Sharia Finance Checklist

Structuring parameters for Islamic capital deployment in US assets.

Islamic finance principles dictate strict prohibitions on interest (Riba), extreme uncertainty (Gharar), and gambling (Maysir). When structuring joint ventures with US entities, traditional debt-heavy capital stacks must be re-engineered into profit-and-loss sharing (Mudarabah/Musharakah) or leasing (Ijarah) structures.

The Leverage Ratio Limit

Most Sharia screening methodologies (e.g., AAOIFI, S&P) prohibit investment in companies where conventional debt exceeds 30-33% of total market capitalization or total assets.

Sector Screening

US targets must derive less than 5% of their revenue from prohibited activities, including conventional financial services, alcohol, pork, gambling, and adult entertainment.

Vetting Matrix

Conventional Debt < 33% of Total Assets

Cash & Interest-Bearing Securities < 33%

Prohibited Sector Revenue < 5%

Absence of Preferred Stock (Guaranteed Return)

Asset-Backed Financing Structure (Ijarah/Murabaha)

Note: Final certification requires a Fatwa from a qualified Sharia board. This is a preliminary screening tool.