Islamic Finance – Islamic Capital Finance - shares of companies engaged in non-core, illegal activities
The standards used to evaluate shares of businesses with non-Halal operations are simple. Shares of businesses engaged in non-Halal activities, such as those engaged in the entertainment, tobacco, alcoholic beverage, and interest-based financial services, cannot be listed among the investable shares. The screening procedures must follow the requirements. Yet, some businesses have non-compliant non-core operations despite having compliant core activity. One example of these may be construction firms with a small equity position in alcoholic beverage-serving hotels and resorts. It is obvious that selling alcohol is a non-core activity. The income from the sale of alcohol, as in this case, cannot be 5% or more of the company's total revenue, which is the benchmark set at 5% in this situation. Nevertheless it is challenging to quantify this.
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