Methodology
How we decide whether a company passes — in plain language. Every verdict on Xumirah shows its own reasoning; this page explains the approach behind it.
The standard we screen against
Every verdict is built on AAOIFI Shariah Standard No. 21 (Financial Papers), the most widely-adopted methodology for equity screening, with a Dow Jones Islamic Market (DJIM) preset for those who follow it. A company has to clear two kinds of check to be compliant:
- What it does. A business whose core activity isn't permissible — for example interest-based lending, alcohol, tobacco, or gambling — doesn't pass.
- The shape of its finances. A company shouldn't carry too much interest-based debt, hold too much in interest-bearing instruments, or earn too much of its income from non-compliant sources. The exact limits per standard are below.
Where these standards come from
None of the standards on Xumirah is the ruling of one madhhab. The joint-stock company did not exist in classical fiqh, so it has no classical Hanafi or Shafi'i position to draw on: every equity screen here is contemporary scholarship, worked out across schools. A six-country scholar board wrote the first index screen in 1998, and AAOIFI turned it into its Financial Paper Standard No. 21 in 2004. National regulators in Malaysia and Indonesia later published their own versions with different thresholds, which is why the standards carry institution names rather than madhhab names.
The 30% and 33% caps trace to a hadith of the Prophet ﷺ: when a companion asked to give away his wealth, he was told a third, and a third is a lot, and scholars set the debt and cash limits safely below that third. The 5% impure-income limit rests on a separate principle: a small, unavoidable trace of non-compliant income is excused, not made permissible. Interest itself is never allowed; purification exists to clean that residue.
The financial thresholds, in the open
We don't hide the numbers. Pick the standard you're comfortable with — and on every stock's page you'll see the company's actual ratio next to the limit, and whether it passes or fails.
| Standard | Interest-bearing debt | Cash & interest-bearing securities | Non-permissible income |
|---|---|---|---|
| Strict (default · AAOIFI) | ≤ 30% | ≤ 30% | ≤ 5% |
| Standard | ≤ 33% | ≤ 33% | ≤ 5% |
| Lenient (DJIM) | ≤ 33% | ≤ 33% | ≤ 5% |
Ratios are expressed against market capitalisation. You can switch standard at any time and re-screen instantly.
Evidence you can check yourself
A verdict is only as good as what it's built on. Where a company's business activity decides the outcome, we show the verbatim quote from its own filings — with a link and a dated archive — so you can see exactly why we ruled the way we did, rather than trusting a label. This is what sets us apart from screeners that only show a pass/fail badge.
Your values, on top
Shariah screening is always on. On top of it, you can optionally exclude companies on climate, weapons, military occupation, governance, and recent controversies — drawing on recognised public registries and ongoing news. These are an overlay; they never replace or weaken the Shariah verdict.
Kept current
We re-screen against up-to-date company financials and news on an ongoing basis, so a verdict reflects where a company stands now — not a snapshot from months ago. If a holding you own stops meeting your rules, we tell you.