Fatwa ID: 22208
Title: Company Discounted stocks
Category: Financial Transactions
Date: 2005-08-10

Assalamo alaikom,

My question is  about stock purchase plan which is provided by lots of companies in the US. The mechanism is as follows:

- The company deducts a certain percentage of the employee`s salary each month(0-10%) and the employee chooses how much to be deducted.

- At the end of each six months the company gives the employees stocks with 15% discount from the minimum price (price at beggining of 6 month or price at end of 6 months).

- Assuming the company deals in Non-Haram business, would this type of transaction be halal?

- The problem that I see, is that i am paying money throughout the 6 months and i don`t know what exactly i am getting in return till the end of the six months, when usually employees would make at least 15% on thier money

Jazakom Allah khair


Assalmau alaikum

For any transaction to be halal some conditions have to exist:

1- The company has to be halal and deals with halal: If the company sells forbidden stuff such as liquor and crosses. And so if it deals with Riba, then it is forbidden to buy its stocks

2- The company`s means should also be halal. Sometimes the company deals with halal material like selling computers, but the way they are running the company is a wrong way, like if the company cheats or puts its money in the bank that gives interest, or borrow money from banks with interset, then it is forbidden to buy stockes from it.

If your company does not force you for its plan and it is optional to go for it or decline it, then I advise you to not put any money. But if it is a must, then count the money that you put every month, and at the end of the six-month-period when you get the stocks sell it back and get your money and give the extra to the poor people or to the masijd.

And Allah knows best