Sharia Screening

Screen stocks, ETFs, and companies for Sharia compliance based on AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Standard No. 21.

When to Use

• User asks if a stock or company is halal / Sharia-compliant
• User wants to screen their portfolio for compliance
• User asks about AAOIFI screening criteria
• User wants to calculate the purification amount for a holding

How It Works

Step 1: Identify the Company

Get the ticker symbol or company name from the user. If screening multiple stocks, collect all tickers.

Step 2: Qualitative Screening (Business Activity)

The company's core business must NOT be in any prohibited sector:

#	Prohibited Sector	Examples
1	Alcohol	Breweries, distributors, bars
2	Gambling	Casinos, betting platforms, lotteries
3	Conventional Banking/Insurance	Interest-based banks, conventional insurers
4	Weapons & Defense	Arms manufacturing (controversial weapons)
5	Tobacco	Cigarette manufacturers
6	Adult Entertainment	Pornography, adult content
7	Pork & Non-Halal Food	Pork production, non-halal food processing
8	Interest-Based Finance	Payday lending, credit card issuers

If the company's core business is in a prohibited sector → Automatically Non-Compliant.

Step 3: Quantitative Screening (Financial Ratios)

Apply three AAOIFI financial ratio tests:

Ratio	Formula	Threshold
Debt Ratio	Interest-bearing debt ÷ Market cap	< 30%
Cash Ratio	(Cash + interest-bearing securities) ÷ Market cap	< 30%
Impure Income Ratio	Non-permissible income ÷ Total revenue	< 5%

All three must pass for compliance.

Run the screening:

python scripts/screen_stock.py --ticker AAPL
python scripts/screen_stock.py --ticker AAPL MSFT TSLA --json

Step 4: Purification Calculation

For compliant stocks with some impure income (< 5%), calculate the purification amount — the portion of dividends/gains that must be donated to charity:

Purification % = Non-permissible income / Total revenue
Purification Amount = Dividends received × Purification %

Step 5: Present Results

For each stock, present:

1. Company Name & Ticker
2. Qualitative Result — Sector analysis (Pass/Fail)
3. Quantitative Ratios — Each ratio with actual value and threshold
4. Overall Verdict — Compliant / Non-Compliant / Needs Review
5. Purification Ratio — If applicable
6. Notes — Any caveats or areas requiring scholarly opinion

Screening Methodologies

This skill uses AAOIFI by default. The user may also request:

• DJIM (Dow Jones Islamic Market) — Similar but uses total assets as denominator
• S&P Sharia — Slightly different thresholds
• MSCI Islamic — Uses total assets, 33.33% thresholds

Refer to references/screening_criteria.md for comparison across methodologies.

Important Notes

• Financial data may be delayed or from the most recent quarterly/annual filing
• Screening results are point-in-time — companies can move in/out of compliance
• When data is unavailable, flag the stock as "Needs Review" rather than guessing
• Always recommend the user consult a Sharia advisory board for significant investment decisions
• Some sectors are partially permissible (e.g., airlines, hotels) — flag these for review

Output Format

Default output is a formatted table/report. Use --json for JSON output. When screening multiple tickers, output a summary table with per-stock verdicts.