Dr ʿAlī Muḥyī al-Dīn al-Qaraḍāghī
College of Sharīʿah and Law and Islamic Studies
Qatar University
All praise is due to Allah, the Lord of the Worlds. May peace and blessings be upon the one sent as a mercy to all creation, and upon his family, companions, and those who follow his guidance until the Day of Judgment.
To proceed:
There is no doubt that sharikāt musāhama (joint-stock companies) play a major role in the modern economy. One of their most important foundations and instruments is the concept of as-hum (stocks), which enable the collection of the largest possible amount of capital. This is because the division of capital into small shares allows widespread participation, facilitating the accumulation of substantial capital and thereby enabling investment in major projects.
Today, the trading of stocks is no longer limited to the founding shareholders of the company; rather, it has become a widely traded financial instrument, especially in al-būrṣa (global financial markets).
This gives rise to the question: To what extent is stock trading, in general, Islamically permissible? More specifically, what is the ruling on investing in stocks of global companies or even local companies within the Muslim world whose financial transactions are not free from elements of ribā (usury/interest)?
One of the most serious challenges facing our societies is the dominance of non-Islamic economic systems (whether capitalist or socialist), under which most of the companies in the Muslim world have been established. These companies, in most cases, do not adhere to the upright Islamic methodology, and they borrow and lend through interest-based banks.
Most Muslims today are confused: Should they boycott these companies and refrain from contributing to them – thus allowing immoral individuals and those with weak faith to dominate the management of companies that form the backbone of economic life – especially since these companies are already established and the boycott of sincere reformers will not impact their existence? Or should Muslims participate in them with the intention of reform and change?
Amid this confusion among the general Muslim public, we find differences among contemporary scholars. Some of them consider the higher objectives of the Sharīʿah (maqāṣid al-sharīʿah) and the potential harms that may result from complete boycotts and non-participation, and thus they permit investment in such companies under certain conditions and restrictions. Others focus more narrowly on the presence of prohibited elements in these transactions and, as a result, reject them entirely.
In this brief study, we aim to address this issue with honesty and sincerity, hoping that Allah Most High will guide our steps, grant us to what is right, and protect us from errors in belief, word, and deed.
