Shariah screening
What happens when a stock I own becomes non-compliant?
Practical options and religious considerations when a holding fails Shariah screening.
The short answer
When a stock becomes non-compliant you can consider selling, holding until you decide, or purifying income already received. The right choice depends on your screening rules, the reason for non-compliance and your personal religious guidance.
Choices to make
Decide whether to sell immediately, monitor for short-term divergence, or continue holding for a planned exit. Some investors use rules such as selling at the next convenient trading point or when a breach is sustained across reporting periods.
Shariah-compliance considerations
Our platform uses AAOIFI Shari'ah Standard No. 21 as the pragmatic baseline. If the breach is due to temporary accounting timing or a small passive income element, scholars differ on whether immediate sale is obligatory. For actual rulings consult a qualified scholar.
What this means in practice
- 1Check the fund or vendor note explaining why the company is now non-compliant.
- 2Decide in advance a rule you will follow (for example, sell at next review) and document it.
- 3If you received income during the period of partial non-compliance, calculate purification as appropriate.