Every compliance verdict on Zeenox is built on three quantitative ratios defined by AAOIFI — the Accounting and Auditing Organization for Islamic Financial Institutions. Here is exactly how each one works, with real numbers.
AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) is a Bahrain-based international standards body that issues Shariah standards for Islamic finance. Their screening methodology — Shariah Standard No. 21 — is the most widely adopted institutional framework for determining whether a publicly listed stock is permissible for Muslim investors.
It is a quantitativemethodology. There is no subjective judgement in the ratio calculation — the numbers either pass the thresholds or they do not. The scholarly element lies in which activities are classified as “haram revenue” in the second criterion, and AAOIFI has published specific guidance on this.
Why this criterion exists
Riba (interest) is forbidden in Islam. A company that finances itself primarily through interest-bearing debt is considered to have a structural riba dependency, making it non-compliant regardless of its core business.
Worked example
✓ PASSApple (AAPL) — Q1 2026
2.8%
Total debt: ~$108B ÷ Market cap: ~$3.8T = 2.8%. Well below the 30% threshold. Result: PASS.
Why this criterion exists
A business may have a halal core but earn incidental income from prohibited sources — alcohol sales in an airport lounge, interest on cash reserves, or a small gambling subsidiary. AAOIFI allows up to 5% of revenue to come from such sources, subject to purification.
Worked example
✓ PASSMicrosoft (MSFT) — Q1 2026
2.1%
Microsoft earns a small amount of interest on its cash holdings (~$2.1B) against total revenue (~$100B). 2.1% < 5% threshold. Result: PASS. Note: the 2.1% must be purified — donated to charity proportional to your shareholding.
Why this criterion exists
A company that holds most of its value in cash or interest-bearing bonds is economically equivalent to a bank from a shareholder perspective. AAOIFI caps this at 30% to ensure the investor is primarily exposed to real productive assets, not monetary assets.
Worked example
✗ FAILBerkshire Hathaway (BRK.B) — Q1 2026
41.8%
Berkshire holds ~$167B in cash and T-bills against a ~$400B market cap = 41.8%. Exceeds the 30% threshold. Result: FAIL.
A stock can pass all three AAOIFI criteria and still earn some incidental haram income (e.g. interest on cash reserves). This does not make the stock non-compliant — but it does create a purification obligation on the investor.
Purification means donating to charity the proportion of your dividends and profit that corresponds to the haram revenue percentage. If Microsoft earns 2.1% of its revenue from interest income and you received £100 in dividends, you should donate £2.10.
Purification formula
Purification amount = Dividend received × Haram revenue ratio
Zeenox calculates your purification amount automatically inside the portfolio tracker.
AAOIFI ratios are calculated from a company's financial filings — quarterly 10-Qs (US) or half-year reports (UK). As a company takes on debt, makes acquisitions, or changes its revenue mix, its compliance status can change. A stock that passed in Q1 may fail in Q2.
This is the core problem that manual screening cannot solve at scale. Zeenox monitors 5,000+ stocks and alerts Premium subscribers within minutes of a compliance change being detected in a new filing.
Type any ticker into Zeenox and get the full three-part AAOIFI breakdown, source attribution, and purification calculation — free, no account required.
Screen a stock now →This page is for educational purposes only and does not constitute financial or religious advice. AAOIFI Shariah Standard No. 21 is a widely used but not universally binding standard — different scholars and institutions may apply variations. Always consult a qualified scholar for rulings specific to your circumstances.