Scholarly Background: The One-Third (33%) & Two-Thirds Principle
Major global Sharia index committees derived the screening thresholds from classical jurisprudence: for a business to be considered predominantly permissible, at least two-thirds (approx. 67%) must be free from interest debt, capping debt strictly below one-third (33%).
Narrated Sa‘d ibn Abi Waqqas (رضي الله عنه)
I said, "O Allah's Messenger (ﷺ)! May I will all my property (in charity)?" He said, "No." I said, "Half of it?" He said, "No." I said, "A third of it?" He said: "A third, and a third is much, for it is better for you to leave your heirs wealthy than to leave them poor, begging from others..."
Sahih al-Bukhari 2742, Sahih Muslim 1628sunnah.com/bukhari:2742 Modern corporate debt did not exist in early Islamic commerce, and interest (Riba) remains categorically forbidden. However, contemporary jurists (including AAOIFI scholars and the Dow Jones Sharia Supervisory Board) applied juristic analogy (Qiyas) to the Sa‘d ibn Abi Waqqas narration. Because the Prophet (ﷺ) established one-third as the boundary of what is "much" or influential (kathir), any incidental interest debt must remain strictly below 1/3 (< 33.3%). Inversely, at least two-thirds (≥ 66.7%) of the company's financing must remain pure equity.
◆The Juristic Maxim (للأكثر حكم الكل) — The Majority Rule
Under the classical legal maxim "Li al-akthar hukm al-kull" (The majority carries the ruling of the whole), when at least two-thirds of an enterprise is interest-free and permissible, the halal majority characterizes the stock. Additionally, companion Abdullah ibn Abbas (رضي الله عنه) noted in Sahih al-Bukhari 2743 that he preferred reducing bequests from one-third to one-fourth (25%) due to the Prophet's caution—which is why AAOIFI Standard No. 21 adopted an even stricter 30% ceiling rather than 33.3%.