Shariah Compliances
Shariah-Compliance Standard we follow:
Shariah-Compliance Guidelines for HalalGrow aligned with the relevant standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
Mudaraba
In the Mudaraba mode (where investors provide capital and an entrepreneur or working partner manages the business), HalalGrow will ensure the following in accordance with AAOIFI standards (e.g., Standard No. 13 on Mudaraba)
1. Contractual clarity – HalalGrow will ensure a clear and documented agreement between the investor (Rab al-Maal) and the entrepreneur/manager (Mudarib) specifying the capital provided, the profit sharing ratio, responsibilities of parties, and duration of the contract.
2. Separate roles of capital/provider and manager – The investor supplies the capital, and the entrepreneur supplies the labour/management: the roles must be distinguished and defined clearly.
3. Permissible business activities – The venture financed must be Shariah-compliant and not involve prohibited (haram) elements such as riba, gambling, alcohol, etc.
4. Ownership of capital – The investor’s capital must be real assets or funds, and must not be a loan with guaranteed return but rather a share in profit and a possibility of loss.
5. Profit and loss sharing – Profits will be shared according to the agreed ratio; losses are borne by the investor (capital provider) except where there is proven negligence or misconduct by the entrepreneur.
6. Monitoring and reporting – HalalGrow will monitor the business activity, collect business performance information, and provide transparent reporting to investors and entrepreneurs.
7. No guaranteed return – The investor must not be guaranteed a fixed return; guaranteeing returns violates the concept of risk-sharing.
8. Use of capital in the business – The capital must be invested in the business venture and not diverted; HalalGrow will ensure the use of funds is as per the contract.
9. Termination and liquidation – There should be clear conditions for termination, and upon completion or termination the assets, profits/losses will be distributed in accordance with Shariah.
10. Zakah and purification – HalalGrow will ensure that zakah (obligatory charity) on the investment profits is addressed and any non-compliant income (if inadvertently generated) is purified.
By adhering to these points, HalalGrow’s Mudaraba investments will align with the Shariah standards and provide transparency and fairness for both parties.
Musharakah
In the Musharakah mode (where investors participate in the capital/share of a joint venture) HalalGrow will apply the following guidelines in line with AAOIFI standard on Sharika/Musharakah State Bank of Pakistan+2Muamalat Journal+2:
1. Joint contribution – Both parties (investors via HalalGrow and entrepreneurs) contribute capital (or assets) to the venture; the share contributions must be clearly defined.
2. Ownership and risk-sharing – Profits are shared according to the agreed ratio, and losses are borne in proportion to capital contributions, unless otherwise agreed (and in that case compliant with Shariah).
3. Participation in management – The parties may decide on participation in management or appoint one party to manage the business, but the terms must be explicit.
4. Legality of shares – Shares in the venture must represent genuine ownership in assets/business, not merely a debt instrument or disguised loan.
5. Business purpose and activity – The venture must involve a real business, permissible under Shariah principles, and not merely speculative or prohibited activities.
6. Monitoring and governance – HalalGrow will facilitate regular monitoring of the business, financial reporting, and oversight of the joint venture to ensure adherence to contract and Shariah.
7. Profit distribution mechanism – The method of distributing profits (when, how, and by whom) must be clearly spelled out and adhered to, ensuring timely and fair distribution to investor-partners.
8. Treatment of losses – Losses must be borne by partners based on their capital share unless negligence or breach of contract is proven. HalalGrow will ensure this is communicated and accounted for.
9. Exit and liquidation arrangements – The contract should include clear arrangements for exit of parties, sale or dissolution of the venture, and settlement of accounts in a Shariah-compliant manner.
10. Purification and Zakah – Any income or returns must be evaluated for Shariah compliance, purified if needed, and zakah obligations clearly addressed.
These principles ensure that the Musharakah investments facilitated by HalalGrow maintain transparency, fairness and full compliance with Shariah standards.
Murabaha
For the Murabaha mode (cost-plus sale, where HalalGrow purchases asset for entrepreneur and sells to them at a known profit margin on deferred payment) HalalGrow will follow these guidelines in line with AAOIFI standard (e.g., FAS 28 “Murabaha and other deferred payment sales”) AAOIFI+2SpringerLink+2:
1. Sale transaction not a loan – The arrangement must be structured as a sale of a tangible asset or commodity, not as a loan with interest. The subject matter must be owned by HalalGrow before sale to the entrepreneur.
2. Knowledge of cost and profit margin – The entrepreneur must be informed of the cost incurred by HalalGrow in purchasing the asset and the profit margin added; the markup must be fixed and known to the buyer.
3. Deferred payment terms – The sale may be on deferred payment basis, but the asset has been transferred to the buyer; the sale and payment terms must be clearly defined in contract.
4. Possession and transfer of ownership – HalalGrow must take ownership (and usually physical delivery or legal transfer) of the asset before reselling to the entrepreneur; risk must have passed or the transaction must reflect true trade.
5. Permissible asset – The asset being sold must be a Shariah-permissible item (not haram) and its use by the entrepreneur must also be permissible under Shariah.
6. No hidden fees or riba elements – Any additional fees or charges must represent real cost or service, not disguised interest. Penalties for late payment must be structured carefully to avoid riba (see Standard No. 3 on default). Islamic Finance
7. Monitoring and transparency – HalalGrow will monitor the entrepreneur’s usage of the asset and the payment schedule, and report to investors accordingly.
8. Distribution of returns to investors – The proceeds (purchase, markup, payment schedule) will be passed to investors as per contract, ensuring that the transaction remains transparent and profit (not interest) based.
9. Treatment of default – In the event of default by the buyer (entrepreneur), any penalty must not be interest-based; HalalGrow will follow the default guidelines as per AAOIFI and not impose prohibited compensation for delay.
10. Purification and Zakah – Any inadvertent non-Shariah compliant income or expense will be purified; HalalGrow will ensure zakah obligations on profit are handled appropriately.
We are shariah-compliant
By applying the above guidelines, HalalGrow ensures that all its investment services — under the Mudaraba, Musharakah and Murabaha modes — adhere to the spirit and letter of the AAOIFI Shariah standards. We believe that this rigorous and transparent approach builds trust with our stakeholders (investors and entrepreneurs alike) and upholds the integrity of Islamic finance.
Testimonials are a social proof, a powerful way to inspire trust.
Testimonials are a social proof, a powerful way to inspire trust.
Testimonials are a social proof, a powerful way to inspire trust.
Halal Grow
Empowering you to grow wealth and businesses the Halal way — free from interest, rooted in faith.
Phone: +8801723846332, Address: House: 374, Road no. 08, Padma Abashik, Vodra, Rajshahi, Email: info@halalgrow.com