged down with balance sheet calculations, it is also permissible to simply take 25% of the market value of your share holdings, and pay 2.5% on that. To illustrate what I mean, say you have $100 worth of shares, you can take $25 to be zakatable. So you need to work out 2.5% of $25 and give that to charity.

Investment Musings

So, would I invest? My decision on this company would probably be to buy, as I see capital gains in the long term, maybe 1-2 years. Rio Tinto had a sudden turn in fortune in 2015, with the rout in the commodity markets, which drove down prices due to an oversupply. This was partly because of irrational fears that China was consuming most of the world’s resources. It is important to remember that the bad results were largely due to macroeconomic results, and not due to company inefficiencies and operational mishaps. The company did quite well as compared to some of its competitors, in pulling through. It massively reduced capital expenditure and has managed to release a positive net income in the 2016 half year statement. Although dividend payments have been cut, in the long term there is a good chance that Rio Tinto will manage to recover and post higher net income. In one way, the recent crisis has been good as it has allowed the company to focus even more on efficiency and offers good future growth prospects. Downturns can often weed out the most efficient companies, which makes them attractive propositions on the other side.

These are just my own brief musings without a more detailed look, and I’ll leave it to you to do your own due diligence before/if you invest. This should not be taken as advice in any way.

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Author: Mustafa Khan

In our quest to advance knowledge on sharia screening of stocks, we’re giving you full free access to our 4-part course.

The course will cover:

  1. Detailed explanation purification of stocks you own and co-mingled assets (e.g. funds within a pension);
  2. The lowdown on halal stock screening and how you can start looking for halal companies today; and
  3. A live analysis of some companies to assess their sharia compliance.

We’ve created this exclusive content just for this 4-part course – it isn’t available anywhere else. You’ll get the content e-mailed to you directly over the next couple of weeks.

To get it for free today, just hit the button below.

In our quest to advance knowledge on sharia screening of stocks, we’re giving you full free access to our 4-part course.

The course will cover:

  1. Detailed explanation purification of stocks you own and co-mingled assets (e.g. funds within a pension);
  2. The lowdown on halal stock screening and how you can start looking for halal companies today; and
  3. A live analysis of some companies to assess their sharia compliance.

We’ve created this exclusive content just for this 4-part course – it isn’t available anywhere else. You’ll get the content e-mailed to you directly over the next couple of weeks.

To get it for free today, just click here.

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57 Comments. Leave new

  • Good day

    How do i know that this is legitimate.

  • Not being funny or anything, but I can not see anywhere on here where you have quoted anything from the Quran or from any Hadith. If Im wrong lads then please point it out.

    • Please refer to the underlying fatwa from Mufti Taqi upon which this article is based. The core argument scholars use with regards to stocks and shares is that a degree of impermissibility in a business is tolerable due to certain overarching Shari’ jurisprudential principles such as “necessity”, “the majority of a thing is that which is ruled upon”. I agree with you that this is not your classical Qur’an and hadith approach – but one must also remember that limited liability companies, shares, and stock markets didn’t exist at the time either.

      There are scholars who do hold the view that all investment in stocks is impermissible, and others who say investment in stocks that deal in interest is impermissible. You must do your own research and thinking and come to your own decision. We merely facilitate with content like this article.

  • السلام عليكم
    In step 2 – you added “anything interest related ” which resulted in 83M .Which accounts did you exactly add up.In page 113 I can see only 3 accounts having the word “interest”, should i add them all or is there other accounts I should add that they don’t have the word “interest in them”. What I did is that i added up “Net gains/(losses) on disposal of interests in businesses” , “Profit/(loss) relating to interests in undeveloped projects” and “attributable to non-controlling interests (net earnings/(loss))” which resulted in 515M + 44M + 159M = 718M
    In step 5 – how did you calculate 15.086bn ?
    Total assets = 89263 bn
    Illiquid assets (you calculated it above in step 4) = 66165bn
    Then , shouldn’t liquid assets = total assets – illiquid assets = 23098bn ?
    Obviously my accounting knowledge is small at the moment so kindly forgive me and جزاكم الله خيرا

  • Is there a way to see the market capitalization from these statements ?
    I weren’t able to find it anywhere in the PDF, so i looked it up in and I found it.
    so do companies put it on their statements or I have to look it up seperatly ?

