Question # 019
Is investing in stocks such as Tesla, Apple, Microsoft halal?
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.
May Allah reward you for reaching out.
To invest in the shares of a particular company or to purchase shares of a company from the stock market has been a matter of debate between the contemporary scholars.
The majority of the scholars, such as, Shaykh Ali al-Khafif, Dr. Wahba al-Zuhaili, Shaykh Taqi Usmani and others have declared investing in the shares of companies to be lawful (halal) subject to certain conditions.
When one purchases the shares of a company, one will be considered a partner and share-holder of the business, hence all the rules of partnership (shirkah) will apply. Once a person buys a share in the company, the share certificate then means that the shareholder is now an owner in the company. His ownership is proportionate to his investment in the company. This means that if the company was to become bankrupt, the shareholder will not receive his investment in the form of cash, rather he will receive the company’s assets based on his proportionate ownership in the company.
Due to the reasons listed above, it will be permissible to invest in stocks.
However, this permissibility includes conditions that one must adhere to. The conditions are as following:
The company deals with lawful business. Investing in stocks of such companies that deal with unlawful business such as interest-based banks or companies manufacturing and selling liquor will be prohibited.
If the company’s main business is halaal but the company is involved in interest dealings in one way or another then the following is necessary:
One should object to the interest dealings. By doing so, the responsibility will be deemed fulfilled.
When the dividend is distributed, the proportion of the company’s income which was gained by interest dealings must be given in charity without the intention of receiving reward, as is the case with unlawful money in general. The amount of interest accumulation may be known by means of the income statement.
The company must have some illiquid assets in its possession i.e all the assets of the company are not only in the form of cash rather the company owns some building, property and goods. If all of the company’s assets are in liquid form (only cash), then the share cannot be sold or purchased except at face value.
By purchasing shares, one should aim at having partnership, not only profiting by levelling differences.
If the above four conditions are followed, then it will be permissible to trade in the stock market.
Please refer to the link for further clarification:
And Allah Ta’āla Knows Best
Regards,
Student - Jamiah Islamiyah Abu Bakr
Checked & Approved by Shaykh Kasim Ingar
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