What is the position of Islam regarding stock companies? And is it a condition for the shareholders that they know one another?
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The questioner : Shaykh, regarding stock companies, what is the position of Islam towards them in the first place? And is it a condition for the shareholders that they know one another, and that if one of the shareholders dies, the stock company becomes invalid due to his death? May Allah reward you.
The Shaykh : First of all, in my opinion, I do not find myself religiously compelled to elaborate on the matter to the point of concluding whether his right is invalidated if he dies or not. This is because we say that shareholding today is not based on the rulings of the Shari'ah. These shares, from the very beginning of participation in them, and before these shares—which are specific percentages, one hundred dinars, one thousand dinars, fifty dinars—all of these, as is known in reality, are deposited in banks. Then, over time, if they have the amount that was planned to be invested in, for example, trade, or in establishing a factory or something similar, until these funds are converted into goods or a factory, they remain in interest-based banks. So the religious problem begins here, which does not allow a Muslim to participate in any project that exists today. When does this question arise? It arises when there are stock companies that have established a methodology for the company that conforms to the principles or rulings of the Shari'ah. After that, it is said: Is the right of this participating shareholder to remain a shareholder cut off from the heirs due to his death, or does this right continue? In answer to that, I say: It continues, because there is nothing that prevents continuity except if there are conditions and an agreement that the shareholder's right ends upon his death. But the ruling is originally not religiously valid, and therefore we do not advise participating in these shareholdings.
The questioner : May Allah bless you.
The Shaykh : May Allah bless you.
The questioner : Is the condition they impose that the shareholder must know the other shareholders in this company?
The Shaykh : No.
The questioner : It is not a condition.
The Shaykh : My brother, what is built upon a defective foundation is defective.
The questioner : May Allah bless you.
The Shaykh : As long as the original matter is not prescribed, the matter is concluded.
The Shaykh : First of all, in my opinion, I do not find myself religiously compelled to elaborate on the matter to the point of concluding whether his right is invalidated if he dies or not. This is because we say that shareholding today is not based on the rulings of the Shari'ah. These shares, from the very beginning of participation in them, and before these shares—which are specific percentages, one hundred dinars, one thousand dinars, fifty dinars—all of these, as is known in reality, are deposited in banks. Then, over time, if they have the amount that was planned to be invested in, for example, trade, or in establishing a factory or something similar, until these funds are converted into goods or a factory, they remain in interest-based banks. So the religious problem begins here, which does not allow a Muslim to participate in any project that exists today. When does this question arise? It arises when there are stock companies that have established a methodology for the company that conforms to the principles or rulings of the Shari'ah. After that, it is said: Is the right of this participating shareholder to remain a shareholder cut off from the heirs due to his death, or does this right continue? In answer to that, I say: It continues, because there is nothing that prevents continuity except if there are conditions and an agreement that the shareholder's right ends upon his death. But the ruling is originally not religiously valid, and therefore we do not advise participating in these shareholdings.
The questioner : May Allah bless you.
The Shaykh : May Allah bless you.
The questioner : Is the condition they impose that the shareholder must know the other shareholders in this company?
The Shaykh : No.
The questioner : It is not a condition.
The Shaykh : My brother, what is built upon a defective foundation is defective.
The questioner : May Allah bless you.
The Shaykh : As long as the original matter is not prescribed, the matter is concluded.
Source
www.al-albany.com
The Arabic text is copied verbatim from the original source, without any edits.