Buying share, stocks and mutual funds : are stock companies permitted in Shari’ah ? And what justifies little interest ?

Fatawa Question

Assalamu Alaykum : I have read few Fatwas in the site about the stock market. And I would like someone to clarify few points for me. When we talk about the stock market, we should look into how the company was established, meaning look at the contract of buying and selling stocks, and then judge it according to Islam. It was mentioned that when you buy stocks you become a partner in that company that with the percentage of your stocks to the total stocks issues. Well the question comes, what kind of partnerships is that from an Islamic point of view ? Is it ok in Islam to force yourself to be a partner in a company just because you have money ? I know that in Islam the partner has the right to be involved in the decision of the company "al Shareek Motasarref", so how can we not look into that when we study the fact that the whole stock market is built upon ? Money partnership, is it justified in Islam ? 2. The second point is, it was mentioned that it is ok to deal with companies that has less than 50 % of loan in their balance sheet ? How can that be justified ? And based on what ? I have never heard of anything justifying the percentage of Riba.... What I know is a dollar Riba is like a 100, there is no amount of Riba that is right and that is not. I would appreciate it if you answer my wondering about the structure of the company and all the points I have mentioned.

Fatwa

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Publication Date

2001-08-01

Main Subjects

Economics & Business Administration
Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Islamic economics
• Financial markets
• Stocks
• Usury

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-726848

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