How is zakah calculated on shares held in companies? Given that they have an original nominal value and other values that change over time?
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The questioner : He says he has shares.
The Shaykh: Yes.
The questioner : He calculates the zakah every year in Ramadan, but the shares have a value, which is the nominal value, which is what he bought them for, registered, for example, at the bank, and the price is, for example, one dinar.
The Shaykh : Yes.
The questioner : Their value changes; sometimes it is lower and sometimes it is higher. So how should he calculate the zakah on them? How should he compute it? If there are profits, he takes the profits, but what about their value? Does he calculate it based on the nominal value at which he bought them? The Shaykh: By Allah, this issue—I am not among those who say it is permissible to deal in shares. That is the first point.
The questioner : First.
The Shaykh : Second: If I must answer, he should not calculate the zakah based on the original value, but rather based on the actual value, which may rise or fall.
The questioner : But how should he calculate it during the year? It goes up and down, and he may have placed it in the...
The Shaykh : I do not know. Therefore, I say: I do not approve of this dealing in the first place, because it is sufficient that it is dealing with interest-based banks. As for how he should pay it out, if I were afflicted with such a trial, I would be confused in dealing with it, with the same confusion you are asking about. How, by Allah, has He spared us, and we ask Allah for well-being for everyone. Here comes the principle:Sunan an-Nasa'i 5711Sahih (Darussalam) If this shareholder does not stop dealing in shares, he must at least act with this precaution derived from this authentic hadith: Sunan an-Nasa'i 5711Sahih (Darussalam), and because it is better for him to pay what is not obligatory than to refrain from paying what is obligatory. This is a principle, as you know, that covers many of the rulings of the Shari'ah. Sunan an-Nasa'i 5711Sahih (Darussalam) This is all I have to say in answer.
The questioner : There is a discussion among some of them. A group says, for example, that one person bought land for one hundred thousand, and another bought shares for one hundred thousand. The one who bought the land pays... and these shares, meaning they measure them by this, that the dealing is... and this one bought, but he will pay based on the nominal value on them, plus the profits if there are profits at the end of the year.
The Shaykh : Yes, that is the analogy you are mentioning regarding some people.
The questioner: Yes.
The Shaykh : What exactly is intended by it?
The questioner : It is intended to mean equality in the original amount of the two transactions in dealing and trade.
The Shaykh : But let us return to the land now. Let us return to the land now.
The questioner: Yes.
The Shaykh : The land is a material, existing thing, whereas shares exist only in the mind. So if this land was bought ten years ago for ten dinars, and now it is worth one thousand dinars, what does he pay out of it?
The questioner : He pays it out when he sells it. He does not pay it out otherwise.
The Shaykh : How, when he sells it?
The questioner : Or if there is an agricultural yield, if there is an agricultural yield, he pays out of the agricultural yield.
The Shaykh : O Shaykh, you have strayed from the topic. You are asking about the zakah on shares that are still the right of their owner and have not been sold, is that not so?
The questioner : Yes, that is it.
The Shaykh : Well, if you had not strayed from the land and said that he pays zakah on it when he sells it, we say now: this land, which is from trade goods, and when he bought it, he bought it for ten dinars, and now it is worth one thousand or more, and he wants to pay its zakah, does he pay its zakah based on the original amount he bought it for, ten dinars, or based on the one thousand?
The questioner : Based on the one thousand.
The Shaykh : Then the analogy you mentioned is completely reversed.
The questioner : Well, what does this statement mean now?
The Shaykh : Yes, that is what we want, but I hope he will listen to the first point, which is that we advise Muslims not to deal with banks at all for trade and profit, but only within the limits of extreme necessity.
The questioner : But these shares, O long-lived one, in companies are not in banks?
The Shaykh : And the companies are based on banks, as you know, sir.
The questioner: Yes.
The Shaykh : There is no company whose money is not in the banks, so there is no difference between the bank and the company in this regard. They cooperate in interest. Perhaps you remember, you and your companion next to you, his saying (peace and blessings be upon him):Sahih Muslim 1598. So the companies, all their cash is deposited in the banks, not in the form of trusts in the boxes that you know, but on the basis of depositing money in the bank for interest. So the capital becomes one million, and at the end of the year it becomes one million and a thousand and thousands upon thousands. Therefore, I hope you will note this with me, and do not say that these are shares in a company. There is no difference whether they are shares in a company or in a bank. This is all I have, and we ask Allah, Mighty and Majestic, to guide us to know the truth first, and then to follow it second.
