Question about Sharia complaints Halal Stocks

[cautiouslittlehope]

@philip1979 The income generated from haram sources will be purified. These include income from haram activities and income from interest.

For example, this is from SPUS Prospectus (p.29): "If a company derives a portion of its total income from interest income and/or Sharia-prohibited business activities, Sharia investment principles state that this portion must be “purified” from the distributions paid out to shareholders. Shareholders may purify their portion of prohibited income received by absolving an equivalent amount to charitable purposes. Accordingly, for investors seeking to purify prohibited income received from the Funds, if any, ShariaPortfolio will publish an income purification calculator on the Funds’ website, www.sp-funds.com, to assist Sharia ETF and Global REIT ETF investors in calculating the per share amount to be purified on a monthly basis. The Sukuk ETF does not require purification because sukuk are by definition Sharia-compliant."

 

[philip1979]

@cautiouslittlehope Thank you for responding. I’m still kinda confused so I know what you mean by sukuk ETF’s.
Let’s take an example of Tesla stock they have non-halal income of 1.28%. 1.01% interest income and rest 0.27% Direct sales-type leasing program. That’s a total of 1.28% of haram income.
Also they have 3.60% interest bearing securities and assets and interest bearing debts is 0.59%.
So in here the company is dealing with interest 3.60% they have interest bearing securities and assets and they are earning interest from them isn’t it?
And 0.59% they are giving interest to bank on that percentage of debt. So if I don’t want take that interest profit or sukuk they’re getting from securities and assets and and don’t want to associate with their interest money they’re paying to bank for the loan they took. What should I do? Which things to deduct

 

[cautiouslittlehope]

@philip1979 We have to differentiate interest earning income and interest paying debt. Interest earning deposits should not exceed 30% of the market cap of a company. The income earned from interest will be purified (you can use your approach to calculate income from non-halal business activities and interest). Also, there is a limit on income earned from prohibited sources, which should not exceed 5% of the total income.

The debt that is borrowed should not exceed 30% of the company's market cap.

Hope this helps. And Allah knows best.