Question #13-37: Is it halal to buy and sell stocks of companies?

Question:

Is it halal to buy and sell stocks of companies?

Answer:

In the name of Allah, the Most Compassionate, Most Merciful

Assalamu alikum wa rahmutul Allah wa Barrakathu:

It depends. It could be Halal or Haram:Buying stock is considered, from the Shari’ah point of view, is the same as entering into a company or partnership because when you buy stocks you become a partial owner of the company. This means that one may buy stocks of companies that deal in permissible (Halal) goods and services through Halal kinds of contracts. As a result, a Muslim is permitted to be a partial owner of a company that deals in Halal goods/contracts. For instance, it is Halal buying stocks of an Islamic bank or Islamic insurance company. Just as buying stocks of conventional bank, casinos, and breweries is Haram.

Accordingly,

1) Stocks of companies whose main line of business is prohibited must be completely avoided.

2) Companies that are involved in interest-based contracts must also be avoided.

3) Also, if the money is collected, then it should be given to the broker to invest and by the end of the day a distribution is made according to the profit and loss after the deduction of all expenses related to the investment. It is also haram if you save the investment in a bank gaining interest.

Allah knows best.

Shk. Mostafa

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