Owning 'haram' companies' shares/stocks is halal ?

[accident]

I am my own Uma, Ulima and Sheikh and I say it is alright, atleast for me.

Why should it be haram when you extract Haram gains and implement it in good social projects which is good for all of society? You are not even benefiting.

[anonymousfaarax]

This website has a lot of interesting information. But I must say that I raised an eyebrow at some of the stuff e.g. "dividend purification or dividend cleansing"

http://www.applied-islamicfinance.com/s ... rket_2.htm

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Gambling in the stock market

Some people believe that the stock market is a place where they can try their luck and gain substantially from the increment in stock prices, just like spending money in casinos. They think that all they have to do is just to purchase any stock they want and then sit back and wait, hoping for the profits to come rolling into their pockets sometime in the future. If this is the case, then trading in the stock market is prohibited according to the Shari’ah principles.

The question now is, are all activities in the stock market similar to gambling activities? Although one may gamble in the stock market and gain from buying and selling of stocks, in the long run the gambler will always lose. With this in mind, anyone who wishes to participate in the stock market should prepare oneself with the knowledge and ability to analyse the market trends and financial data of companies in order to reduce the level of uncertainty of stock price movements and to gain from buying and selling of stocks. Therefore, in contrast to a gambler’s behaviour of waiting and hoping for stock prices to increase, a true investor would have analysed all available data to derive the intrinsic value of stocks and to predict the future movements of these stocks. The investor would then choose stocks, which have high probability of bringing value to his or her investment. Whilst a gambler is uncertain as to whether or not his or her stocks will appreciate or depreciate in value, a true investor is exceptionally certain that his or her stocks will indeed produce future returns. As a result, trading in the stock market is lawful under Shari’ah principles provided that proper evaluations had been carried out prior to purchasing of stocks, and the intention to trade must not be the same as the case of gambling.

[Teeri]

Does anyone have any info if interest from savings account from ones bank can be given to charity?

I know that interest is haram but I've heard people say this type of interest is one the bank will make whether you take it or not so why leave it for them? Though you may not get reward for it you better take it from them and give it to someone who really needs it.

Anyone can shed a light on this?

People make a big ho ha on this savings account/current account paying riba. if you get paid riba in your account, its haraam, end of it, give to charita or used to build a public toilet, the religion is clear,

how is your money earned haraam? when your sleeping at night, its sent to build a pool and then lent out to people seeking loans, obviously they charge riba on these people and pay you small share for it, for centuries they have figured, the banks, the little secret that the vast majority of poeple never come and claim their money all at the same time, so they lend it out at riba.

somali xawaalad companies and other Islamic investments funds, firstly dont lent out at riba, secondly invest in hallah pools like properties etc, the they share out the funds with. comparing the 2 is not right.

by the way, one can not refuse this in British banking law, otherwise your told to keep your money under the bed, in Islam the Islamic banks must seek your written permission to use your savings/current account money.

[waryaa]

I am going to put a question of my own out there. If I was to buy shares in a company that trades in haram industry, but I only made money from holding these shares/stocks through capital gain rather than dividends, is this money haram ?

The logic is that the profit you are making is the difference between how much you paid for the share and the excess that others are willing to pay - you have taken no money from the haram proceeds of the company in question. The excess that people are willing to pay depends on the expected future cash flows and goodwill value of the company. Also, you contribute in no way to the running or finances of the company because you are buying stock/shares that has already been issued i.e. in this scenario we are not talking about a share/stock issue.

I would be interested in your responses.

Western economy is much more complicated than just filtering what you buy on the stock market. Let's say your employer (non-haram) uses your your salary money right to the minute it is released to you by selling/buying stocks owned by companies like Tyson Foods. They can pay you in full or partially by profits from stock exchange, regardless of whose stocks were used. What about if you buy stocks in a high-tech company and you find out later that it is majority owned by the largest pork production company in the world.

In my opinion, all publicly owned companies are what they are: public. Buying Tyson stocks doesn't make you pork producer.

