Shariah-compliant stocks are those that operate in accordance with Islamic principles, based on three key factors: the company's primary business activities, investment practices, and financial standing.
⚠️ Important: A stock's Shariah status is NOT permanent - it can change over time based on the company's financial performance.
📊 What Can Cause a Stock to Lose Shariah Compliance?
1️⃣ Sources of Revenue
If revenue from impermissible activities (e.g., interest-based income, alcohol, or tobacco) exceeds 5% of total revenue, the stock may no longer be Shariah-compliant.
2️⃣ Debt Levels
If the company's total debt exceeds 30% of its total assets or average market capitalisation, its compliance status may change.
3️⃣ Interest-Bearing Assets
If interest-bearing assets (e.g., bonds or interest-earning deposits) exceed 30% of total assets, the stock may lose its Shariah-compliant status.
🔄 How Often is Compliance Reviewed?
Shariah compliance is reassessed quarterly, based on the company's published financial results.
🤝 Our Shariah Data Partner
InvestSky has partnered with Musaffa to provide Shariah screening tools for both KSA and US stocks. These tools help you instantly identify compliant stocks without manual research.
⚠️ Please note: Musaffa's tools are a guide and do NOT guarantee the accuracy or authenticity of a stock's compliance status. For complete assurance, we recommend consulting a qualified Shariah advisor or contacting us at [email protected] to relay your questions to Musaffa.