28th April 2017
السلام عليكم و رحمة الله و بركاته
Question: Will it be permissible for me to buy stocks/shares of the company Armaco?
الجواب حامداً و مصلياً
In the name of Allāh, the Most Gracious, the Most Merciful
Answer
Amarco is a Saudi state-owned oil company based in Dhahran. It deals with crude oil, petroleum and natural gas with an estimated value of one trillion dollars of investment. Based on the information provided, they deal mainly with natural and energy resources.[1] From the Shari’ee point of view, natural and energy resources are permissible for trade and regarded as intrinsic value (mutaqawwam) for buying and selling.
Contemporary scholars such as Shaykh Mufti Taqi Usmani view the permissibility of buying and selling shares in a company. He argues that the status of a company falls somewhat similar to Musharakat (partnership)[2] in the sense that he purchases a certain percentage of ownership in the assets of the company. Buying and selling shares is permissible with the following conditions,
- The trade must be in the form of fixed assets rather than currency. In other words, the exchange of items must be cash and assets. An exchange between the same currencies is permissible with the same quantity on both sides. Either side being more than the other becomes interest (riba) which will not be permissible.
- Being a shareholder does not imply merely owing certain rights in a company but assets of the company. Trading in bundles of rights would not be permissible because of the absence of assets.
- The company should not deal with interest. Should they do so then he must voice his disapproval of it.[3]
- If the shareholder receives interest unintentionally then he must dispose of it by giving it away to the poor and needy or community service project without the intention of reward.[4]
[Allãh Knows Best]
Written by (Mufti) Abdul Waheed
Answer Attested by Shaykh Mufti Saiful Islam
JKN Fatawa Department
[1] http://www.saudiaramco.com/en/home.html
https://en.m.wikipedia.org/wiki/Saudi_Aramco
[2] It must be noted that its similarity is subtle otherwise there are some distinctions between Musharakat and company such as individual ownership in partnership whereas the company is regulated by the state, a partner can choose to exit the business and take his stock whereas a shareholder in a company can only sell his share in order to exit.
[3] It must be remembered that the company directors represent (wakeel) all the shareholders from a Shar’ee perspective,
[4] Mufti Taqi Usmani – Islām aur Jadeed Ma’eeshat wa Tijarat
- Buying and selling Shares, Fiqhi Maqalāt vol1, p.141
Maulāna Khalid Saifullah Rahmani – buying and selling Shares, Jadeed Fiqhi Mabahith, p. 249, vol 4