(#118)
Asalamualaikum Warahmatulah Wabaraktuhu dear Ustad, Kindly request if you can give insight into buying shares and investing in companies on the stock exchange online via platforms such as Sharesies New Zealand (https://www.sharesies.nz/) or Hatch (https://www.hatchinvest.nz/).
These are local online platforms that allow you to become shareholders with large companies such as Apple, Tesla etc. As there is no current Halal avenue to purchase a home here in New Zealand, we were curious to see if the above online options are halal means one can invest and grow their wealth to help save for purchasing a home one day without a interest based loan Insha Allah.
Allah grant us tawfiq and taqwa in all our dealings.
If the above platforms are halal to invest in. Could you also tell us how Zakat would be applied to such an investment?Jazakamullahu Khair Ustad for your noble efforts to the Ummah and the team at Auckland Islamic Trust. May Allah Azzawajal be most pleased with you all. Ameen With Duas
15th Rabi al Akhir 1443
Answer
بسم الله الرحمن الرحيم
السلام عليكم و رحمة الله و بركاته
حامدا و مصليا و مسلما
Muhtaram
We have received your query regarding shares, our response is as follows:
A difference of opinion exists among the Ulama with regards to trading on the stock market. Our Darul-Ifta (and also other reputable Darul Iftas ) subscribe to the view of those Ulama who opine that it is impermissible to trade in the shares of, or invest in a company listed on the stock market.
Therefore, by way of advice, we would like to advise you that, if purchasing shares in the aforementioned manner involves delving in the stock exchange market, then it would be best NOT to purchase such shares as the mechanics of the stock exchange have been found by some Ulama to be doubtful and inconsistent within the principles of Shariah. It would be safer thus, to abstain from this.
Yes, some Ulama permit the purchasing of shares in certain selected companies (such as those that do not engage in invalid Shar’i business transactions, nor deal in buying and selling of Haraam commodities and/or whose income is not dependent on interest-based transactions). However, as mentioned above, we advise caution, amongst those who advise that one should refrain from shares is a prominent and renowned Mufti of the Indo-Pak subcontinent (viz. Faqeehul Ummah Hadhrat Mufti Mahmood Saheb Rahmatullahi Alaihi) after being explained the mechanism of the Stock Market felt that such an investment does not fall within the ambit of any legal Shar’I transaction. Thus, concerning the buying of shares on the stock market he answered:
“In terms of the Shariah this (buying and selling of shares in the company set up) is not a Baie (Sale), nor Ijaarah (Leasing), nor Shirkah (Partnership), nor Mudharabah (Sleeping partnership), nor Qardh (monetary Loan), nor Aariyah (Loan of an item), nor Wadee’at (Trust), it is not in any class of a Shar’iee transaction. Never should one enter into such a transaction.”
Thus, these Ulama do not permit dealing in any shares of the share market as such.
Hence, to be on the safe side one should avoid investing with shares. Also due to the unknown modus operandi of these companies’ transactions, their methods of dealing with capital, etc. there is a strong possibility that their transactions and/or activities may include methods deemed impermissible in Shari’ah. Hence, our advice is that caution would dictate that one abstains entirely from buying and investing in any type of Shares. We may feel that we might ‘lose’ some money, but Inshallah one will be rewarded for treading the path of Shari’ah (Deen). And ones Rozi/sustenance will not be decreased because a person has to receive that which has been decreed for him.
As far as Zakaat on shares is concerned, the basic principle is that, after deduction of liabilities (monies owing, etc) Zakaat is paid on the market value of the shares as well as on the dividends accrued therefrom. However, this rule of discharging Zakaat on both the share-value and dividends will only apply if the company’s business is that of selling a commodity. If, on the other hand, its source of income is through hiring transactions such as rental accrued from property-letting or hiring out machinery and equipment, then Zakaat will be due only on the dividends and not on the share-value.[1]
It will be best that you search for other avenues to invest your money, if you have any further queries regarding any specific investment than please do not hesitate to get in contact with us.
And Allah Ta’ala Knows Best
(Moulana) Abdushakoor Salim
Student of Darul Iftaa
Checked and approved by:
(Mufti) Musayyab Sahib and (Mufti) Muhammad Irshad Motara
30th Rabiuth Thaani
6th December 2021
[1] فتاوى رحيمية ، ص ١٥١ ، ج ٧
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