Buying and selling shares on the same day

20-5-2009 | IslamWeb

Question:

salam if i trade in stock market shares that are halal companies 1. if i buy shares in morning and analyse or on news, sell on profit/loss on that day or someother day, will it be halal?some say it takes time for one's share to be part of the company so it can be wrong.please help guiding me. 2. if the company's main act is halal e.g textile spinning, but i don't know whether the company maintains interest based accounts and other such acts, will trading that share be halal? please clarify me. i really rely on you. thanks

Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

 

If the company has really started its business activity and it is not a company on paper then – if its shares are among the permissible ones – we do not see anything wrong with selling them directly after buying them, and it is not necessary to keep them for one day or more or less. This is because if the goods is transferred to the buyer, it becomes his right to dispose of it as he wishes, either by selling it, gifting it and the like. The stock market or else is not permitted to condition on the buyer not to sell his shares except after a given time. If it conditions this, then the condition is void because the Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) said: "Whoever conditions a condition that is not in the Book of Allaah, then his condition is void, even if it were one hundred conditions.” [Al-Bukhari and Muslim]  However, the sale is correct.

On the other hand, if the company has not yet started its business activity, then it is not permissible to sell its shares because at this time it is still cash money and it is not permissible to sell it for a bigger amount (of the same cash money) because this is Riba (interest and/or usury). Similarly, it is not permissible to sell the shares before they are owned by the buyer because this is selling what one does not possess and the Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) forbade it. Such kind of forbidden contracts happen a lot in the future contracts in the stock market, in a way that the buyer sells the shares of a future contract before he possesses them and this is not permissible.

Therefore, you should know, dear brother, that it is not permissible to deal in the shares of a given company unless you know that its activity is permissible and that it does not put its money in banks that deal with Riba. If you do not know whether it puts its money in banks that deal with Riba or in Islamic banks, then it is not permissible for you to deal in its shares, because in principle, such companies do not care about the prohibited transactions and putting its money in banks that deal with Riba.

For more benefit, please refer to Fataawa 92713, 90770 and 81504.

Allaah Knows best.

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