Question : A question was asked regarding [the validity of buying/selling] shares (ashum) in banks.

Fatwa in Brief: This is illegal, as the work of banks is illegal.

Shaykh Ibn al-‘Uthaymin, 9/7/1412

Response:

It is permitted to buy [and sell] shares in a company that works in an Islamically viable field. [On the other hand] It is not permitted to deal with companies that trade in illegal, morally corrupt (khabith) fields.

Commentary:

It is legal to buy [and trade in] the shares of a company that works in a legal and Islamically viable (tayib) field. Its dealings must be free, therefore, of usury, cheating, monopoly, fraud, betrayal, ignorance, gambling or any method of cheating people out of their money (akl amwal al-nas bil-batil). In contrast, it is illegal to deal with companies that work in illegal, morally corrupt fields.

Those who buy shares in a company that operates illegally [according to Islamic law] with the intention of changing this company [from within], so that it no longer acts contrary to the demands of Islamic law, are performing a service to Islam. For by doing this, s/he increases its spread and influence. The jurists disagree as to whether or not it is permitted to do so; if s/he is not able to change the company at the time s/he buys the shares, but rather aims to do so in the future and through the committees of General Assembly and the Governing Council. In either case, any interest earned must be spent on a noble cause (khayr).[1]

Dr. Anas Abu Shadi