Praise be to Allaah.
1 – Definition of shares.
A share is a defined portion of the total
capital of a company.
A share is defined as being the share that the
shareholder has in a company, or a portion of the total capital of
a company, written on a certificate that has a nominal value, so
that the shares in totality represent the capital of the company,
and are all of equal value.
Based on that, the share is an independent
document, given to the shareholder, that contains information
specific to the company, such as the company name, the amount of
its capital, its nationality, the location of its headquarters,
the number and value of the share and the name of its holder if it
is a nominal share, or the statement that the share belongs to the
bearer.
2 – Ruling on shares
In principle there is nothing wrong with buying
or selling shares, but there are some things that should be
avoided, such as:
Buying and selling shares in companies in which
it is haraam to hold shares because they sell things that are not
permissible, or they help in spreading corruption and falsehood.
Buying and selling shares in riba-based banks.
Putting share money in riba-based banks, because
that leads to the profits being mixed with riba money.
A – The Standing Committee was asked about
holding shares in private companies that deal in charity work,
agriculture, banks, insurance and petroleum. They replied:
It is permissible for a person to hold shares in
these companies if they do not deal with riba. If they deal with
riba then it is not permissible. That is because it is proven from
the Qur’aan, Sunnah and scholarly consensus that dealing with riba
is haraam.
Similarly it is not permissible for a person to
hold shares in commercial insurance companies, because the
insurance policies involve ambiguity, uncertainty and riba, which
are all haraam according to Islamic sharee’ah.
Fataawa Islamiyyah,
2/43
B – There follows the text of a question and
answer from the Fatwa Committee of the Kuwaiti Finance House (Bayt
al-Tamweel al-Kuwaiti) concerning the third point.
Question:
Is it permissible to buy and sell shares in
foreign companies such as General Motors, Phillips and Mercedes,
knowing that these are industrial companies, but they do not
refrain from lending and borrowing with interest?
Answer:
In principle, there is nothing wrong, from the
point of view of sharee’ah, with holding shares in industrial,
commercial or agricultural companies, because they are subject to
profits and losses. It is akin to the kind of investment approved
of in sharee’ah, subject to the condition that these companies
keep away from riba-based transactions, whether they are paying or
taking interest. From your question it is obvious that these
companies deal in riba, paying or taking it, so on that basis
holding shares in them is to be regarded as holding shares in a
riba-based operation, which is what is forbidden in sharee’ah. And
Allaah knows best.
Al-Fataawa al-Shar’iyyah fi’l-Masaa’il
al-Iqtisaadiyyah al-Ajzaa’ Bayt al-Tamweel al-Kuwaiti,
Fatwa no. 532.
And Allaah knows best.