Fatawaa

Subject : Islamic Ruling on Borrowing Company Shares
Fatwa Number : 3907
Date : 06-08-2024
Classified : Partnership in Business
Fatwa Type : Search Fatawaa

Question :

Is it permissible to borrow company shares and then return them to their owner, while giving him a check for the value of the shares, with the check serving only as a pledge and guarantee for his right?


The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

A loan is the act of giving money to someone to benefit from, on the condition that they return an equivalent amount; seeking the pleasure of Allah. It is permissible for the borrower and recommended for the lender. However, since shares are considered common parts of ownership in joint-stock companies, and their value changes according to the changes in the company's assets and activities - making it difficult to return an equivalent - lending shares is not permissible. This is because the value of a share fluctuates between the time the loan is taken and the time it is returned, and this difference may be significant, resulting in a gross inequity, which Islamic law does not permit.

In the book (Sharia Standards for Islamic Financial Institutions/Standard No. 24), states: "The basis for prohibiting the lending of company shares is that the shares at the time of return are not, in terms of what they represent, equivalent to the shares at the time of the loan, due to the continuous change in the company's assets."

 In conclusion, lending company shares is not permissible due to the significant fluctuations in their value. And Allah The Almighty Knows Best.

 






Comments


Captcha


Warning: this window is not dedicated to receive religious questions, but to comment on topics published for the benefit of the site administrators—and not for publication. We are pleased to receive religious questions in the section "Send Your Question". So we apologize to readers for not answering any questions through this window of "Comments" for the sake of work organization. Thank you.