Fatwa No : 85110
Ruling on Trading in Shares

Ruling on Trading in Shares

Is Trading in Shares Permissible in the Light of Shari‘ah?

الجوابُ حامِدا ًو مُصلیِّا ً

Trading in shares is permissible and valid under the following conditions: (1) Firstly, the primary business of the company whose shares are being purchased must be Shari‘ah -compliant and lawful. (2) It must possess some tangible fixed assets, and the company should not be engaged solely in business in the form of capital or cash. (3) If the company is involved in interest-based transactions, a formal objection must be raised against such dealings during its annual general meeting. (4) At the time of profit distribution, any portion of the profit earned from interest-bearing deposits should be given to the poor and needy without the intention of reward. Therefore, keeping these conditions in view, trading in shares is permissible.