Praise be to Allah.
Shares may
be divided, according to the field of activity and work involved, into
three categories:
1.
Shares based
on permissible work, such as companies that deal with transportation,
shipping, manufacturing clothing, tools, office supplies, furniture, medical
equipment, real estate, and so on, and do not engage in any haraam practices
or transactions, such as cheating, or lending or borrowing on the basis of
riba; rather they follow Islamic rulings in all their transactions and
dealings.
These types of
companies are called “permissible” or “clean” companies, and it is
permissible to buy and sell shares in them.
2.
Shares based
on prohibited types of work, such as companies that deal with tourism,
hotels that promote and aid in immoral actions, breweries, riba-based banks,
commercial insurance companies, companies that print and distribute indecent
magazines, and so on. It is not permissible to buy shares or invest in this
type of company, and it is not permissible to advertise them or promote
them.
With regard to
these two types of companies, there is no confusion about the ruling and the
matter is quite clear.
3.
Companies
whose field of work is basically permissible, but they engage in some haraam
practices or transactions, such as transportation companies – for example –
that have interest-bearing accounts in the bank, or they are financed by
means of riba-based loans from banks or from people in the form of stocks.
These types of
companies are called “mixed” companies. The contemporary scholars differed
concerning the ruling on them, but the most correct view is that it is
haraam to buy shares in them, invest in them or promote them.
That is
because the shareholder is a partner in the company based on the number of
shares he holds, so he is a partner to every transaction into which the
company enters, such as riba or other haraam transactions.
With regard to
the prohibition on promoting these companies, that is because of what that
involves of co-operating in sin and transgression, helping to spread haraam
and causing people to fall into it. Allah, may He be exalted, says
(interpretation of the meaning):
“Help you
one another in Al‑Birr and At‑Taqwa (virtue, righteousness and piety); but
do not help one another in sin and transgression”
[al-Maa’idah 5:2].
This view was
favoured by the majority of contemporary scholars, including the scholars of
the Standing Committee for Issuing Fatwas in the land of the two Holy
Sanctuaries. A statement to that effect was also issued by the Islamic Fiqh
Council belonging to the Organisation of the Islamic Conference, as well as
the Islamic Fiqh Council belonging to the Muslim World League.
It says in
Fataawa al-Lajnah ad-Daa’imah, 14/299:
The basic
principle is that it is permissible to hold shares in any company if it does
not deal with haraam things such as riba and so on. But if it does deal with
haraam things such as riba, then it is not permissible to hold shares in
it.
Based on that,
if any of the shares mentioned are in a company that deals with riba or
haraam things, then it is essential to withdraw from it and get rid of any
profit by giving it to the poor and needy. End quote.
Shaykh ‘Abd
al-‘Azeez ibn ‘Abdullah ibn Baaz, Shaykh ‘Abd ar-Razzaaq ‘Afeefi, Shaykh
‘Abdullah ibn Ghadyaan, Shaykh Saalih al-Fawzaan, Shaykh ‘Abd al-‘Azeez Aal
ash-Shaykh, Shaykh Bakr Abu Zayd
It also says
(14/299, 300):
Firstly: if it
is proven that a company deals in riba, whether taking or giving, it is
haraam to hold shares in it, because that comes under the heading of helping
in sin and transgression. Allah, may He be exalted, says (interpretation of
the meaning):
“Help you
one another in Al‑Birr and At‑Taqwa (virtue, righteousness and piety); but
do not help one another in sin and transgression. And fear Allaah. Verily,
Allaah is Severe in punishment”
[al-Maa’idah 5:2].
Secondly: if a
person previously acquired shares in a company that deals in riba, then he
has to sell his shares in it and spend the interest on charitable causes.
End quote.
Shaykh ‘Abd
al-‘Azeez ibn ‘Abdullah ibn Baaz, Shaykh ‘Abd ar-Razzaaq ‘Afeefi, Shaykh
‘Abdullah ibn Ghadyaan, Shaykh ‘Abdullah ibn Qa‘ood
The Islamic
Fiqh Council belonging to the Organisation of the Islamic Conference issued
a statement concerning shares in its seventh conference, held in Jeddah,
7-12 Dhu’l-Qa‘dah 1412 AH/ 9-14 May 1992 CE, in which it says:
(a)
As the basic
principle concerning transactions is that they are permissible, founding a
share-based company that has Islamically acceptable aims and activities is
something that is permissible.
(b)
There is no
difference of opinion concerning the prohibition on holding shares in
companies whose basic aims are haraam, such as dealing in riba, or producing
or trading in haraam things.
(c)
The basic
principle is that it is haraam to hold shares in companies that sometimes
deal in haraam things, such as riba and so on, despite the fact that their
basic activities are Islamically acceptable.
End quote from
Majallat al-Majma‘, issue no. 6, vol. 2, p. 1273; issue no. 7, vol.
1, p. 73; issue no. 9, vol. 2, p. 5.
The Islamic
Fiqh Council of the Muslim World League issued a statement on the same
matter in its fourteenth session in 1415 AH/1985 CE, the text of which is as
follows:
1.
As the basic
principle concerning transactions is that they are permissible, founding a
share-based company that has Islamically acceptable aims and activities is
something that is permissible.
2.
There is no
difference of opinion concerning the prohibition on holding shares in
companies whose basic aims are haraam, such as dealing in riba, or
manufacturing or trading in haraam things.
3.
It is not
permissible for a Muslim to buy shares in companies or banks if some of
their transactions involve dealing in riba, or manufacturing or trading in
haraam things.
4.
If an
individual purchased shares not knowing that the company deals in riba, then
he finds out about that, what he must do is get out of it.
The
prohibition in this case is clear because of the general meaning of the
evidence in the Qur’an and Sunnah concerning the prohibition on riba, and
because buying shares in companies that deal with riba when the purchaser is
aware of that means that the purchaser himself is a partner in dealing in
riba, because the share represents part of the company’s capital, and the
shareholder has a share in the company’s activities and possessions. So if
the company lends any money with interest, or borrows with interest, the
shareholder has a share of that, because those who deal with lending and
borrowing on the basis of interest are doing that on his behalf and acting
as his delegate, and delegating someone else to do a haraam action is not
permissible.
May Allah send
blessings and peace upon our Prophet Muhammad and upon his family and
companions. Praise be to Allah the Lord of the Worlds. End quote.
Dr. Muhammad
ibn Sa‘ood al-‘Usaymi (may Allah preserve him) was asked about the ruling on
investing in mixed shares.
He replied: It
is not permissible according to the majority of scholars, except investing
in “clean” shares, whether one is buying shares or investing. End quote.
http://www.halal2.com/ftawaDetail.asp?id=1201
With regard to
the view that shares in all types of companies are haraam, this view is
incorrect, because there are some companies of the first type, which are the
ones that adhere to Islamic rulings in their dealings. But perhaps those who
are of this view were motivated to say that because companies of the first
type are very few and most companies are of the second and third types.
And Allah
knows best.