[abdisamad3]

guys I see us muslims say many things are haram, but I have one big question to ask you'll, now many of us muslims live in gaalo countries and as you guys know many muslims receive welfare checks, these welfare checks contain tax money, that are collected from all sorts of business from brothel houses to khansiir butcher shops/factories, alcohol factories porn-shops bars and many other haram bussiness such as banks that earn money on interest, so my question is why is it haram to receive goverment checks,so why is it halal to receive goverment check for us muslims. but haram to make investments or borrow money from the bank to start a bussiness or buy a house?
I don't understand this.

[waryaa]

Abdisamad, aside from somali sheiks, many Muslim scholars will tell you that there's nothing wrong with buying a house or borrowing interest bearing capital for important reasons. Besides, today's interest doesn't necessarily mean the riba you see in the Kitab and currency is not necessarily real money either

[Lamagoodle]

[Western economy is much more complicated than just filtering what you buy on the stock market. Let's say your employer (non-haram) uses your your salary money right to the minute it is released to you by selling/buying stocks owned by companies like Tyson Foods. They can pay you in full or partially by profits from stock exchange, regardless of whose stocks were used. What about if you buy stocks in a high-tech company and you find out later that it is majority owned by the largest pork production company in the world.

In my opinion, all publicly owned companies are what they are: public. Buying Tyson stocks doesn't make you pork producer.

By far the best analysis. It is not as simple as so called wadaads and armchair somalis make the issue to be. The economy -even so called in muslim countries- is interconnected. Firms, taxes, social welfare etc are part and parcel of a system in which economic actors are just players.

You can't for instance claim that you are not taking/paying interest rates if you are part of that system; the welfare benefit your are getting has come because of taxation of companies that sell pork, trade in alcohol etc. In addition, those companies have borrowed money to invest (and in the extension pay interest rates). Your employer invests in shares so that you could get a pension.

Even the slightest economic transaction like buying a bus ticket or petrol contains elements of interest rates.

As to shareholding; companies exist to create value for shareholders. Their balance sheet contains investment decisions that require financing and interest rates.

Ask any economist and he/she will tell you the interest rates drive economies; the I is the most important human invention.

I know some of you will claim that in islamic countries, the above is not true; that is ballony! Where is the oil money from the middle east invested? funds that contain Interest rates.

Let us admit it; economic transactions blur the boundary between xaaram and xalaal.

If you are a true believer you live in a toxic world; go and mind your camel/cattle/goats and firm and eat their produce. Once, your bring them to the market place, your cannot stay free from interest rates.

[abdisamad3]

Abdisamad, aside from somali sheiks, many Muslim scholars will tell you that there's nothing wrong with buying a house or borrowing interest bearing capital for important reasons. Besides, today's interest doesn't necessarily mean the riba you see in the Kitab and currency is not necessarily real money either

Thanks 4 the answer sxb,,

[Teeri]

[Western economy is much more complicated than just filtering what you buy on the stock market. Let's say your employer (non-haram) uses your your salary money right to the minute it is released to you by selling/buying stocks owned by companies like Tyson Foods. They can pay you in full or partially by profits from stock exchange, regardless of whose stocks were used. What about if you buy stocks in a high-tech company and you find out later that it is majority owned by the largest pork production company in the world.

In my opinion, all publicly owned companies are what they are: public. Buying Tyson stocks doesn't make you pork producer.

By far the best analysis. It is not as simple as so called wadaads and armchair somalis make the issue to be. The economy -even so called in muslim countries- is interconnected. Firms, taxes, social welfare etc are part and parcel of a system in which economic actors are just players.

You can't for instance claim that you are not taking/paying interest rates if you are part of that system; the welfare benefit your are getting has come because of taxation of companies that sell pork, trade in alcohol etc. In addition, those companies have borrowed money to invest (and in the extension pay interest rates). Your employer invests in shares so that you could get a pension.

Even the slightest economic transaction like buying a bus ticket or petrol contains elements of interest rates.

As to shareholding; companies exist to create value for shareholders. Their balance sheet contains investment decisions that require financing and interest rates.

