Change in shariah compliance year to year

[Abdul_Rahman1 (Abdul Rahman)]

I have a doubt , if we purchase a Share in any year ( say 2021 ) and that stock passes all Sharia laws in FY 2021 But in FY 2022 result of the company it fails in some of the parameters. So in that case what we should do ?

[Farhan]

Assalaamu Alykum @Abdul_Rahman1 welcome to the Zoya Community! Great to have you with us.

We received this question in a previous discussion, and here’s the answer we covered.

@Farhan

As for what to do when a stock’s compliance changes I’ll start with the caveat that I’m neither a sheikh and Zoya is not giving advice regarding what to do with your own investments. I would start by saying that it’s important to consider why is the company no longer shariah compliant. For example if a company now has non compliant shariah revenue as a part of their business going forward, it’s probably better to stay away. If a companies compliance is changing because of their financial ratios, I feel it’s better to take a long term view of whether the company is taking on debt to deal with a short emergency (during the pandemic for examples) or if this is a part of their new company structure. Allah knows best, but this is the approach I’m taking now until I learn more.

[Saif (Saif Ul haq)]

Salaam everyone,

I’ve been using Zoya to screen stocks for the past few years now. I had a question about one of the stocks that `I had purchased while it was shown as being Sharia compliant (on Zoya). Since then the stock has depreciated in market cap and is hence is now below the 30% debt/market ratio to make it shariah non-compliant. I now wanted to know from a Islamic legal perspective what the right way forward is:

1. I sell off my current stock right now and book losses.
2. Wait and sell off the stock at cost price and hence not book any gains.

I do understand that this is a question that should be followed in more detail with a religious scholar/mufti — but was just wondering if it has been discussed before on this forum.

Best,
Saif

[asim (Muhammad Asim Arshad)]

I would like to know too, as almost 75% of portfolio converted to non-shariah compliant stocks. worried how to navigate in this situation.

[Farhan]

Assalaamu Alykum @asim and @Saif!

Welcome to the Zoya Community! Great to have you guys with us. I moved your posts to this discussion to continue the conversation. Let me know if the answer above makes sense for you as well as what you’d consider the better option to be.