I would like to ask is investing in Azzad Ethical Fund or the Azzad Wise Capital Fund (http://www.azzadfund.com ) is halal?
Jazakallah
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
At the outset, the buying and selling of shares is an academically contested issue among contemporary and prominent ‘ulama. While some believe it is permissible, others contend against it.
However, even in accordance to those scholars who permit buying and selling shares, it will not be correct to render the Azzad Ethical Fund and the Azzad Wise Capital Fund as Sharia-compliant until we gain further clarity from the Fund on the following issues:
- It is stated concerning Azzad Ethical Fund on page 9 of the Azzad Funds prospectus dated November 1, 2013 that the Fund could “invest in instruments that provide a fixed rate of return [emphasis added] in transactions”. According to the Islamic laws of sale, it is necessary for the investor to assume the risk of loss as well as any potential profit and, as such, a fixed rate of return renders the transaction as (invalid).[1]
- Furthermore, it is stated in regards to Azzad Wise Capital Fund on page 14 that an issuer will “sell the investor a certificate, which the investor then rents back to the issuer for a predetermined rental fee.” This statement needs clarity. The statement apparently denotes one transaction being contingent on another or the coercion in renting back to the issuer which, according to Sharia, render the transaction invalid.[2]
You may forward your response to admin@daruliftaa.net for our further consideration.
And Allah Ta’āla Knows Best
Hanif Yusuf Patel
Student Darul Iftaa
UK
Checked and Approved by,
Mufti Ebrahim Desai.
References
[1]
[An Introduction to Islamic Finance, p. 76, Maktabah Ma`arif al-Qur`an]
[2] قَالَ (وَمَنْ بَاعَ عَبْدًا عَلَى أَنْ يُعْتِقَهُ الْمُشْتَرِي أَوْ يُدَبِّرَهُ أَوْ يُكَاتِبَهُ أَوْ أَمَةً عَلَى أَنْ يَسْتَوْلِدَهَا فَالْبَيْعُ فَاسِدٌ) ؛ لِأَنَّ هَذَا بَيْعٌ وَشَرْطٌ وَقَدْ نَهَى النَّبِيُّ – صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ – عَنْ بَيْعٍ وَشَرْطٍ. ثُمَّ جُمْلَةُ الْمَذْهَبِ فِيهِ أَنْ يُقَالَ: كُلُّ شَرْطٍ يَقْتَضِيهِ الْعَقْدُ كَشَرْطِ الْمِلْكِ لِلْمُشْتَرِي لَا يُفْسِدُ الْعَقْدَ لِثُبُوتِهِ بِدُونِ الشَّرْطِ، وَكُلُّ شَرْطٍ لَا يَقْتَضِيهِ الْعَقْدُ وَفِيهِ مَنْفَعَةٌ لِأَحَدِ الْمُتَعَاقِدَيْنِ أَوْ لِلْمَعْقُودِ عَلَيْهِ وَهُوَ مِنْ أَهْلِ الِاسْتِحْقَاقِ يُفْسِدُهُ
[al-`Inayah Sharh al-Hidayah, 3: 598, al-`Ilmiyyah]
وأما ان لا يقيضيه العقد و لا يلايمه و لا جري العرف باشتراطه و في نفع لأحد العاقدين او لغيرهما من اهل الاستحقاق، فالبيع فاسد في هذه الصورة
[Sharh al-Majallah, 1,2: 60, Maktabah Rashidiyyah]
و خلاصة مذهب الحنفية في ذلك انه ان كان شرطا يقتضيه العقد، او يلائم العقد، او شرطا جري بي التعامل بين الناس، فهو جائز، و لا يفسد بي البيع…و أما الشروط الأخري التي لا تدخل في واحد من هذه الثلاثة، فعن كان فيها منفعة لأحد العاقدين، او للمعقود عليه، فانها فاسدة، و يفسد بها البيع…كما في فتح القدير
[Takmilah Fat`h al-Mulhim, 1: 629-30, DU Karachi]