Friday, December 29, 2017

Q&A: Dealing with Muslim owned Public Limited Companies?

The following are Q&A from the time of Sheikh Abdul Qadeem Zalloom (raheemullah):

Question: Are we allowed do deal with share companies (PLCs) owned by Muslims?

Answer: Having dealings with share companies belonging to Muslims is void (batil) because they cannot be contracted in Islam i.e. they do not exist as a necessary party in the contract of sale and purchase… in order to have offer and acceptance with the other side with whom the deal is made.

Question: As Pakistan International Airlines (PIA) is a Muslim owned share company, are we allowed to buy from them and if not why not?

Answer: Share companies (PLCs) are invalid in Islam. This is because they are not contracted and they are not considered to be an existing party in a contract between the Muslims. Therefore, it is not allowed to have dealings, in terms of sale and purchase etc. with share companies whose owners are Muslims, because they have not been contracted between them for they are invalid in Islam. As long as the owners of the Pakistani airlines company are Muslims based on your statement that the Pakistani government has a share of 57% and the company has a share. Then buying tickets from them is not allowed.

Question: You said in a previous Q&A, that buying from Muslim owned shared companies is haram.  Are we allowed to buy from a agent who are from not a share company?  If so are we not allowing the agent who buys tickets from these companies from buying haram?

Answer: Previously we gave you the answer that buying tickets from a Pakistani airline company is haraam as long as it is a share company whose owners are Muslims. And this was because the share company cannot be contracted in Islam and cannot exist as a party in any contract between Muslims. However buying tickets from travel agencies which are not share companies and are owned either by a Muslim or kaafir is allowed if they are not part of the share company and nor an agent or go between for the share company. Rather they work on their own account. So buying from them is allowed according to the rules of buying and selling.

As for the view that this makes the travel agency to commit Haraam because we buy from it and it buys from the share companies and thus commits Haraam. As a consequence the company is sinful and so are we. This statement has no effect on the Sharee’ah rule. As long as we have not assigned the agency to buy tickets from the share company then we are buying from the agency like any other buyer. Our purchase of tickets from the agency in this case is correct and there is no sin on us. We will not fall into sin because its dealings with the share company are separate from us i.e. we did not assign it to do so. So the sin fall upon the agency for dealing with the share company whether we bought tickets from it or not.

The change in the cause of the benefit makes the Sharee’ah rule different. If the share company were to produce sugar then the trader who buys sugar from it will be sinful because the contract of purchase with the share company is invalid (baatil). Thus it is haram to benefit from this sugar which he had purchased in any way whatsoever. However, if this trader were to sell it to someone else, then the contract of that other purchaser is correct. The same goes if he gives it to another person as a gift. This gift is a correct discharging of property. So the second buyer or the one to whom the sugar is given as a gift, it is allowed for him to benefit from it because the cause of the ownership of the sugar has changed and thus it becomes Halaal.

Thus, buying from a share company airline is void (baatil) but buying from the agency which deals with it on its own account is allowed as long as the agency is not part of the company or an agent or go-between etc. This is because the cause of ownership and consequently the cause of benefit have changed.

Question: Is it allowed to deal with shareholding companies which are banks?

Answer: The shareholding (musahima) companies, if owned by Muslims, it would not be (legally) convened. For its contract between Muslims is invalid (batil). This is as if it is not established. Therefore, dealing with it is invalid because it is a side (partner) who does not exist (legally). But shareholding companies owned by kuffar, it is in their view convened, as long as they live outside the Islamic State. Therefore, it is an existing side (partner), and it is allowed to deal with it in matters which are mubah.

Banks, which are shareholding companies, are similar in their hukm to what has been mentioned about the shareholding companies.

If such companies are privately owned (i.e. not Musahima), then it is allowed to deal with them, similarly the banks if they were privately owned. Then dealing with them in other than riba (interest) and its related matters, is mubah and allowed.

For further explanation on the Islamic rules on PLCs and the Stock Market please refer to the booklet: The turbulence of the Stock Markets: Their causes & the Shari’ah rule pertaining to these causes 

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