ISLAMIC VIEW POINT AND RULES OF SHARE BUSINESS

<span class="content1">Islamic economic system has prescribed rules and guidelines for trading and investment. Business is allowed when it takes place according to the Islamic rules and guidelines. A basic rule of Islamic Trading is that either of the participants should not hurt or harm the other. In the same way there should be no cheating or deception. Mustadrak &lsquo;Alas Sahihain, Chapter of Sales: Translation of the Hadith,&quot; It has been narrated on the authority of Hazrat Abu Sa&rsquo;eed Khudri (May Allah be well pleased with him), that the Holy&nbsp;Prophet (Sallallahu alaihi wa sallam) said,&quot; Neither bearing of loss is permitted nor inflicting loss is correct.&quot; <br /> <br /> A share is in reality a proportionate part of the shared wealth (Share Capital) which is in the form of the assets and investments of the company. Business in such wealth whether it belongs to person or is shared by a group of people, when governed by the rules and guidelines of Islam is permitted. <br /> <br /> However, some basic points need to be kept in mind. <br /> <br /> The company's business should be lawful and permissible in Islam (Halal ). The company should deal in things whose trade is permitted in Islam. Like computers, medicines etc. Trading in shares of such a company is permitted. On the contrary, dealing in shares of companies which deal in unlawful and forbidden things e.g. wine etc. is forbidden. For the shareholder, the company's status is that of a representative. The way a Muslim is forbidden from dealing in forbidden things, in the same way, a Muslim is forbidden to appoint a representative on his/her behalf to deal in such things. Musnad Ahmed has a Hadith in Musnad e Abdullah bin Abbas. Translation,&quot; Hadhrat Abdur Rahman bin Wa'ala (May Allah be well pleased with him) narrates that he said, ' I asked Hadhrat Abdullah bin Abbas about trade in wine. He said that the Holy Prophet (Sallallahu alaihi wa sallam) said,&quot; The Lord who prohibited its drinking also prohibited its trade.&quot; <br /> <br /> If the company trade is basically of a permitted type (Halal) but to increase its investments or to avoid income tax, the company takes a bank loan or deposits its money in the bank, then the ruling will be different basing on whether the country is an Islamic one or a non-Islamic one, (Dar ul Islam or Dar ul Harb). <br /> <br /> In a non-Islamic country a Foul sale (Bayah Fasida) is allowed, provided it is not through cheating of any kind. Also a non-Muslim's wealth is Mubah (Neutral). So, obtaining extra wealth without cheating is allowed. As given in Fathul Qadeer. <br /> <br /> For these reasons in a non-Islamic country, Interest (Sud) is not established between a Muslim and a non&#8209;Muslim. So, according to the Shariah, in a non-Islamic country trading in the shares of companies which deposit their money in a non-Muslim bank is permitted. In an Islamic country trading in the shares of such a company amounts to interest-based transaction, which is prohibited. Without a real and pressing need going for an interest-based loan is not permitted. But in the face of a very stringent need Imam, Ibn e Nujaim Misri has permitted an interest-based loan. As given in Al- Ashba wan Nadhaair. On this basis dealing in shares of companies which take a loan may be permitted; provided the interest payable is equal to the amount of tax which the company pays. But to be on the safe side, it is better not to buy the shares of such companies because taking a loan for evading income tax or to increase investment does not seem to be a stringent need. <br /> <br /> Some Scholars have ruled that dealing in shares of such companies is permitted with 2 conditions <br /> <br /> The shareholders should protest against the interest-based transactions in the Annual General Meeting. The Company is like a representative of the shareholder, and if the shareholder protests against the interest-based transactions irrespective of whether the company considers it or not, the shareholder is absolved of his responsibility. <br /> <br /> The percentage of the profit gotten from the interest-based transaction should be calculated, and that percentage of the profit should be given away in charity. <br /> <br /> In the light of the above explanation, dealing in all types of shares, even of those companies whose business is Halal is not permitted. Some cases are permitted and some are not. Those cases where shares are registered and already transferred to the buyer's account, and &quot;Sale on Margin&quot; wherein the broker is not given any extra amount more than the principal amount which the broker had contributed, ( It will be considered as interest) are permitted. But other cases where the ownership of shares has not been acquired and the case where the broker is given any amount more than the principal amount (i.e. interest) and all other cases which involve speculation, gambling, betting of any kind are not permitted.</span>