I bought shares in a listed company over a period of 7 years. The shares were bought at various prices; some were at a higher price than the current share price, and some were bought at a lower price than the current share price. Some were bought with my own money, and some were bought with money borrowed on a 0% credit card.
I recently discovered that the company is haram because it has no earnings, except from interest, and has large debt on which it pays interest. I understand that I must sell the shares, and any profit made has to be donated to charity.
I need some advice on how to go about selling the shares, as the total value of my holding is less than what I paid/invested. Some shares are in profit, the majority are in a loss. There are a few options available:
1) Wait until the total value of the shares is equal to the money I invested, and sell. This means that some share will be in profit, and some will be at loss, but the profit cancels out the loss.
2) Sell shares as each lot/tranche of shares reaches the price that I paid for them. Donate any excess to charity. This means that it may take a long time to dispose of the shares, as the price will have to at least double. In fact, the price may never reach what I paid.
Do I need to treat the shares purchased by borrowing money on credit card separately to the shares purchased using my own money.
How should I deal with transaction costs? If it cost me £12 to buy 10 000 shares at 10p, and it costs me £12 to sell the shares, I have lost £24.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Respected brother in Islam,
We commend you for your efforts in practicing Deen and staying away from the prohibitions of Shari’ah in trying to keep your income pure and free from haram. Aameen.
You are correct in understanding that you must sell the shares and any profit earned from the shares must be donated to charity.
The primary objective is to get rid of the haram wealth in your possession. This will be achieved by selling the shares as soon as possible and not by prolonging the sale for a value increase. However, in order to avoid incurring an unbearable loss you may wait for a short term for a value increase of the shares so that it may reach the purchase price. After a considerable period of waiting, you must sell the shares as soon as possible whether it be of a loss or profit.
And Allah Ta’āla Knows Best
Fahad Abdul Wahab
Student Darul Iftaa
Checked and Approved by,
Mufti Ebrahim Desai
وَيَرُدُّونَهَا عَلَى أَرْبَابِهَا إنْ عَرَفُوهُمْ ، وَإِلَّا تَصَدَّقُوا بِهَا لِأَنَّ سَبِيلَ الْكَسْبِ الْخَبِيثِ التَّصَدُّقُ إذَا تَعَذَّرَ الرَّدُّ عَلَى صَاحِبِهِ
[رد المحتار ج٦ ص٣٨٥ ايج ايم سيعد]
فتاوي رحيمية ج٩ ص٢٥٦ دار الاشاعت
فتاوي محمودية ج٢٤ ص٣٤٦ مكتبة محمودية