The criteria and guidelines that are used by shari’a-compliant equity indexes to verify that their stocks meet the screening requirements of Islamic investors. Companies in a given index are screened for compliance and reviewed on a frequent basis. Listed companies must meet shari’a requirements for permissible products, debt levels, and interest income and expenses.

The main stock screening criteria are: prohibited business sectors and mandatory financial ratios:

Business sectors:

1. Alcohol.
2. Pork and pork-related products.
3. Tobacco.
4. Weapons and related production.
5. Conventional finance, banking, and insurance.
6. Indecent entertainment and recreational activities (pornography, obscene cinema, music, arts, etc) and gaming (casinos, betting and wagering, etc).

Financial ratios:

1. Debt/ total assets < 33%.
2. Cash and interest-bearing holdings < 33%.
3. Accounts receivable and cash < 50%.
4. Total interest income < 5%.
5. Non-compliant income other than interest < 50%.
6. Purification ratio: 5% of dividends.

The screening methodology is subject to the review of an independent shari’a supervisory board.