SHARIA-BASED CLASSIFICATION FOR THE COMPANIES LISTED IN THE CAPITAL MARKET: A PROPOSED VISION

Abstract

The present study aimed to provide a Sharia-based classification for the companies listed in the capital market. The researcher suggests that those companies can be classified under Sharia into three types; companies which all their transactions are halal; companies which all their transactions are haram, and companies of mixed type (i.e. they carry out halal and haram transactions jointly).  He found that it’s Halal to establish companies which carry out halal and haram transactions jointly, provided that there is compliance with three criteria. These criteria are:

1)-the percentage of unintentional haram earning of all the earning of the company shouldn’t exceed 5%.

2)-a criterion related to the earnings per share percentage of the overall haram earnings. 3)- A criterion related to the money borrowed or lent through Riba or the money invested in Haram transactions unintentionally. Based on these criteria, the companies which carry out halal and haram transactions can be classified based on a fifteen-item scale based on the extent of compliance with these criteria.  The researcher recommends examining the proposed scale. That is because this scale plays a significant role in attracting the investors who would like to invest in the capital marketin accordance with the provisions of Sharia. It is because this scale plays a significant role in increasing the savings of companies. It is because this scale plays a significant role in improving the competitiveness of the companies listed in the financial market and promoting compliance with the provisions of Sharia to improve their ranking on the scale.