Table of Contents
Participation Finance Compliance
Comprehensive guide to our Islamic finance principles and compliance framework.
- Compliance oversight
- Committee review
- AAOIFI Standards
- Continuous Monitoring
Compliance with Participation Finance Principles
At Ethis, investment opportunities are reviewed by our independent Advisory Board for compliance with participation finance principles. The goal is to ensure that interest-based structures, contract uncertainty, and non-compliant activities are not involved in the process and to regularly monitor compliance throughout the investment period.
Compliance with Participation Finance Principles
Core Principles We Follow
Prohibition of Interest
All investments are free from interest-based transactions. Returns are generated through profit-sharing, asset-backed investments, and ethical business activities.
Risk & Profit/Loss Sharing
Investors share both profits and losses based on actual business performance, promoting fair and ethical wealth distribution.
Asset-Backed Investments
All investments are backed by real economic activities and tangible assets, avoiding speculative and artificial financial products.
Ethical Business Activities
We only finance halal businesses that benefit society and contribute to sustainable economic development.
No Riba
Interest-free financing
Interest-bearing income/transactions excluded
No Gharar
No excessive uncertainty
Clear, defined terms
No Haram
No non-compliant activities
No alcohol, gambling, tobacco
Mudarabah
Profit-loss sharing
Fair distribution of risks and rewards
Participation Finance Advisory Board
Independent assessment and guidance
Our Advisory Board provides independent compliance assessment and guidance on investment opportunities and platform processes.
Responsibilities of the Board
- Reviewing investment opportunities and conducting compliance assessments
- Developing participation finance compliance policies and procedures
- Monitoring the compliance of funded businesses throughout the investment period
- Providing guidance on complex participation finance matters
- Publishing annual compliance assessment reports
Independence and Transparency
- Independent decision-making authority
- No conflict of interest with platform operations
- Quarterly board minutes are published
- Public participation finance compliance certificates
- Annual external participation finance audit
Compliance Screening Process
Multi-Stage Review Process
Every investment opportunity undergoes a comprehensive multi-stage Shariah compliance review before being made available to investors. This rigorous process ensures 100% compliance with Islamic finance principles.
Initial Business Screening
3–5 business daysComprehensive review of business activities, revenue sources, and operations to identify prohibited activities or structures.
Financial Analysis
2–3 business daysDetailed examination of financial statements, debt levels, and revenue sources to ensure compliance with participation finance ratios and principles.
Participation Finance Board Review
5–7 business daysEvaluation of documents by the Advisory Board and determination of final opinion/conditions.
Continuous Monitoring
ContinuousOngoing oversight of the compliance of approved investments throughout the investment period.
Non-Compliant Activities
Out-of-Scope Activities
In accordance with participation finance principles, the following businesses and activities are strictly excluded. Our screening process ensures zero exposure to these sectors.
Financial Services
- Conventional banking
- Insurance companies
- Interest-based lending
- Derivatives trading
- Forex speculation
Entertainment and Lifestyle
- Gambling and betting activities
- Adult entertainment
- Alcohol production/sales
- Tobacco industry
- Music & entertainment (controversial)
Food and Agriculture
- Pork production
- Non-halal meat processing
- Alcohol beverages
- Restaurants serving pork/alcohol
- Non-halal food chains
Compliance Criteria
How is the compliance of an investment assessed?
To be considered Halal and suitable for Muslim investors, our investments meet strict criteria. These criteria are based on classical jurisprudence and modern Participation finance standards.
Business Activities
- Halal production and manufacturing
- Technology and innovation
- Health and pharmaceuticals
- Education and training
- Real estate development
Financial Ratios
- Debt/market cap < 33%
- Interest income < 5% of total revenue
- Cash + interest-bearing assets < 33%
- Receivables < 49% of total assets
Social Impact
- Positive contribution to society
- Environmental sustainability
- Ethical employment practices
- Community development
- Fair trade practices
Governance
- Transparent management structure
- Regular financial reporting
- Ethical business practices
- Regulatory compliance
Certification and Monitoring
Compliance and Monitoring Process
Application review — business & financial analysis
Board review — independent assessment
Compliance document — formal result
Continuous monitoring — regular verification
Continuous Monitoring
Quarterly Reviews
Regular assessment of business activities and indicators
Annual Audits
Comprehensive annual compliance assessment
Violation Management
Taking necessary actions upon detection of non-compliance
Investor Updates
Regular compliance information to investors
Resources and Contact
Participation Finance Compliance Resources
Educational Resources
- Guide to Participation Finance Principles
- Monthly Compliance Status Reports
- Compliance Documents Archive
- Board decisions and compliance opinions
Contact Information
- [email protected]
- Response within 2 business days
- Monthly online Q&A
- Multi-language support (TR, EN, AR)