Conditions for permissibility of buying shares
Fatwa No: 328285

  • Fatwa Date:17-9-2016 - Thul-Hijjah 15, 1437
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Question

I would like to ask about dealing in shares in the case that a person who used to be a banker started a marketing company and now wants to sell his shares. Sixty percent of the shares are to be sold out to people, and profit is distributed per share on a daily basis, so my question is the following: many people purchased shares, and I also purchased a share, but some people have illegal money, and some people have legal money. So my question is: is the profit that is given to me for my share halal?
In Summary: The business is legal; the shares are purchased by many people; we do not know their source of income and the owner was a former banker; and profits on shares are distributed to all share holders according to their stake.

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 ʻalayhi wa sallam, is His slave and Messenger. 

Scholars set two conditions for the permissibility of buying shares:

Firstly, the activity of the company must be lawful, such as selling food to Muslims or non-Muslims, as long as what is sold is halaal (lawful).

Secondly, the company must not invest any part of the shareholders' money in usurious banks to yield interest, which would then be added to the profits of the shareholders.

As long as these two conditions are met, then there is no religious impediment to buying shares and availing oneself of their profit. The fact that some of the shareholders have earned their money, with which they bought the shares, from unlawful sources is of no effect. The prohibition of such ill-gotten money is related to their personal liability, not to the money itself.

Shaykh Ibn ʻUthaymeen  may  Allaah  have  mercy  upon  him wrote in his Tafseer of Soorah al-Baqarah:

As for that which is unlawful because of the manner in which it was acquired, such as money that was obtained through cheating, through usury, or lying and so on, it is unlawful for the one who acquires it, but it is lawful for anyone else if he acquires it from him in a lawful manner. This is indicated by the fact that the Prophet, sallallaahu ʻalayhi wa sallam, used to deal with the Jews though they consumed unlawful money and dealt in interest. This indicates that the ill-gotten money itself is not unlawful for anyone other than the one who acquires it.

For more benefit, please refer to fataawa 102369 and 93774.

Allaah knows best. 

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