DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - Corporations and Limited Liability not Shariah Compliant

**Frjrbefd** · 08-07-2012, 01:39 AM

Assalamu alaikum,

I have read arguments from both sides and personally I am not convinced at all by the arguments made by Mufti Ebrahim Deai saheb. The arguments put forward by Mufti Taqi and his father Mufti Shafi', I find are much more reasonable, both of who permit investing in shares of limited liability corporations.

Needless to say there are two camps on this issue, and those who prohibit investing in shares is clearly the minority. I do not think there is any point in actually discussing the merits of the arguments of the two parties as I am sure the ulema on both camps have considered the arguments. The intention of this post is merely to bring to the attention of the members of the forum that as far as I know majority of the scholars and the majority of the Deobandi scholars permit investing in the shares of limited liability corporations.

It is however important to note that one must abide by the conditions of investing in shares which are highlighted in the AAOIFI standards. Apart from obvious impermissibilities such as not investing in a haram company, etc., one has to ensure that the company's debt to asset ratio is below 30% and haram income in the company is below 5%.

Good point, IF you know your calls will fall on deaf ears with relatives and friends, atleast redirect the message towards something which is at a basic level Ethical by Islamic standards. Agree with your reference to the above on AAOIFI standards.

But they by no means shield one from the potential disaster market-trading and investing in this modern age can lead one to. Bankers are constantly changing definitions, creating new names for new products to sell to the wider market. On face value, it looks like an asset - when analysed carefully, all it is is debt wrapped-up as equity in an asset and the investment bankers 'knowingly' sell this toxic garbage onto you (at a fantastic profit for themselves).

Great example of this is the recent float in the US of Facebook. It opened and hit $40/Share on first day of trading with nearly $100billion market capitalisation - unexperienced investors chasing Facebook stock all the way upto $40. Mark Zuckerberg cashed-in over $1billion in the first week of trading (selling-off stock in his own company is always a bad sign if its the boss). Now, only a couple of months later, Facebook has lost nearly half of its value. Common stock in Facebook is worth only $20/share and still falling. The unexperienced investor is the one who got suckered into Facebook at $40 and is watching the value of his stock collapse almost daily - and these guys have no way out except swallowing their losses and cutting what they have left. But folk keep on risking their money on the markets like this.

And you know the worst thing about that, there are people who are making a fortune through Put options as the price of Facebook (and so many other stocks) collapse. Short-selling is one of the most devastating financial weapons in the markets today. Companies are deliberately overpriced, sold onto retail investors and then short-sellers move in and clean the price up (force it lower through a combo of HF trading and triggering profit/loss stop positions) - making more money the further the price collapses.

Allahu A'lam

08-07-2012, 01:39 AM	#38
Frjrbefd Join Date Oct 2005 Posts 381 Senior Member	Assalamu alaikum, I have read arguments from both sides and personally I am not convinced at all by the arguments made by Mufti Ebrahim Deai saheb. The arguments put forward by Mufti Taqi and his father Mufti Shafi', I find are much more reasonable, both of who permit investing in shares of limited liability corporations. Needless to say there are two camps on this issue, and those who prohibit investing in shares is clearly the minority. I do not think there is any point in actually discussing the merits of the arguments of the two parties as I am sure the ulema on both camps have considered the arguments. The intention of this post is merely to bring to the attention of the members of the forum that as far as I know majority of the scholars and the majority of the Deobandi scholars permit investing in the shares of limited liability corporations. It is however important to note that one must abide by the conditions of investing in shares which are highlighted in the AAOIFI standards. Apart from obvious impermissibilities such as not investing in a haram company, etc., one has to ensure that the company's debt to asset ratio is below 30% and haram income in the company is below 5%. Good point, IF you know your calls will fall on deaf ears with relatives and friends, atleast redirect the message towards something which is at a basic level Ethical by Islamic standards. Agree with your reference to the above on AAOIFI standards. But they by no means shield one from the potential disaster market-trading and investing in this modern age can lead one to. Bankers are constantly changing definitions, creating new names for new products to sell to the wider market. On face value, it looks like an asset - when analysed carefully, all it is is debt wrapped-up as equity in an asset and the investment bankers 'knowingly' sell this toxic garbage onto you (at a fantastic profit for themselves). Great example of this is the recent float in the US of Facebook. It opened and hit $40/Share on first day of trading with nearly $100billion market capitalisation - unexperienced investors chasing Facebook stock all the way upto $40. Mark Zuckerberg cashed-in over $1billion in the first week of trading (selling-off stock in his own company is always a bad sign if its the boss). Now, only a couple of months later, Facebook has lost nearly half of its value. Common stock in Facebook is worth only $20/share and still falling. The unexperienced investor is the one who got suckered into Facebook at $40 and is watching the value of his stock collapse almost daily - and these guys have no way out except swallowing their losses and cutting what they have left. But folk keep on risking their money on the markets like this. And you know the worst thing about that, there are people who are making a fortune through Put options as the price of Facebook (and so many other stocks) collapse. Short-selling is one of the most devastating financial weapons in the markets today. Companies are deliberately overpriced, sold onto retail investors and then short-sellers move in and clean the price up (force it lower through a combo of HF trading and triggering profit/loss stop positions) - making more money the further the price collapses. Allahu A'lam
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