Share Trading

Question

I wanted to know if the buying and selling of shares is permissible, but for that companies that primary source of income is the ‘sale’ of halaal good, eg petrol, phones, clothing.

Is the dividends earned on said shares halaal too?

If not, could I please have the reasoning behind the fatwa?

I know that the buying of selling of shares of banks, and financial institutions which main source of income is through futures and interest is not permissible.

Darul Ifta, Darul Uloom Azaadville · Accepted Answer

There is a difference of opinion amongst the scholars in regards to buying and selling shares on the stock exchange. Some of the Muftis are of the opinion that trading on the stock exchange is valid with the proviso that the company invests is Halaal products and should not be dealing in interest, or any objectionable transactions, etc.

However, Faqeehul-Ummat Hadhrat Mufti Mahmood Saheb Rahimhullah after being explained the mechanism of the South African Stock Market responded by saying, “In terms of the Shari’ah, the buying and selling of shares in the company set up is not a Bay’ (Sale), nor Ijaarah (Leasing), nor Shirkah (Partnership), nor Mudharabah (Sleeping partnership), nor Qardh (Loan), nor ‘Aariyah (Loan), nor Wade’at (Trust). It does not fall in the category of any Shar’ee transaction. One should therefore refrain from entering such a transaction.”

Based on the above, we at the Darul Ifta advise abstention from investing or trading on the JSE.

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