Trading shares and stocks : rules of investment in stock markets and their applications

Fatawa Question

Assalamu Alaykum Wa Rahmatullahi Wa Barakatuh, I have some questions about the fatwa mentioned by respected Dr. Monzer Kahf concerning stock markets and their applications In one of his answers he mentions a fatwa, and a decision added by the ECFR (European Council for Fatwa and Research) that allows trading in stocks (supported only by a minority of scholars-and only for minority of Muslims in the west) and follows by some conditions: In one of the conditions he cites : 3. The unlawful assets should not exceed 10 percent of the total assets, provided that one should get rid of the interests and unlawful earning, whatever their proportion may be, through disposing of them for charitable purposes and that the circulation, in the case of increase in kind assets and benefits, should be confined to debts and cash. My question : suppose I own a stock which has 5 % unlawful activity or earnings of its total assets. To calculate the unlawful part in this investment, what should I take as a reference : do I have to calculate the unlawful percentage of the assets (taking total assets as reference) or should I calculate the unlawful percentage of the total income / benefit of the company... Or the unlawful percentage of the total turnover / sales or... ?? What should I take as a reference here, as I only possess a share of the company ? after the percentage is defined, How should the active cleaning process apply on the example when selling the stock ? Should I give 5 % to charity of the total of the capital of the stocks I sold, or only 5 % of the increase (benefit) I gained on selling this stock ? What if I sell the share containing 5 % unlawful part with loss, at a lower price then initially bought ? Selling without any gain, should I then also clean the capital even if it results is less capital that I initially invested ? It would be nice and appreciated if this question can be clarified, as I have tried to find an answer in the bank of questions, and tried to submit this question directly, but without success. My best regards, Jazakum Allahu Khairan for your constant help

Fatwa

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Publication Date

2006-07-03

Main Subjects

Economics & Business Administration
Islamic Studies

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-790482

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