Ask any economist and he/she will tell you the interest rates drive economies; the I is the most important human invention.

ehm. interesting. true, the sources for findingits not my job to charge income support is mixed with haraam and halal funding, unfortunately a mixture of taxes from everywhere like porkk, banks, beer sales taxes etc.


put that a side, its not my job to judge single somali mothers who are given that money, we know what it is, I leave that to Allah.

My background is in Economics, with a keen background in development, enterprise, banking, Islamic finance and economic history.

your statement about riba driving economies is the most come mentioned myth by the laymen and the biggest fallacies in economics. it is the biggest held lie in human history that the Qur'an demystifies it.

the main reason for this are: many say economics is a young discipline, only two societies on the face of the entire human civilization have sat down and writen the fundamental laws for economics and theories. the muslim arabs of old from shafii-ibn maqrizi-ibn suti. and the scholastic salamancan-smithian-marshalian schools of the west. and many have seen the ''success'' of western economies since the war and thus are ''convinced'' of the miricles. they simply dont read enough history

economics is separated down to 2 major schools of thought. one is the salamancan scholastic shcool and the other is the neoclassic Keynesian. its very important that you understand these schools of thought in order to understand how riba prohibition was overcome in europe.


the fathers of the neoclassics, the Calvinists or the classical, used contract-um trinius to in courage the church to allow riba from the back door, it wasnt till the 1910s the charge relaxed the ban, other European governemnts were doing it under cover, Britannia in 1862 was the first to allow it for everyman on the street to charge and pay riba. ofcourse King Henry the 8th allowed it, but only for the rich to lend at riba, whilst the italian states who were free from Rome alowed for the jews to conduct it from the 1400s ( ofcourse the rich benefited under cover)

the calvanists religous doctrine was set up to overcome catholic restriction against riba, Calvinists economiests such as calvin himself, adam smith and smith's teacher Hume all argued for the churche to relax the band on riba, they build the foundations and paved the way. if you were magically sent to 1811 london or paris, you would hear fierce debates about riba, like the Muslims have now.

the first humans to sit down and create clear structures for economcis were the muslims, their successor school of slamanca, inherited books from the arabs who were kicked out of spain and they passed this economic knowledge to the west. hence why most of Islamic economcis is similar to muslim economics: like property rights, private firms, profit and loss accounting systems, etc.

of course the wise greeks like aristotle wrote books such as Economics but was more political economics rather then the actual field

sure Xenophon too wrote Economicus, but this was for farming and agriculture efficiency.

riba is band because:

1)it destroys wealth in the long run
2) it creates artificial distribution of wealth rather the market which god has ordained.
3) it creates negative incentives
4 creates inflation,
5) creates incentive that replaces real money (gold and silver) with artificial money ( god ordained money as gold and sliver infact to eliminate riba and inflation)
6) encourages war and the easy funding of war
7) destroys the Division of labour,
8) creates disequilibrium between short and long term investments
9) creates unemployment
10) reduces the standard of living for the average men whilst the riba lender became really rich, the 99% became poorer
11) not only does it create inflation at home, but also exports it which could lead to war and negative relations
12) gives incentive to create fractional reserve banking situation.
13) leads the nation to debase her gold and silver standards as this restricts the person lend loans in gold and thus they would favor paper money so they can print and lend as much as they can at riba, where as gold currency means they have to look for it, dig it out, melt it, secure it then lend it, its easier with a paper money.




the first nation to use paper money was china in the 11 century, inflation run so rampant it was forced back to gold standard.
the second nation to use it was the french during the war with Britannia in the early 1600s, the french leader in Quebec simply took out card games, wrote numbers on it then gave it as a wage to soldiers then forced the business to accept it like they would for gold currency, as France had not send it gold after it run out due to British blockade of the Atlantic.

the British followed suit in the 1620s in Boston after a long war with the french in Vermont lead to gold being depleted

nations dont need to replace money with paper to suffer from inflation, they can also reduce the purity of the gold or silver in the coin, this is mainly done to lend more money out to fund wars and earn more riba in using the less pure coins for loans.

riba has always been band, the jews changed their entire torah to overcome the problems, so did the christians.