  • which is better to see , the annual data for the company or the quarterly data ?
    I will be using to check manually but is there a stock screener where it would scans only the halal stocks from other stocks in the NYSE and NASDAQ
    sorry for not posting all my questions in one box but the questions came directly after i posted .My bad

  • Are there any stock screener services that filter sharia compliant shares?

  • As salamu alaikum,

    My question is regarding the condition you have mentioned that the investor must voice his opposition to Haram activities, either written or orally, perhaps at the annual shareholder meeting.

    Say a company was based overseas e.g. in the USA or even domestically, how would a small-time investor practically voice his opposition to things the company do such as taking out loans on interest even though it appears highly unlikely they will listen and take necessary action?

    Thank you

    • Ibrahim Khan
      July 20, 2018 3:43 pm

      I agree it is practically not that realistic, or going to have much of an effort. But one can still easily email the investor relations teams in these companies quite easily.

  • Salaam, I also had a similar questions to brother Mahmoud. How did you calculate the $83M in interest? Could you maybe break it down a little so it’ll be easier for us to know what to look at when we research other companies on our own. JazakAllah Khair for all the effort!

    • Mohsin Patel
      July 23, 2019 10:45 am

      Ws – the notes section in the accounts helps a lot when breaking down liabilities. Anything which is noted as being interest-bearing should be added in.

  • Salam,
    What about those companies that have made use of some impermissible sources of finance ( as seen in their finance items) but have zero revenue. They do have cash from other halal sources, such as grants and the selling of common shares, however. The other criteria, seems to be within the above defined limits.
    What would be the verdict on such companies, would it be halal to invest in them?
    For an example please consult the 10Q of Sernova corporation.

    • to the extent that a company is leveraged beyond what is acceptable, it would not be permissible, be it revenue generating or not.

      • Salam,
        Please could you elaborate on your statement, ‘ be it revenue generating or not.’
        As one of the criteria states that, ‘….the income from these Haram investments cannot exceed 5% of the gross revenue of the company.’
        If the company has no income in the form of sales but has cash from the selling of shares, grants and loans but it meets the requirements of the criteria in the above article ( with the exception that the company cannot meet the 5% rule ( the income fromHaram investments cannot exceed 5% of the gross revenue of the company) because it has no revenue but it meets the 33% rule), would it be permissible to invest in such a company?
        The company i am referring to us Sernova corporation.
        Jazak-Allah Khair

        • debt is a form of financing – so the company will be paying for that. This can’t be more than 33% of its total assets.

          halal/haram sources of revenue are a separate matter. These are the sources of income the company will receive. These should be capped at 5% of the total revenue.

  • Assalamalaikum Dear Brothers/Sisters – could someone with understanding of islamic finance please inform me as to whether the percentage of the interest bearing debt is calculated in terms of a percentage of TOTAL ASSETS or as a percentage of TOTAL EQUITY? Some websites state total assets whereas others show it as a percentage of total equity.

  • Assalamo Alaikum,
    This was helpful but I can’t really apply the criteria on other companies. Can you please include the breakdown in Step 2 and Step 4?
    For example: the total doesn’t total to $83m after adding all the interest related values. That would help us alot as I see other people in the comments wondering the same

    • please feel free to get in touch with us via our contact us page if you’d like us to assist you further with your specific calculations.

  • To me, the below statement doesn’t make any sense.
    “if a company has purely liquid assets, let’s say just £5m of cash in the bank and no other assets, it can Islamically only be sold at par value.”

    Of course, if that’s what Islam says, then I have to go with it, but is there more to this?

    For example, this means a shopkeeper who leases his shop, or ebay trader (or many other businesses) can only sell their business at the value of their stock and cash as they don’t have any illiquid (i.e. fixed) assets. i.e no goodwill.

    Is a possible resolution that one is allowed to include the off balance sheet goodwill value? Which for stocks and shares would I think be the Market Cap less the Net Assets.

    I checked out this company today, looked brilliant. Had no illiquid assets, which actually makes it look even better as it doesn’t actually need any. But I can’t buy the company because it fails the illiquid assets test!

