Answered by: Maulana Moinul Abu Hamza
Question
Dear Shaykh,
I have three questions pertaining to financial transactions.
1. What if the company has debt and has taken out loans. What is the ruling on investing in those companies?
2. In regards to the insurance that companies take out, some of which is state-mandated by the government and some is the choice of the company. How does that affect my investment now potentially being an equity owner in the company? Can you please let me know in regards to these two points that will affect my investment and now I being an equity holder/part owner in the company invested?
3. In regards to Musharakah contract, if it is done in the west, ‘without’ the term itself and agreed returns based on profit are provided, is that allowed?
بسم الله الرحمن الرحيم
In The Name Of Allah, The Most Gracious, The Most Merciful
Answer:
1- It is not permissible to be partners in a business that has haram loans. This is because transactions are made in your name that makes a profit from those interest-bearing loans.[1]
2- If there are state-mandated regulations this is seen more as tax than cover you have voluntarily bought into.[2] As for those insurances which carry a third party and there is no necessity, this insurance that carries gharar in origin is impermissible to partner in or do alone.[3] As stated in the above answer, the impact is based on whether all parts of the contract you partake is halal in origin, it if is not then it is impermissible whether done in a partnership or by oneself.
3- The legal maxim “Taking into consideration in transactions the purpose and meaning, and not the words and phrases.” informs us that the naming is not the issue but the conditions of the contract itself. This is whether you are in the West or anywhere else.
Only Allah knows best
Written by Maulana Moinul Abu Hamza
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
[1] Radd al-Muhtar (2.693)
[2] “It is a well-settled principle of Shari’ah that every transaction between two parties in which the payment by one party to the other is certain while payment by the other party depends upon a contingency (which may or may not occur) is included in Qimaar and Gharar and is, therefore, unlawful. (Mufti Taqi Uthmani, Contemporary Fatawa)
[3] 68/ 13( للسرخسي المبسوط( العاقبة مستور يكون ما والغرر» الغرر بيع عن – وسلم عليه الله صلى – النبي بنهي)