The Four AAOIFI Filters, Explained

Sharia stock screening sounds intimidating. It isn't. The AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) framework boils it down to four filters. A company has to pass all four to count as compliant.

Here's what they actually mean.

1. Activity — qualitative

This one is binary. The company's primary business activity must be halal. That excludes:

• Conventional banks and insurance (interest-based)
• Alcohol, pork, gambling
• Adult entertainment
• Conventional financial services (lending, leasing on interest)

For Casablanca specifically, this immediately rules out ATW, BCP, BOA, CIH, and most of the insurance sector.

2. Debt — quantitative

Formula: interest-bearing debt ÷ market cap ≤ 30%

A halal-activity company can still fail screening if it's loaded up on conventional debt. Most cement and real estate firms in Morocco get tripped up here.

3. Cash — quantitative

Formula: (cash + interest-bearing securities) ÷ market cap ≤ 30%

A company hoarding cash in interest-bearing instruments is generating riba, even passively. The 30% ceiling keeps that exposure bounded.

4. Non-compliant revenue — quantitative

Formula: non-Sharia-compliant revenue ÷ total revenue ≤ 5%

Some otherwise-halal companies get small amounts of revenue from non-compliant sources (e.g. a hotel chain serving alcohol in some properties). If that share stays under 5%, the company can still qualify — but the investor is expected to purify the proportional share of dividends by donating it.

Putting it together

Filter	Formula	Limit
Activity	Qualitative	Halal only
Debt	Debt / Market cap	≤ 30%
Cash	Cash / Market cap	≤ 30%
Non-compliant	Non-compliant income / Total revenue	≤ 5%

Any single failure → not Sharia-compliant. All four pass → green.

You'll see this exact table on every stock detail page in the Market. Today most of the rows say "Available soon" — populating those filings is what we're working on next.