Halal investing
Can a business be Muslim-owned but not Shariah-compliant?
Understanding why ownership and Shariah compliance are separate matters.
The short answer
Yes. A business may be owned by Muslim individuals but operate in ways that fail Shariah screening rules — for example, earning non-permissible income or carrying high interest-bearing debt.
Ownership versus business activity
Ownership tells you who holds the shares of a business. Shariah compliance looks at what the business actually does, how it earns income and how it is financed.
A firm can be majority-owned by Muslims yet operate in activities that are not permissible (haram) under common screening rules: for example, producing alcohol or gambling services, or having major revenue from interest.
Common screening checks
AAOIFI Standard 21 offers a practical default benchmark for shares: it looks at core business permissibility, limits non-permissible income (typically below 5%), and sets debt-related thresholds — for example restricting interest-bearing debt relative to market value.
Data and calculation methods vary. Even if a company looks borderline, a provider’s specific screening dates, accounting conventions and rounding can change the outcome. A scholarly opinion may be helpful for personal cases.
What this means in practice
- 1Inspect the company’s revenue breakdown and business description in the annual report.
- 2Check published Shariah screening reports from the fund or provider.
- 3Compare the company’s interest-bearing debt and non-permissible income against AAOIFI Standard 21 as a practical reference.
- 4Ask the provider for the data date and calculation method used for screening.
- 5If you need a personal ruling, consult a qualified scholar with the company’s facts and financials.