Fatwa #324822 June 2001India
Can I invest in shares in the Stock market?
Question
Dear Mufti Saheb, 1.can I invest in shares and debentures, if yes then which kind of shares are allowed and which are not? 2.Can I invest in the stock market on a short term speculative basis e.g buy today and sell tomorrow at higher prices and continue doing this everyday?Will the earning from such transactions he halal? If not then under what conditions can my earning from shares be halal? 3.Can I sell the shares which I have purchased,even before the purchased shares are transferred in my name, to another person for a profit?Is this permissable and is this profit halal? 3.We have to pay brokerage to agents for buying and selling the shares,this is compulsory.What is the position of this commission paid? Thank you
Answer
TO WHOM IT MAY CONCERN%0D%0A%0D%0AA Muslim can acquire the shares of a joint stock company with the following%0D%0Aconditions:%0D%0A1. The main business of the company must be Halaal (permissible) according%0D%0Ato Shari%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%0A2. 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%0A3. 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%0A4. 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%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%0Aand Allah Ta'ala Knows Best%0D%0A%0D%0AMufti Ebrahim Desai%0D%0AFATWA DEPT.%0D%0A%0D%0A