    • Salaam Umar,

      In your example, why would the shopkeeper not have any goodwill? In that sort of example, a purchaser is typically not just paying for the stock, they’re paying for taking over the business as it is as a going concern. That comes with a bunch of illiquid stuff – in this case intangible goodwill: reputation, location, etc. Similar with an eBay trader – if you are buying his stock, then you can only buy the value of their stock. But if you are buying their business as a going concern, you are buying the intangible assets that come with it – primarily trading history (feedback) in this case.

      If you are looking at listed companies, it’s extremely rare that there are no illiquid assets. Intellectual property, for example, is a key illiquid asset for tech companies. For companies on the manufacturing side, plant & machinery is usually the largest illiquid asset.

      In short, if a company genuinely has no illiquid assets, they’ll basically just be a shell company with some cash in it – and that stuff can only be sold at par.

      • Wasalaam Mohsin…bit of a delayed response from me…not sure why!

        Anyway, a shopkeeper of Ebay trader would not have goodwill on their books. In general, a founder of a business does not have goodwill. When another company buys that company, goodwill is created in the consolidated accounts, and is the difference between the purchase price and the Net Asset Value of the company bought.

        So I go back to my question – I couldn’t buy a shop off someone for more than the Net Asset Value under Islamic law according to how I’ve understood it. Which can’t be right.

  • income from non-sharia-compliant investments.
    I did send in a similar question a few days ago but it has not appeared, and i will therefore try again, insha’Allah.

    In regards to R&D companies, many have no income but do hold some money from non-sharia-compliant areas( maybe interest on money in the bank), in such cases what do we do if we find that the company has no income, no debt but some money from interest? Are we allowed to invest in the company even though we cannot apply ‘Step 2 – income from non-sharia-compliant investments’
    Jazak-Allah khair.

    • If the company has negligible interest (i.e. not actively seeking to make money that way) I would be comfortable with it. Your investment is primarily being used for halal purposes i.e. R&D.

  • Assalam oalaikum,

    As mentioned in point 5 of the article, the net liquid assets should be less than the market cap of the company.

    What if the share price dropped after the last earnings report was posted and we have no way of knowing the current assets of the company after the price drop. Like in the example of Air Canada the net liquid assets reported on 31st of dec 2019 were around 7 Billion. The share price at that time was around $48 putting the market cap at $12 Billion. The net liquid assets were below market cap.
    But today the share price has dropped to around $12 bringing the market cap to 3.2 billion approx. there is no way for us to know what their current liquid asset standing is. With the current market situation it could be much lower.
    My question is, does the stock still qualify as shariah compliant in light of point number 5?

    JazakAllah and thank you for your time

    • Ibrahim Khan
      April 20, 2020 9:38 am

      Good question. I think the best approach is (a) rely on public data available (i.e. annual reports); and (b) where these reports are likely out of date, best to rely on your judgement and avoid if there is doubt.

  • Is oil sector contain on halal shares

  • Salaam.
    For condition 2 – Is the ratio
    a. ‘non-sharia compliant income/revenue’, or
    b. ‘non-sharia compliant income/total income’

    In addition, should we query gross income or net income?

    • It’s non-sharia compliant revenue/total assets (different parts of the balance sheet) (should be <33%) and a separate calculation for non-sharia compliant revenue/total revenue (should be 5% or less).

      This is for revenue, i.e. gross income. Net income is usually referred to as profit.

  • Masha’Allah brothers…. a comprehensive and articulate article with a real effort to engage with comments. These things take time!!

    However, comparison with one of your service partners (Wahed) highlights a less stringent set of criteria for financial screening.. and i wonder if you wouldnt mind briefly explaining the differences

    Screening means that:
    1) Conventional Debt/Total Market Capitalization must be less than 33 percent
    2) Cash +Interest Bearing Deposits/Total Market Capitalization must be less than 33 percent
    3) Total Interest/Revenue must be less than 2 percent.

  • Ihtishaam Arif
    April 24, 2020 7:53 pm

    Salaam, Hope you’re well

    Just got off the phone with Ibrahim. Jazak for the call. However I need further clarification to one of the questions I asked as I was struggling to hear you due to the signal unfortunately.

    Can you please advise further on the net liquid assets figure. For the cash receivables criteria, CIMA’s Islamic and Banking certificate course uses current assets/total assets which needs to be 80% which will not be eligible according to what CIMA has written, however you lot use current assets/market capt and if I were to use this I would be eligible to invest in it so I am unsure what to do and what not to do.


