A Muslim can acquire the shares of a joint stock company with the following
1. The main business of the company must be Halaal (permissible) according
to Shariáh. So, a Muslim cannot invest in a company whose main business is
Haraam, like the traditional banks, insurance companies, companies dealing
in wines, etc.
2. If the main business is Halaal, but it is involved in borrowing money on
Interest or placing its funds in an Interest bearing account a Muslim
share-holder should raise his voice against this practice in the annual
general meeting of the company.
3. When a Muslim share-holder receives a dividend he must ascertain that
proportion of the profit of the company which has accrued on its
interest-bearing accounts. Then a similar proportion from his own dividend
must be given by him to a person or persons entitled to receive Zakaat.
4. If all the assets of a company are in a liquid form and the company has
not yet acquired any fixed assets or any stock for trade, then the sale and
purchase of shares must be on their par value only.
If anyone of these conditions is contravened, the investment in a company is
not permissible in the Shari’ah.
NB. The above ruling has been issued by Justice Mufti Muhammad Taqi Usmani
of the Shariat Appellate Bench – Supreme Court of Pakistan. He is also the
Deputy Chairman of the Islamic Fiqh Academy – Jeddah.
And Allah Ta’ala Knows Best
Mufti Ebrahim Desai