The questioner : Amen, if Allah wills.
The Shaykh : Is there anything else?
The questioner : How are you? How is the family, or al-Fadl?
The Shaykh : Praise be to Allah, we are well. And your family, are they all well?
The questioner : Everyone is well, praise be to Allah.
The Shaykh: Yes.
The questioner : He calculates the zakah every year in Ramadan, but the shares have a value, which is the nominal value, which is what he bought them for, registered, for example, at the bank, and the price is, for example, one dinar.
The Shaykh : Yes.
The questioner : Their value changes; sometimes it is lower and sometimes it is higher. So how should he calculate the zakah on them? How should he compute it? If there are profits, he takes the profits, but what about their value? Does he calculate it based on the nominal value at which he bought them? The Shaykh: By Allah, this issue—I am not among those who say it is permissible to deal in shares. That is the first point.
The questioner : First.
The Shaykh : Second: If I must answer, he should not calculate the zakah based on the original value, but rather based on the actual value, which may rise or fall.
The questioner : But how should he calculate it during the year? It goes up and down, and he may have placed it in the...
The Shaykh : I do not know. Therefore, I say: I do not approve of this dealing in the first place, because it is sufficient that it is dealing with interest-based banks. As for how he should pay it out, if I were afflicted with such a trial, I would be confused in dealing with it, with the same confusion you are asking about. How, by Allah, has He spared us, and we ask Allah for well-being for everyone. Here comes the principle:
Leave that which makes you doubt for that which does not make you doubt.
دَعْ ما يريبك الى مالا يريبكLeave that which makes you doubt for that which does not make you doubt.
دَعْ ما يريبك الى مالا يريبكLeave that which makes you doubt for that which does not make you doubt.
دَعْ ما يريبك الى ما لا يريبكThe questioner : There is a discussion among some of them. A group says, for example, that one person bought land for one hundred thousand, and another bought shares for one hundred thousand. The one who bought the land pays... and these shares, meaning they measure them by this, that the dealing is... and this one bought, but he will pay based on the nominal value on them, plus the profits if there are profits at the end of the year.
The Shaykh : Yes, that is the analogy you are mentioning regarding some people.
The questioner: Yes.
The Shaykh : What exactly is intended by it?
The questioner : It is intended to mean equality in the original amount of the two transactions in dealing and trade.
The Shaykh : But let us return to the land now. Let us return to the land now.
The questioner: Yes.
The Shaykh : The land is a material, existing thing, whereas shares exist only in the mind. So if this land was bought ten years ago for ten dinars, and now it is worth one thousand dinars, what does he pay out of it?
The questioner : He pays it out when he sells it. He does not pay it out otherwise.
The Shaykh : How, when he sells it?
The questioner : Or if there is an agricultural yield, if there is an agricultural yield, he pays out of the agricultural yield.
The Shaykh : O Shaykh, you have strayed from the topic. You are asking about the zakah on shares that are still the right of their owner and have not been sold, is that not so?
The questioner : Yes, that is it.
The Shaykh : Well, if you had not strayed from the land and said that he pays zakah on it when he sells it, we say now: this land, which is from trade goods, and when he bought it, he bought it for ten dinars, and now it is worth one thousand or more, and he wants to pay its zakah, does he pay its zakah based on the original amount he bought it for, ten dinars, or based on the one thousand?
The questioner : Based on the one thousand.
The Shaykh : Then the analogy you mentioned is completely reversed.
The questioner : Well, what does this statement mean now?
The Shaykh : Yes, that is what we want, but I hope he will listen to the first point, which is that we advise Muslims not to deal with banks at all for trade and profit, but only within the limits of extreme necessity.
The questioner : But these shares, O long-lived one, in companies are not in banks?
The Shaykh : And the companies are based on banks, as you know, sir.
The questioner: Yes.
The Shaykh : There is no company whose money is not in the banks, so there is no difference between the bank and the company in this regard. They cooperate in interest. Perhaps you remember, you and your companion next to you, his saying (peace and blessings be upon him):
Allah's Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses
لَعَنَ الله آكل الربا ، وموكله ، وكاتبه ، وشاهديهThe questioner : Amen, if Allah wills.
The Shaykh : Is there anything else?
The questioner : How are you? How is the family, or al-Fadl?
The Shaykh : Praise be to Allah, we are well. And your family, are they all well?
The questioner : Everyone is well, praise be to Allah.
Source
www.al-albany.com
The Arabic text is copied verbatim from the original source, without any edits.