  • Hafiz Rasul
    May 27, 2020 7:19 pm

    Assalamualaikum. Just want to ask, regarding the debt/total asset. The Shariah Compliant should based on quarter or annual report? Because the ratio will change based on the debt and asset figure on the annual vs the other 3 quarterly report.

  • Hafiz Rasul
    May 28, 2020 5:37 am

    Assalamualaikum,. Just want to ask regarding the Total Debt/Total Asset ratio. Both parameters were found on the balance sheet & those figures vary on quarterly report. My question is, as a muslim, do we need to screen any particular stock on every quarterly basis to identify the is there any fluctuating shariah compliant of just by annually (based on the annual report).


  • Danish Shaikh
    August 25, 2020 12:44 pm

    Assalamu alaikum
    All parameters should be considered on quarterly basis/results or annual reports?

    Please answer. Jazakallahu Khair.

  • Salaam,

    Can you please elaborate the calculations done in step 2 to calculate income from non sharia investment? How did you arrive at the $83M value?

    Jazaak Allah Khair

  • Asalaamualaikum
    Please help, when i click on the link for Riotinto accounts for practical experience it says ‘this page could not be found’

  • Salam thank you for the article and worked examples – I had one query which I hope you can address. I have been reading extensively about screening for sharia compliant stocks and have come across only >50% or >33% (according to another opinion in the hanafi school) for illiquid/liquid assets but no where have I encountered 20%. Please could you enlighten me/provide a reference (I have Mufti Taqis & His sons book by Meezan on this topic if that helps). JazaakAllahukhair and keep up the fantastic work.

    November 9, 2020 9:15 pm


    I’m willing to invest in some companies. I have in mind companies like Tesla, Apple or Salesforce which are apparently ok. Could anyone confirm from experience?.

    Another question, is there a list of Halal Companies, for instance, in Fortune 500? That would be really useful..

    Thank you in advance

  • As-salaamu alaykum,

    Can I get a reference/source for the opinions attributed to Mufti Taqi as I want to know how the specific percentage values were chosen?

  • Mohammed Hoque
    January 28, 2021 4:29 pm


    As business tend to be dynamic at times, if a business meets the halal criteria now but in the future fails to meet the halal criteria (e.g non sharia complaint income exceeds 5%) would one be required to sell the stock/shares at the point of finding out this information?

  • Salaam alaykum, the purification process of halal stocks still remains unclear to me. If I understand correctly regarding to some scholars it is allowed to only purify dividend (and not the capital gain). But what if my stocks do not provide any dividend, can we then simply omit the purification step altogether? And at the moment that we sell this stock I assume that the money we get should be purified too, but this is then done only once at the moment of selling, am I correct? Hope somebody can help, thanks in advance.

  • Mohammed Multani
    February 9, 2021 11:38 am

    In regards to the above criteria.
    If one refers to the answer given by Sheikh Taqi Usmani, the numbers are absent from his answer. Further, most answers found on the hanafi q a website also follow this pattern.
    For example.
    In terms of buying shares…the answer given was as follows..
    “1. The main business of the company must be Halaal (permissible) according to Shariáh. So, a Muslim cannot invest in a company whose main business is Haraam, like the traditional banks, insurance companies, companies dealing in wines, etc.
    2. If the main business is Halaal, but it is involved in borrowing money on Interest or placing its funds in an Interest bearing account a Muslim share-holder should raise his voice against this practice in the annual general meeting of the company.
    3. When a Muslim share-holder receives a dividend he must ascertain that proportion of the profit of the company which has accrued on its interest-bearing accounts. Then a similar proportion from his own dividend must be given by him to a person or persons entitled to receive Zakaat.
    4. If all the assets of a company are in a liquid form and the company has not yet acquired any fixed assets or any stock for trade, then the sale and purchase of shares must be on their par value only.

    If anyone of these conditions is contravened, the investment in a company is not permissible in the Shariah.”

    This answer has been consistently given but i have not found an answer which gives the percentages.

    My questions is, have those percentages been added as precautions, in terms of protecting the buyer from ‘bad’ companies, but do not necessarily a shiria requirements?

  • can i know the reasons behind the AAOIFI standards? Why would they allow up to 5% of the revenue from the interest? where is the hardships? we can invest in other assets too? so, why did they create such ratios? would the senior scholars accept these?


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