Fatwa ID: 07645
Answered by Moulana Sarfraz Mohammad
Question
Among the conditions for buying and selling shares in the share market, what percentage of the company’s total assets must be in illiquid form? Is there any fixed percentage or even if it is 1%, will buying and selling of its shares be permissible?
﷽
In the name of Allah, the Most Gracious, the Most Merciful
Answer
In the Hanafi madhab, the permissibility of buying and selling shares in a company is based on certain conditions. One key factor discussed in modern Islamic finance is the proportion of a company’s illiquid assets (assets that are not immediately convertible to cash, such as property, machinery, or other physical goods) compared to its liquid assets (cash, bank balances, receivables).
In classical Hanafi fiqh, there is no direct discussion of shares in companies as they exist today, but scholars have derived rulings based on general principles from the books of fiqh. One major principle is the prohibition of trading purely monetary or liquid assets (like cash etc) at face value or with interest (riba). Therefore, when purchasing shares, a company must have a significant proportion of its assets in illiquid form to avoid being treated like a sale of monetary assets.
There is no fixed percentage explicitly mentioned in classical Hanafi fiqh regarding the minimum percentage of illiquid assets required for shares to be permissible. However, modern Hanafi scholars and Islamic finance institutions have established certain guidelines. The general consensus is that a company should have a significant proportion of its assets in illiquid form to make trading its shares permissible.
Contemporary Hanafi Guidelines:
Most contemporary Hanafi scholars, along with Islamic finance bodies such as (the Accounting and Auditing Organization for Islamic Financial Institutions), have set a threshold that the company’s illiquid assets must constitute at least 30% of its total assets. This is to ensure that the company is not merely a financial institution dealing with cash or receivables, which would make share trading resemble an interest-based transaction. If the illiquid assets of the company fall below this threshold, some scholars argue that it resembles a trade of monetary assets (e.g., cash, debts), and thus trading in such shares would be impermissible due to the risk of engaging in riba (interest).
Conclusion:
To ensure the permissibility of buying and selling shares according to the Hanafi madhab, it is recommended that the company’s illiquid assets should be at least 30% of its total assets. This ensures the trade does not resemble the prohibited sale of liquid assets or debts.
Allah تعالي Knows Best
Written by Moulana Sarfraz Mohammad
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
الدر المختار وحاشية ابن عابدين (رد المحتار) (4/ 517)
وأفتى المصنف ببطلان بيع الجامكية، لما في الأشباه بيع الدين إنما يجوز من المديون
(قوله: وأفتى المصنف إلخ) تأييد لكلام النهر، وعبارة المصنف في فتاواه سئل عن بيع الجامكية: وهو أن يكون لرجل جامكية في بيت المال ويحتاج إلى دراهم معجلة قبل أن تخرج الجامكية فيقول له رجل: بعتني جامكيتك التي قدرها كذا بكذا، أنقص من حقه في الجامكية فيقول له: بعتك فهل البيع المذكور صحيح أم لا لكونه بيع الدين بنقد أجاب إذا باع الدين من غير من هو عليه كما ذكر لا يصح قال: مولانا في فوائده: وبيع الدين لا يجوز ولو باعه من المديون أو وهبه. اهـ
بدائع الصنائع (كتاب البيوع 148/5)
ولا ينعقد بيع الدين من غير من عليه الدين؛ لأن الدين إما أن يكون عبارة عن مال حكمي في الذمة، وإما أن يكون عبارة عن فعل تمليك المال وتسليمه، وكل ذلك غير مقدور التسليم في حق البائع، ولو شرط التسليم على المديون لا يصح أيضا؛ لأنه شرط التسليم على غير البائع فيكون شرطا فاسدا فيفسد البيع، ويجوز بيعه ممن عليه؛ لأن المانع هو العجز عن التسليم، ولا حاجة إلى التسليم ههنا، ونظير بيع المغصوب أنه يصح من الغاصب، ولا يصح من غيره إذا كان الغاصب منكرا، ولا بينة للمالك