Resolution No.(271)(2/2019), By The Board of Iftaa', Researches and Islamic Studies:
"Ruling on Holding Shares in Companies whose Business is a Mixture of Lawful and Unlawful Transactions"
Date: (25/ Jumādā al-Awwal/1440 AH), corresponding to (31/1/2019)
All perfect praise be to Allah, the Lord of the Worlds, and may His Peace and Blessings be upon our Prophet Muhammad and upon all of his family and companions.
During its second session held on the above date, the Board reviewed the letter {No.611/55122/1352. Date: 22/11/2018} sent from His Excellency, Chairman of the Sharia Consultative Committee in charge of drawing up the Sharia and accounting standards for the classification of companies according to their compliance with the rules of Sharia. The letter was addressed to the Secretary General of the Iftaa` Dept. Dr. Ahmad Al-Hasanat, and it read as follows:
I would like to bring to your kind attention the fact that the Amman Stock Exchange has formed a Sharia consultative committee to draw up the Sharia and accounting standards for the classification of companies according to their compliance with the rules of Sharia. This committee includes a number of experts in various fields of Islamic financing from both technical and Sharia perspectives. Having reviewed the resolutions of the Iftaa` Board, Fatwas of the Iftaa` Department, resolutions of the International Islamic Fiqh Academy, AAOIFI Sharia Standard No.(21) about "Stock Exchange: Shares and bonds", resolutions of Sharia supervisory councils, Dow Jones Islamic Market Index, former international experiences, in addition to several research papers and studies in this filed, the committee has drawn up a draft of the above standards, subjected them to arbitration, commented on them, and set up Sharia and accounting regulations for them.
In light of this, we would like to stress the significance of this project and its impact on strengthening and developing the Islamic economy. This is in addition to assisting investors who have the inclination to invest in companies whose businesses comply with the principles of the tolerant Islamic Sharia, and this, eventually, will lead to strengthening and supporting the national economy. We would like you to discuss the above draft with the Iftaa` Board to deliver the ruling of Sharia on it.
After deliberating the above issue, the Board decided adopting the following Sharia standards:
First: There is no harm in dealing with the shares of companies whose declared transactions and financial statements are free of the agreed upon unlawful practices.
Second: It is prohibited to trade in the shares of companies whose core business is definitely prohibited.
Third: Companies and their boards are prohibited to deal in usury, even if the latter was a small percentage.
Fourth: As for companies with mixed transactions (lawful & unlawful) the source of their business is lawful, but they accidentally dealt in some unlawful contracts or sold unlawful items, although these aren`t their basic activities nor stipulated in their registered articles of association. This mixed type must meet two conditions in order for trading in their shares to become permissible:
1- The borrowed or deposited amounts, involving usury, mustn't exceed 25% of the overall value of the company`s shares.
2- Revenues and expenditures resulting from that incidental unlawful transaction-as defined earlier mustn't exceed 5% from the company`s overall revenues.
The evidence for these two conditions rests on the flexible rules of Islamic Jurisprudence. For example, "Pardoning the little", "Necessity must only be assessed and answered proportionately", and "A general need takes the ruling of a necessity." This is in addition to the rule, which states that the one who undertakes the prohibited action is the one liable for it while others are free from that liability. This particularly applies to modern companies shared by thousands of individuals. Therefore, it is hard for each shareholder to realize, in detail, the incidental transactions of that company.
It is the duty of every Muslim-despite the conditional permissibility of the above ruling-to get rid of the unlawful percentage of his profits, and to spend it on public interest. This is provided that no benefit is earned from the latter whatsoever. And Allah the Almighty Knows Best.
Chairperson of Iftaa` Board,
Grand Mufti of Jordan,
Dr. Mohammad Al-Khalayleh
Sheikh Abdulkareem AlKhasawneh/ Member
Sheikh Sa`eid Al-Hijjawi/ Member
Prof. Abdullah Al-Fawaaz/ Member{Have a reservation on the word "Mixed"}.
Dr. Muhammad Khair Al-Issa/ Member
Dr. Majid Al-Darawsheh/ Member
Prof. Adam Noah/ Member{have a reservation on the fourth standard}.
Judge. Khaled Al-Worikat/ Member
Dr. Ahmad Al-Hasanat/ Member
Dr. Mohammad Al-Zou`bi/ Member