The shares were acquired when the companies demutulized
Any form of life insurance is Haraam. Mutual companies are owned by policy
holders and all reserves are built up through retained profits. However,
such profits primarily arise from income generated through Haraam
investments such as interest on government stock, interest on fixed deposit,
investments, investments on Brewery companies, etc.
Accordingly such accumulated profits are from Haraam sources. On
demutualisation, these accumulated profits are utilised to issue free shares
to policy holders in proportion to their equitable shares. Therefore, such
shares received are Haraam and the proceeds on sales are Haraam. The
proceeds should be given away as charity to the poor and needy. (Answer
prepared in consultation with Jamiat Accountants)
and Allah Ta’ala Knows Best
Mufti Ebrahim Desai