Criteria for determining the Shari'ah compliance of shares: a fiqhi synthesis
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Shari'ah has specific rules for dealing in each class of assets and activities; i.e., cash, debt, goods, usufruct, and those classified as either halal (permissible) or haram (impermissible). These rulings can be easily applied when such an asset or activity is an independent subject matter of a transaction. However, the issue becomes complicated when an asset or activity is mixed with others and the combination is represented as a single subject matter. A fine example of this situation is shares of a joint stock company. A company share represents all the activities and underlying assets of that company. Some of the activities and assets of that company may be Shari'ah non-compliant while some may be Shari'ah compliant. Such assets can be in any form; i.e., cash, debt, goods, usufruct or rights. There are two main issues that need to be dealt with in considering a company's shares: (1) when it represents a mixture of halal and haram activities and assets, and (2) when it represents a mixture of ribawi and non-ribawi assets.
Shari'ah-compliant shares , Screening methodology , Principle of predominance , Principle of majority , Principle of primacy and dependency
Mohamad, S., Habib, F., & Salim, K. (2018). Criteria for determining the Shari'ah compliance of shares: a fiqhi synthesis, ISRA Research Paper 104/2018. Kuala Lumpur, Malaysia: ISRA.