Original Question: Hi. There is this stock P9D (Civmec) which is rated syariah compliant by CGS International Refinitiv Shariah screening. However, there is a handphone app screener called Musaffa which screened the same stock as non-Shariah compliant or it’s exact words ‘not halal’..Both uses AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shariah mandate. Which screener should I use for the screening of P9D and on general stocks, say Singapore and US stocks for Shariah compliancy? Thank you very much.

Answer:

First of all, thank you for the question. We are absolutely heartened by your interest in learning more about halal investing. 

The short answer is, it depends. The fact that CGS International/Refinitiv says Civmec (P9D) is Shariah-compliant while Musaffa says it is “not halal” does not necessarily mean that one of them is dishonest or that Shariah screening is inconsistent. Two screeners can sometimes reach different conclusions even when both say they follow AAOIFI.

What matters is understanding why they disagree, and then deciding which screening authority is more reliable to follow.

First, what does AAOIFI screening actually do?

AAOIFI does not require a listed company to be completely free from every incidental non-Shariah transaction before its shares can be considered investable. The company’s main business must be permissible, and certain non-compliant financial elements must remain within prescribed limits. For example, AAOIFI applies limits to interest-bearing debt, conventional cash or deposits, receivables and non-permissible income. Among the commonly applied AAOIFI thresholds are less than 30% for conventional debt against total assets and less than 5% for non-permissible income against revenue.

The idea is that the prohibited element must remain incidental rather than the purpose of the investment. A useful fiqh principle is:

يجوز تبعاً ما لا يجوز استقلالاً

“What may not be permissible independently may be tolerated when it is merely subordinate.”

In simple terms, buying an interest-bearing bond directly is one thing. Buying a share in a manufacturing company whose principal business is halal, but which happens to have a limited amount of conventional financing, is a different question. Contemporary Shariah screening was developed to deal with this second situation.

So why can two AAOIFI screeners disagree?

Because AAOIFI provides the Shariah rules and thresholds, applying them requires someone to interpret the company’s actual accounts.

Suppose Civmec’s accounts contain an item called “lease liabilities”. One screener might automatically treat that as debt. Another may investigate further and conclude that it represents ordinary lease obligations rather than interest-bearing borrowing. One screener may use the latest quarterly accounts while another is still using the previous annual accounts. They may also differ in how they classify cash, related-party loans, finance income, subsidiaries or other accounting entries.

Therefore, a “halal” or “not halal” label is actually the end result of several earlier judgments.

This is why it’s best not to conclude from the information given that either CGS/Refinitiv or Musaffa must automatically be correct regarding P9D. We first need to know which AAOIFI ratio P9D allegedly failed and what figures each screener used.

What is an ordinary Muslim expected to do?

Shariah does not require every Muslim investor to become a mufti and accountant and independently calculate every company’s financial ratios.

Allah says:

فَاسْأَلُوا أَهْلَ الذِّكْرِ إِنْ كُنْتُمْ لَا تَعْلَمُونَ

“So ask the people of knowledge if you do not know.”
(Qur’an 16:43)

The basic responsibility of a non-specialist is therefore to rely on people who possess the appropriate expertise.

There is a useful expression used by scholars:

اجتهاد العلماء في الأدلة، واجتهاد العوام في العلماء

“The scholars exercise judgement regarding the evidences; ordinary people exercise judgement regarding which scholars to follow.”

In other words, you are not expected to reproduce the entire Shariah analysis yourself. Your responsibility is to make a reasonable effort to choose a credible and competent authority.

What happens when two screeners disagree?

Do not simply choose whichever one gives you the answer you prefer.

Instead, look at three things.

First, methodology. Does the screener clearly explain how it applies AAOIFI? Does it disclose its ratios and calculations, or does it simply give you a green tick or red cross?

Second, expertise. Is there a recognised Shariah board or qualified scholars supervising the methodology? Shariah places importance on both competence and trustworthiness:

إِنَّ خَيْرَ مَنِ اسْتَأْجَرْتَ الْقَوِيُّ الْأَمِينُ

“The best person you can employ is one who is competent and trustworthy.”
(Qur’an 28:26)

Third, data quality. Which screener is using the more accurate and recent financial information? A sophisticated Shariah methodology can still produce the wrong answer if the financial data going into it is wrong.

This is particularly important where two screeners claim to use the same AAOIFI standard. The first question should therefore be: What exactly caused P9D to fail Musaffa’s screen but pass CGS/Refinitiv’s screen?

So which one should you use?

For general investing in Singapore or US stocks, the suggested step would be to choose one reputable Shariah screening provider whose methodology, Shariah oversight and data sources you are comfortable with, and use it consistently.

You do not need to compare three or four apps every time you want to buy a stock. That would defeat the purpose of relying on specialists.

But once you actually become aware of a direct conflict—as in the case of P9D—it is reasonable to investigate the particular discrepancy rather than simply ignoring the unfavourable result.

If it becomes clear that one provider is using better data or applying the stated AAOIFI methodology more accurately, you may reasonably follow that provider. Classical jurists similarly discussed preferring the more knowledgeable and reliable expert when experts disagree.

If, however, both providers appear equally credible and you genuinely cannot determine why one says halal and the other says non-halal, then avoiding that particular stock is the safer course. This follows the Prophet’s ﷺ general guidance regarding doubtful matters: whoever avoids doubtful matters protects his religion and honour.

That does not mean that every time one app says “not halal”, its view automatically overrides everyone else. Precaution comes after we are unable to reasonably prefer one qualified assessment over another.

So for P9D specifically, the short answer to your above question is not to “follow Musaffa” or “follow CGS.” First identify the exact AAOIFI screen that caused the disagreement and the numbers used by each provider. Once that is known, the issue may turn out to be much simpler than a disagreement over what Islam considers halal or haram. It may simply be a difference in accounting classification, financial data or timing.

And for your general portfolio, choose a credible Shariah screening methodology and follow it consistently rather than shopping between screeners for whichever answer happens to suit a particular investment.

And Allah knows best.