Zoya/AAOFI & Are Leases Debt

How does AAOFI/Zoya treat off-balance sheet leases, are they considered debt for the 1/3 debt calculation?

Links to AAOFI ruling would be appreciated.

We use total debt which represents all the interest-bearing obligations of the company, regardless of when these obligations are due for payments.

  • Short-term debt including current portion of long-term debt
  • Long-term debt
  • Capital lease obligations

Don’t think AAOIFI has published anything on this outside of their standards (I could be wrong) but it’s an industry practice that’s consistent with the major index providers who have AAOIFI certified scholars on their shariah board.