In Islam, is share market acceptable?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

There are differences of opinion among senior and reputable Ulama regarding the permissibility of investing in a joint stock market. The different views of the respected Ulama have been exchanged or at least known and seriously considered both views, permissibility and non permissibility are honest academic views.

It is incorrect to disregard an opposing view which is academically substantiated and argued.

Basically, there are three areas of concern in investing in a stock market:

1. What is the extent of ownership by a shareholder in the asset of the company?
2. The concept of limited liability
3. The role of the invective shareholder in a company as a representative (Wakeel) in relationship to any Unislamic activity in the partnership.

The respected Ulama who believe that investing in a stock market is impermissible state:

1. A shareholder is not an owner of the asset of the company. The company is the owner of the asset. Hence, the dividends are in direct exchange of the invested amount, hence it is money in exchange of money. This is Riba.
2. The concept of limited liability is foreign to Shariah and is not recognised.
3. The shareholder is a Wakeel (representative) of his co-shareholder and the management. He is part to the Unislamic activities of the partnership by virtue of being a Wakeel. All wrong is equally attributed to him.

The Ulama that believe investing in the stock market is permissible have argued against these objections.

It is a well known principle and practice among the Fuqahaa that when there are differences of opinion among illustrious Ulama and the issue concern is academically considered, that creates a laxity in the issue. Therefore, investing in a stock market will be permissible. Not investing in a stock market will be Taqwa.

And Allah Ta’āla Knows Best

Mufti Hussein Issa,
Student of Darul Iftaa

Mozambique

Checked and Approved by,
Mufti Ebrahim Desai.
www.daruliftaa.net