Temporary liquidity increase for M&A

Assalamu Alaikum,

I am actually seeing a real case right now of a stock that is listed as Shariah-compliant, however, it has this quarter issued new units (on a bought deal basis) for financing. By my calculations, this new financing will result in greater than 70% liquidity for the stock and it would not be listed as compliant once the next quarterly financial results are out.

However, the company has done this for the purpose of acquisitions. Within a few weeks of the financing, they have already announced multiple purchases which will be closed shortly.

The stock is actually still listed as halal today, but I suspect temporarily it may not be, however, it will likely be halal again very shortly. How would you advise to deal with such a stock?

It is currently at an attractive price so I would like to purchase it.

Assalaamu alaykum,

As per the latest AAOIFI guidelines, the liquidity filter is no longer applicable.

Allah knows best

Aww,
Where can i find the AAOIFI guidelines and keep up to date with them?

Jzk

Assalaamu alaykum,

You can visit the AAOIFI website www.aaoifi.com

Jzk. I’ve had a look, but can’t seem to find the info, especially about the update to the liquidity filter. Do you have a link by any chance?

The information for this specific filter is in the latest Sharia Standard on Sale of Debt.