Halal Stock Screener | AAOIFI Shariah Compliance Checker

How to use the Halal Stock Screener

1. Enter the company name for your records — it appears on the verdict.
2. Enter market capitalization (share price × shares outstanding, in USD) from the latest data.
3. Enter market capitalization (share price × shares outstanding, in USD) from the latest data.
4. Enter interest-bearing debt — conventional loans, bonds, and overdrafts from the balance sheet. Trade payables and operating liabilities do not count.
5. Enter interest-bearing debt — conventional loans, bonds, and overdrafts from the balance sheet. Trade payables and operating liabilities do not count.
6. Enter interest-bearing income and total income from the latest income statement.
7. Enter illiquid assets and total assets — illiquid assets are property, plant, equipment and other non-current assets.
8. Enter illiquid assets and total assets — illiquid assets are property, plant, equipment and other non-current assets.
9. Answer the business-activity question honestly. If the company’s core business involves alcohol, gambling, conventional banking or insurance, pork products, or adult entertainment, select Yes — the verdict fails automatically.
10. Answer the business-activity question honestly. If the company’s core business involves alcohol, gambling, conventional banking or insurance, pork products, or adult entertainment, select Yes — the verdict fails automatically.
11. Click Screen stock to see each screen’s pass/fail result and the overall verdict.

Formula & methodology

This screener implements the quantitative screens of AAOIFI Shari’ah Standard No. 21 (Financial Papers — Shares and Bonds), the most widely referenced standard for equity screening, plus the qualitative business-activity screen:

Screen 1 — Debt: interest-bearing debt ÷ market capitalization < 33% → PASS. AAOIFI’s standard sets this at 30%; many practitioners and indices (such as the Dow Jones Islamic Market Index) use 33%. This screener uses 33% and shows the exact ratio so you can judge borderline cases yourself.

Screen 2 — Non-compliant income: (impermissible + interest income) ÷ total income < 5% → PASS. A small amount of incidental impure income is tolerated, but it must be purified (see below).

Screen 3 — Tradability / liquidity: illiquid assets ÷ total assets ≥ 30% → PASS. This AAOIFI screen ensures the share represents a real stake in productive assets rather than a bundle of cash and receivables.

Screen 4 — Business activity: the company’s core business must be permissible. Companies whose primary activity is interest-based banking, conventional insurance, alcohol, gambling, pork, or adult entertainment fail regardless of their ratios.

Overall verdict: PASS only if all four screens pass. A single FAIL means the stock does not clear this standard.

Purification of dividends: if you hold a stock that passes but earns a small tolerated amount of non-compliant income, scholars generally hold that you must purify your dividends — donate the impure proportion (e.g., 2% of the dividend if 2% of income was non-compliant) to charity. Purification is not counted as zakat.

Worked example

Sara is researching “TechCorp”, a software company. From its latest filings: market capitalization $10,000,000,000; interest-bearing debt $2,000,000,000; interest income $100,000,000; total income $5,000,000,000; illiquid assets $4,000,000,000; total assets $8,000,000,000. Core business: enterprise software (permissible).

Sara is researching “TechCorp”, a software company. From its latest filings: market capitalization $10,000,000,000; interest-bearing debt $2,000,000,000; interest income $100,000,000; total income $5,000,000,000; illiquid assets $4,000,000,000; total assets $8,000,000,000; illiquid assets $4,000,000,000; total assets $8,000,000,000. Core business: enterprise software (permissible).

Screen 1 — Debt ratio: 2,000,000,000 ÷ 10,000,000,000 = 20% < 33% → PASS.
Screen 2 — Non-compliant income: 100,000,000 ÷ 5,000,000,000 = 2% < 5% → PASS (the 2% must still be purified from dividends).
Screen 2 — Non-compliant income: 100,000,000 ÷ 5,000,000,000 = 2% < 5% → PASS (the 2% must still be purified from dividends).
Screen 3 — Illiquid assets: 4,000,000,000 ÷ 8,000,000,000 = 50% ≥ 30% → PASS.
Screen 4 — Business activity: permissible → PASS.

Overall verdict: PASS — TechCorp clears the AAOIFI-based screens. Sara should still purify 2% of any dividends and ideally confirm with her scholar.

Frequently asked questions

What is AAOIFI Shari’ah Standard No. 21?

It is the standard issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI, based in Bahrain) governing investment in shares. It sets both qualitative screens (the business must be permissible) and quantitative screens (debt, non-compliant income, and liquidity ratios). Because AAOIFI standards are referenced by regulators and Shari’ah boards worldwide, Standard 21 is the most common basis for halal stock screening.

Why does this screener use 33% for debt when AAOIFI says 30%?

AAOIFI’s text specifies 30% of market capitalization for interest-bearing debt. In practice, several major Islamic indices — notably the Dow Jones Islamic Market Index — apply 33%, and many screeners follow that convention. This tool uses 33% but displays your exact ratio, so if a company sits between 30% and 33% you can see it is borderline and seek scholarly guidance.

What counts as a non-compliant core business?

Scholars generally list: conventional interest-based banking and insurance, alcohol production or sale, gambling and casinos, pork products, adult entertainment, and weapons. A company whose primary revenue comes from any of these fails screening outright. Companies with only minor incidental exposure (e.g., a hotel chain with a bar) are assessed through the 5% non-compliant income screen instead.

What is purification and how do I calculate it?

Purification means removing the impure portion of your returns. If 2% of a company’s income was non-compliant, you donate 2% of the dividends you received to charity — without expecting reward, and not counted as zakat. Scholars generally hold this is obligatory when you knowingly hold a stock with tolerated impurity, which is why the income screen exists alongside it.

Purification means removing the impure portion of your returns. If 2% of a company’s income was non- compliant, you donate 2% of the dividends you received to charity — without expecting reward, and not counted as zakat. Scholars generally hold this is obligatory when you knowingly hold a stock with tolerated impurity, which is why the income screen exists alongside it.

Does a PASS verdict mean the stock is definitely halal for me?

No — a screener is a research aid, not a fatwa. Standards differ (AAOIFI, Dow Jones, MSCI, and national boards use different thresholds and denominators), financial data changes quarterly, and borderline cases need human judgment. Treat a PASS as “clears this standard on these figures” and confirm significant investments with a qualified scholar or your fund’s Shari’ah board.

Can I use this for ETFs and mutual funds?

The same screens apply in principle, but a fund must be assessed holding-by-holding or via the fund’s own Shari’ah certification. Many Islamic ETFs publish their screening methodology and purification ratios. If a fund is certified by a recognized Shari’ah board, scholars generally consider that certification sufficient without re-screening each constituent yourself.