[Teeri]

the share price growth of haraam firms is obviously haraam, regardless of if you get paid dividend or not.

Could you explain this further. Bear in mind we are not talking about share issue/IPO and only talking about ordinary shares that have already been issued. You would also only make the money from capital gain i.e. the increase in the markets perceived valuation of the company but no haram proceeds.

you say ordinary shares that have already been issued. just because its not an IPO, it doesnt mean its halal, your taking part in the act, whether u realise or not, your still part taking, the very fact that your buying shares the open market means your aiding n the prices stay high asa you create demand.

i have spoken about haraam firms, and secondary sources of revenue etc. mark my very words, there is vertually the halal share price one can purchase, this includes the supposed Footsie islamic japanese index of 25 firms in the london market, there is nothing islamic about this.

also buying Islamic bank of Britannia shares is also haraam for the very fact that they charge riba, is owned by the Kuwait central which charges riba, bar-clays bank and JP morgan and the althani family who control the Kuwait central bank.

my and a friend once visited IBB and had a meeting about why they mislead people about riba disguised as ''fee'', there arguemnts is so convincing that you will be sacked in if your not trained in both western banking as well as Islamic banking. but i am glad checking their balance sheet, their share prices droped from mid 80pence to 4 pence in the space of 2 years,

if you go to Islamic bank of Britannia and take out a £100,000 loan for a 25 year repayment plan, you will pay back £347,500,

if you go to Barclays for the same plan, you pay back £342,000. now till me if Islamic bank of Britain is Islamic?

ps: the art of buying shares in a halal way is so difficult, like the fact that every one person in the firm should be included to vote in a take over, including minority shareholders, and the need to investigate every part of the firms earning,

its better to stick to commidty or forex, if you call the firm and tell them your a client that arrived from an arab country and give them a muslim name, they would normally give you leverages of 400:1 with no riba, this is great of ur trading Forex.

or you could just way for an islamic state to be born and regulate every business as halal as possible

also i have seen many brothers trading CFDs, this is pure haram, you might as well gamble, and avoid indices of all types like S&P 500 too.

[union]

I am going to put a question of my own out there. If I was to buy shares in a company that trades in haram industry, but I only made money from holding these shares/stocks through capital gain rather than dividends, is this money haram ?

The logic is that the profit you are making is the difference between how much you paid for the share and the excess that others are willing to pay - you have taken no money from the haram proceeds of the company in question. The excess that people are willing to pay depends on the expected future cash flows and goodwill value of the company. Also, you contribute in no way to the running or finances of the company because you are buying stock/shares that has already been issued i.e. in this scenario we are not talking about a share/stock issue.

I would be interested in your responses.

Most companies operate illegally (Islamically speaking) because they use riba and other unhalalal business practices. By buying stocks from that company, you are literally become a co-owner in their forbidden business practices and giving them capital to continue the haram things they are doing, and then profiting from that haram through dividends/profits. So if you don't wish to violate your religious integrity for profit, I suggest you don't invest in any company that isn't 100% compliant, because you'll either be enabling them to continue in their haram, or you'll be profiting from it, or both.

[MrSinister]

making money is halal even if its done in haram way, thats my motto. dhuuni is good.

[accident]

making money is halal even if its done in haram way, thats my motto. dhuuni is good.

[Beans]

making money is halal even if its done in haram way, thats my motto. dhuuni is good.

[Lamagoodle]

Teeri,
If you want to discuss the history of economic thought (doctrine) that is fine but this issue never concerned that. Read the question posed.

True, usery was banned in the bible but again you are mixing apples and peas.

You are utterly wrong if you equate economic thought with the puritans!

Could you please address this question; in today's modern world, is it possible to conduct economic transactions without interest rates? BTW, if you are an economist, you'd know that interest rates are defined as cost of capital.

Stockholding is a complicated issue. If you hold stocks in any company, you are likely to latently hold other stocks.