Criteria for investing in halal business/stock
Question
Alot of the stocks in DJ Islamic Market Index DJIM are technology stock like microsoft, oracle , and all these companies do business with companies involve in unacceptable primary business activities ( Alcohol , Pork related products , Conventional financial services (banking, insurance, Entertainment (hotels, casinos/gambling, cinema, pornography, music, etc.) i.e they all use software made by microsoft or oracle etc. Q-is it halal to do business with intstitutions involve in haram business? Q-if its halal is there any percentage of revenue / profit generated through these business activities Q-islamiq.com uses a "5 percent rule", (which is the maximum level of non-Shari'ah compliant activities or tainted income sources that are considered "tolerable") . is it halal to invest in a company with less than 5% profit generated from interest or other unacceptable activities Q-is day trading halal? Q-is there a minimum time period b/w buying and selling a stock Q - how to adjust inflation in islamic loan Q - if interest rate is less than inflation is halal to take loan from a bank Q -is it halal to work as contractor for a bank, or any intstitution involve in haram business i.e providing any service or product ( furniture, stationary, machinery, software, computers etc )as a contrator to a business involve in haram business
Answer
Respected Brother-in-Islam
Assalaamu Alaykum Wa Rahmatullaahi Wa Barakaatuhu
We suggest you study the attached terms and condition of investing in a stock market by Mufti Taqi Usmani - Judge of the Appellate Division in the Supreme Court of Pakistan and Deputy Chairman of Islamic Fiqh Academy in Jeddah.
and Allah Ta'ala Knows Best
Mufti Ebrahim Desai
FATWA DEPT.
A Muslim can acquire the shares of a joint stock company with the following
conditions:
1. The main business of the company must be Halaal (permissible) according to Shariáh. So, a Muslim cannot invest in a company whose main business is Haraam, like the traditional banks, insurance companies, companies dealing in wines, etc.
2. If the main business is Halaal, but it is involved in borrowing money on Interest or placing its funds in an Interest bearing account a Muslim share-holder should raise his voice against this practice in the annual general meeting of the company.
3. When a Muslim share-holder receives a dividend he must ascertain that proportion of the profit of the company which has accrued on its interest-bearing accounts. Then a similar proportion from his own dividend must be given by him to a person or persons entitled to receive Zakaat. 4. If all the assets of a company are in a liquid form and the company has not yet acquired any fixed assets or any stock for trade, then the sale and purchase of shares must be on their par value only.
If anyone of these conditions is contravened, the investment in a company is not permissible in the Shari'ah.
NB. The above ruling has been issued by Justice Mufti Muhammad Taqi Usmani of the Shariat Appellate Bench - Supreme Court of Pakistan. He is also the Deputy Chairman of the Islamic Fiqh Academy - Jeddah.
- Answered by
- Mufti Ebrahim Desai
Fatawa SA is an independent, read-only index of fatawa already published by Darul Iftaa Mahmudiyyah (AskImam). It is not a fatwa service. For your own situation, ask the issuing Darul Ifta directly.