Every katilim equity fund you can buy on TEFAS, every BIST Katilim index, every katilim pension fund and the only screened brokerage in the country all answer to the same rulebook: the TKBB Advisory Board's share standard. That is unusual. In most markets, each fund manager picks a methodology (AAOIFI, DJIM, FTSE, or something in-house) and investors have to compare fine print. Turkey centralized the question. Understand one standard and you understand the compliance logic of the entire market.
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Who sets the standard
The TKBB Advisory Board (Danisma Kurulu) is the participation finance sector's apex sharia authority, established under the participation banking framework. Its share standard, the Pay Senedi Ihraci ve Alim-Satimi Standardi, governs which equities participation institutions and funds may hold. Borsa Istanbul's Katilim index ground rules implement the standard mechanically, which is why index membership and fund eligibility move together.
The two-stage screen
The standard works the way most global Islamic screens work: first exclude businesses by activity, then test the survivors' balance sheets.
Stage 1: Activity exclusions
- Interest-based finance (conventional banks, insurers, leasing and factoring companies)
- Alcohol production and trade
- Gambling and games of chance
- Pork and pork products
- Impermissible media and entertainment
- Tobacco
- Weapons
- Forward gold and FX dealing, named explicitly, reflecting Turkish market patterns
Stage 2: The financial thresholds, 33/33/5
- Interest-bearing debt must stay below 33% of the greater of total assets or market capitalization.
- Interest-earning assets (deposits, bonds, receivable structures that earn interest) must also stay below 33% of the same base.
- Impermissible income must stay below 5% of total revenue.
The logic is pragmatic. Almost no listed industrial company is perfectly free of conventional finance; the thresholds tolerate incidental exposure while excluding companies whose economics actually depend on interest. Purification of the small impermissible income slice is handled at fund level per committee guidance rather than mandated in the index rules.
How compliance is verified: KAFIF on KAP
Companies self-report through the KAFIF disclosure (Katilim Finans Ilkelerine Uygunluk Bilgi Formu), filed quarterly on KAP, Turkey's public disclosure platform. Borsa Istanbul applies the results at index reviews. A company that breaches a threshold exits the Katilim indices at the next review, and screened products must manage their exits. This quarterly cadence is both the system's strength (public, checkable, uniform) and its lag: a balance sheet can drift for a quarter before the review catches it.
Where the standard binds
- BIST Katilim indices: KATLM (Katilim All), KAT30 (Katilim 30) and KAT50, whose rules are the standard's mechanical form. We unpack them in our BIST Katilim indices explainer.
- Katilim funds: KAP fund rules restrict katilim equity fund universes to Katilim index members plus committee-icazet names.
- Katilim pension funds: the same universe definition applies inside BES and OKS.
- Brokerage: Kuveyt Turk Yatirim's buy-side screen executes buy orders only for compliant names, about 240 at our last check.
That last one matters for stock pickers: if you want automatic order-level screening rather than checking lists yourself, Kuveyt Turk Yatirim is the only venue in the market, as we detail in our review. Everyone else executes any order and leaves compliance to you, in which case our DIY screening guide is the workflow.
How 33/33/5 compares with AAOIFI and global screens
The TKBB thresholds parallel AAOIFI's roughly 30% debt screens but use 33% against the greater of assets or market cap, and the 5% impermissible income cap matches AAOIFI practice. The activity exclusion list is broadly AAOIFI-consistent with local specifications. Practical consequence: a stock passing the TKBB screen would usually pass most global screens, and vice versa, but edge cases exist near the thresholds. If you hold both Turkish and international portfolios, do not assume the lists match name for name.
What the standard does not do
It does not judge management quality, valuation or governance beyond compliance. A stock can pass 33/33/5 and still be a terrible investment. It also does not eliminate judgment: committee-icazet additions beyond index membership involve scholarly discretion, and purification practice varies by fund. The standard answers one question well, which stocks a participation investor may hold, and leaves every other investing question exactly where it always was: with you. For the market this screen feeds, start at our investing hub and the state of halal investing.
Frequently asked questions
Why 33% instead of AAOIFI's 30%?
The Advisory Board settled on one-third as the line, a threshold with deep roots in classical jurisprudence discussions of what constitutes a minor versus dominant share. Measured against the greater of assets or market cap, it behaves similarly to AAOIFI's formulation in most market conditions. The honest answer is that any numeric threshold is a scholarly convention, not revelation; what matters is consistent application and public verification, which the KAFIF system delivers.
Can a company be halal one quarter and not the next?
Yes. Thresholds are ratios, and both sides move: debt levels change, market caps swing. Names near the line can oscillate across reviews. Funds and the brokerage screen handle exits mechanically; individual investors following the standard should recheck holdings each review cycle rather than assuming a one-time check lasts forever.
Compare providers in your region
See side-by-side comparisons of Shariah-compliant products, or let our matcher recommend the best options for your situation.
Do I need to purify dividends myself?
If you hold through a katilim fund, purification of the small impermissible income slice is the fund committee's responsibility, handled per committee guidance, and one of the practical arguments for the fund route. If you hold screened stocks directly, the purification duty is yours: estimate the impermissible share of the company's income, commonly from the KAFIF disclosure or the annual report, and give away the corresponding slice of your dividend. The standard caps that slice at 5% of revenue, so the amounts are small, but the discipline is part of doing direct screening honestly.