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Fatwa #11182 October 2000Pakistan

What if somebody is involved in stock exchange, and doing short selling and long selling.

Answer

Respected Brother-in-Islam%0D%0A%0D%0AAssalaamu Alaykum Wa Rahmatullaahi Wa Barakaatuhu%0D%0A%0D%0Aa) Joint Stock Exchange - ref below%0D%0Ab) What do you mean by shortselling and long selling%0D%0A%0D%0Aand Allah Ta'ala Knows Best%0D%0A%0D%0AMufti Ebrahim Desai%0D%0AFATWA DEPT.%0D%0A%0D%0ATO WHOM IT MAY CONCERN%0D%0A%0D%0AA Muslim can acquire the shares of a joint stock company with the following%0D%0Aconditions:%0D%0A%0D%0A* The main business of the company must be Halaal (permissible) according to%0D%0AShari%E1h. So, a Muslim cannot invest in a company whose main business is%0D%0AHaraam, like the traditional banks, insurance companies, companies dealing%0D%0Ain wines, etc.%0D%0A* If the main business is Halaal, but it is involved in borrowing money on%0D%0AInterest or placing its funds in an Interest bearing account a Muslim%0D%0Ashare-holder should raise his voice against this practice in the annual%0D%0Ageneral meeting of the company.%0D%0A* When a Muslim share-holder receives a dividend he must ascertain that%0D%0Aproportion of the profit of the company which has accrued on its%0D%0Ainterest-bearing accounts. Then a similar proportion from his own dividend%0D%0Amust be given by him to a person or persons entitled to receive Zakaat.%0D%0A* If all the assets of a company are in a liquid form and the company has%0D%0Anot yet acquired any fixed assets or any stock for trade, then the sale and%0D%0Apurchase of shares must be on their par value only.%0D%0AIf anyone of these conditions is contravened, the investment in a company is%0D%0Anot permissible in the Shari'ah.%0D%0A%0D%0ANB. The above ruling has been issued by Justice Mufti Muhammad Taqi Usmani%0D%0Aof the Shariat Appellate Bench - Supreme Court of Pakistan. He is also the%0D%0ADeputy Chairman of the Islamic Fiqh Academy - Jeddah.%0D%0A%0D%0AJamiatul Ulama (KZN)%0D%0A%0D%0A%0D%0A%0D%0A
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