Fatwa ID: 1820
Title: Buying shares in a company with mixed assets (halal with haram)
Category: Financial Transactions
Scholar: Dr.Salah Al-Sawy
Date: 2006-07-26
Question:
What is the verdict on buying shares in the privatized company, Hermis? It is primarily a brokerage firm, dealing in securities and speculation in stocks and bonds. It is the leading company on the Egyptian stock exchange and it controls the market, but this company owns part of a bank that deals in riba (interest) and these shares comprise 12% of the capital of this company. Would it be permissible for me to invest my money in it with the intention of investing in the part of the company`s activities that is permissible? I hope you will grant me the benefit of your advice and may Allah reward you well.
Answer:

All praise is for Allah, and may peace and blessing be upon the Messenger of Allah, his family, companions and followers. To proceed:

There are two well-known opinions on investing in mixed companies amongst modern scholars. Perhaps the more clear of the two is that, if the haram (forbidden) part of a mixed company is incidental, the percentage is small, and it is not the essential target of the company`s activity, there is nothing wrong with investing in it, as long as the investor takes out an amount of profit equal to (or an amount that overwhelms his doubt concerning) the percentage comprised by the haram source in this company. Therefore, if the activities of the Egyptian stock exchange run according to Shari`ah (Islamic Law) and the defect is limited to owning part of a non-Islamic bank, the investor must find out how much revenue this portion contributes to and take out a percentage of profit equal to that part of the haram income. However, we strongly advise you to find out how the stock exchange conducts its other business because most of the activities of stock markets fall into numerous violations which would invalidate many of its contracts; and we ask Allah to grant success and guidance to all.