Fatwa #4374612 December 2019Saudi Arabia
Is it permissible to buy shares?
Question
Salaam,
The company I work for recently annouced they will be listing a portion of the ocmpany on the stock market and we have the option of buying.
Prospectus can be found here.
The ocmpany has set aside a certain amount of funds to ensure or garantee a dividend payout for the next 3 years.
Is it permissible to buy shares?
Please let me know if any further information is required
JazakAllah
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
It is permissible to invest in the stock market with the following conditions.
- The main business of the company does not violate the rules of Shari’ah; therefore, it is not permissible to acquire the shares of companies providing financial services on interest like conventional banks. This also involves companies involved in gambling, pornography, prostitution, the selling of pork, alcohol beverages, tobacco, illegal drugs, etc.
- If the main business of the company is halal, but they deposit their surplus amounts in an interest-bearing account or borrow money on interest, the shareholder must express his disapproval against such dealings preferably during the annual general meeting of the company
- If some income from the interest-bearing accounts is included in the income of the company, the proportion of such income in the dividend must be given in charity without the intention of reward.
- The company must own a considerable proportion of illiquid assets.
If any one of the above-mentioned conditions is violated, the investment will be impermissible.
You will need to enquire from the relevant brokers if they fulfil these conditions.[i]
And Allah Ta’āla Knows Best
Mahmood Suliman
Student Darul Iftaa
Gaborone, Botswana
Checked and Approved by,
Mufti Ebrahim Desai.
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[i] “An Introduction to Islaamic finance” by Mufti Taqi/ pg.207-208