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Buying and Selling Shares

Answered according to Hanafi Fiqh by DarulIftaBirmingham

Answered by: Maulana Tahsin Alam

Question

I want to invest in the stock market (buying and selling of shares) and mutual fund. Please advise.I want to invest in the stock market (buying and selling of shares) and mutual fund. Please advise.


بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم


In the name of Allah, the Most Gracious, the Most Merciful

Answer:

The buying and selling of stocks will be permissible under four conditions:-

1) The main business of the company is lawful (i.e. not involved in alcohol, interest, pornography etc.)

2) The company must have some liquid assets in its possession (i.e. it must have tangible assets in its possession like buildings, materials or stocks in trade),

3) One raises his objection to the company’s interest-based transactions,

4) The proportion of the company’s income gained through interest-based dealings is given in charity (without the intention of the reward). For example- If the profit was $100 and 5% of that amount was gained through interest, then that amount must be donated.[1]

We would advise you to find a shariah-compliant business that deals with investments and stock trading with consultation from your local scholars.

Only Allah SWT alone knows best.

Answered by Maulana Tahsin Alam

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham


 


 



[1]Mufti TaqiUsmani, Contemporary Fataawa (Durban: Offset Plate Printing Sevices, 2000) pg. 100.


This answer was collected from DarulIftaBirmingham.co.uk, which is run under the supervision of Mufti Mohammed Tosir Miah from the United Kingdom.

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