Praise be to Allah alone, and peace and blessings be upon the one after whom there is no prophet. After that: The Permanent Committee for Scholarly Research and Ifta has reviewed what was sent to His Eminence the Grand Mufti from the questioner: Sa'id ibn Ali Ahmad al-Zahrani, Director of the Religious Affairs Department of the Armed Forces of Najran and referred to the Committee by the General Secretariat of the Council of Senior Scholars with number (3777) and date 22/5/1425 AH. The questioner asked a question, the text of which is as follows: Given the high volume of trading in local stocks during the recent period, many members of the force wish for clarification of the legal ruling regarding them so that they may be clear about their religion and worldly affairs. Their desire for clarification on this topic is to kindly request that it be referred to the competent authorities to provide us with a comprehensive fatwa regarding all stocks currently traded in the market from a legal perspective, so that the truth may be clear to those who seek it. May Allah preserve you. After studying the inquiry, the Committee responded that dealing in stocks, whether buying or selling, is permissible, as the original ruling for buying and selling is permissibility; based on the saying of Allah the Exalted: وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا But Allah has permitted trade and has forbidden interest [Al-Baqarah 2:275] , except for what evidence indicates is an exception to this original ruling. However, the following conditions are required for the permissibility of dealing in the buying and selling of stocks: First: The companies whose stocks are being traded must have permissible purposes and activities. It is not permissible to deal in stocks of companies with forbidden purposes and activities, such as companies for intoxicants, pork, gambling, interest-based banks, companies of debauchery and obscene films, investment funds in bonds, and companies dedicated to trading in debts and dealing with them... and the like. It is also not permissible to deal in stocks of companies that own subsidiaries or branches that engage in forbidden activities. Second: That the dealing in company stocks does not include any of the prohibited matters, such as: dealing with options, and dealing with preferred stocks. Third: That the company has commenced the activity for which it was established, such that it has fixed assets, and its assets are not merely money or projects on paper that have not yet entered into execution. As for what was mentioned in the questioner's inquiry regarding some traders colluding to raise the price of a company's stocks to sell when the price is high, and then working to lower the price of its stocks so they can invest when the price drops, that is a forbidden matter; because it involves deceiving other traders.

The Sale of Stocks

The Permanent Committee for Scholarly Research and Ifta

Machine translationRead the Arabic original

Praise be to Allah alone, and peace and blessings be upon the one after whom there is no prophet. After that: The Permanent Committee for Scholarly Research and Ifta has reviewed what was sent to His Eminence the Grand Mufti from the questioner: Sa'id ibn Ali Ahmad al-Zahrani, Director of the Religious Affairs Department of the Armed Forces of Najran
and referred to the Committee by the General Secretariat of the Council of Senior Scholars with number (3777) and date 22/5/1425 AH. The questioner asked a question, the text of which is as follows: Given the high volume of trading in local stocks during the recent period, many members of the force wish for clarification of the legal ruling regarding them so that they may be clear about their religion and worldly affairs. Their desire for clarification on this topic is to kindly request that it be referred to the competent authorities to provide us with a comprehensive fatwa regarding all stocks currently traded in the market from a legal perspective, so that the truth may be clear to those who seek it. May Allah preserve you.
After studying the inquiry, the Committee responded that dealing in stocks, whether buying or selling, is permissible, as the original ruling for buying and selling is permissibility; based on the saying of Allah the Exalted:

But Allah has permitted trade and has forbidden interest

وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا

[Al-Baqarah 2:275]

, except for what evidence indicates is an exception to this original ruling. However, the following conditions are required for the permissibility of dealing in the buying and selling of stocks: First: The companies whose stocks are being traded must have permissible purposes and activities. It is not permissible to deal in stocks of companies with forbidden purposes and activities, such as companies for intoxicants, pork, gambling, interest-based banks,
companies of debauchery and obscene films, investment funds in bonds, and companies dedicated to trading in debts and dealing with them... and the like. It is also not permissible to deal in stocks of companies that own subsidiaries or branches that engage in forbidden activities. Second: That the dealing in company stocks does not include any of the prohibited matters, such as: dealing with options, and dealing with preferred stocks. Third: That the company has commenced the activity for which it was established, such that it has fixed assets, and its assets are not merely money or projects on paper that have not yet entered into execution. As for what was mentioned in the questioner's inquiry regarding some traders colluding to raise the price of a company's stocks to sell when the price is high, and then working to lower the price of its stocks so they can invest when the price drops, that is a forbidden matter; because it involves deceiving other traders.

Source www.alifta.gov.sa

The Arabic text is copied verbatim from the original source, without any edits.

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