AAOIFI Standards
A widely used set of Islamic finance standards that define the rules for screening stocks and other investments for Sharia compliance.
What it is
AAOIFI stands for the Accounting and Auditing Organization for Islamic Financial Institutions, a Bahrain-based body that issues standards for Islamic finance. Its Sharia Standard No. 21 sets out the business-activity exclusions and financial-ratio limits used to judge whether a stock is permissible for Muslim investors. AAOIFI is one of the most recognized rule sets, alongside index-provider methodologies from firms like Dow Jones and MSCI.
Why it matters
Knowing which standard a screen uses matters because the thresholds and the denominators differ between AAOIFI and other methodologies, so the same stock can pass under one and fail under another. AAOIFI's Standard 21 benchmark caps interest-bearing debt at 30% of market capitalization, which can produce different results than total-asset-based screens such as MSCI's, so always check which standard a compliance verdict is based on.
How it's calculated
AAOIFI is a standards body, not a calculation; its Standard 21 specifies the activity exclusions plus financial-ratio caps, including interest-bearing debt under 30% of market capitalization and non-permissible income under 5% of total income.
How Quintarthai uses it
Quintarthai's opt-in Sharia screening is based on AAOIFI standards, with pass and fail verdicts shown on the Sharia screening page.