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Shares

Sep 17, 2007

Q. What is the Shari ruling regarding the buying of shares?

A. A Muslim can acquire the shares of a joint stock company with the following conditions:
1. The main business of the company must be Halaal (permissible) according to Shariah. So, a Muslim cannot invest in a company whose main business is Haraam, like the traditional banks, insurance companies, companies dealing in wine, etc.

2. If the main business is Halaal, but it is involved in borrowing money on Interest or placing its funds in an Interest bearing account a Muslim share-holder should raise his voice against this practise at the annual general meeting of the company.

3.When a Muslim share-holder receives a dividend he must ascertain that proportion of the profit of the company which has accrued on its interest-bearing account. Then a similar proportion from his own dividend must be given by him to a person or persons entitled to receive Zakaat.

4. If all the assets of a company are in a liquid form and the company has not yet acquired any fixed assets or any stock for trade, then the sale and purchase of shares must be on their par value only.

If anyone of these conditions is contravened, the investment in a company is not permissible in the Shari’ah.

AND ALLAH KNOWS BEST.

 

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