Stock Exchange Shares- Halaal or Haraam?

In a debate on the permissibility of trading in Shares. Which has a direct impact on the permissibility of investing in Oasis Equity Fund, Futuregrowth AlBarakah Equity Fund and Fraters Equity Fund.

The main players are Mufti Ashraf Saheb of Springs (referred to as MA), and Mufti Ebrahim Desai Saheb of Daarul Iftaa, Camperdown (referred to as DI). The issues will explain themselves and unfold as you read through the various correspondences. To assist the reader, the editor has taken the liberty to insert notes in {brackets}.

Admittedly, some sections are boring and repetitive. The major thrust of the discussion climaxes towards the end, after much tedious reading. Although the discussion is lengthy, wealth is a trust in your hands and you have a responsibility to earn it from and spend it in only Halaal avenues. In order to do this, you need to educate and empower yourself. This debate will make you informed.

Realising that some readers would not have the time or interest in perusing the entire debate, it was decided to provide a very brief summary, which follows.

There exists a misconception in some quarters that the permissibility of trading in shares on the stock-market is an issue upon which there is consensus of the Ulama. Far from the truth, there is no such unanimity. All that has been mentioned thus far is an initial theory of some Ulama, which in the words of Hadhrat Mufti Taqi Uthmani Saheb, should "not be treated as a final verdict on this subject". Rather, what has been expressed was done for the purpose of providing "a foundation for further research" (again Hadhrat Mufti Taqi Uthmani Saheb's words.)
DI attempted to undertake the further research mentioned, and could not make sense of the theory of permissibility. In order to be fair and get greater clarity on the issue, a number of pertinent Ulama were approached. Sadly, they did not respond, with the exception of Mufti Ashraf Saheb. The debate before you then ensued between DI and MA. The theory of permissibility rests upon the recognition of the "juristic person" in the Shariah. MA could not provide any conclusive proof to substantiate such recognition. MA clearly lacked a proper understanding of what the juristic person is. He nevertheless conceded that he could not provide an example of ownership vesting in an artificial being. There is no such concept in Shariah. This is one important area upon which the theory of permissibility rests. Hence the theory failed on this leg.
MA was under the misunderstanding that the Directors and Shareholders own the tangible assets of the Company, and could not distinguish between a partnership and the modern company. Many attempts were made to try to explain these concepts to him, and the major part of the discussion revolves around this. DI has provided ample proof that the Directors and Shareholders do not own the tangible assets of the Company. The bulk of this debate revolved around these detail proofs. An in-depth exposition was made of the nature of the "share", and it was shown that the capital provided by the shareholder is in essence a loan to the company. Being a loan, it accrues what amounts to in Shariah as Riba (interest). Furthermore, it was highlighted that such a scheme also falls under the category of Qimaar (gambling).
Sadly, when the theory of permissibility had no leg to stand on, emotional arguments were resorted to. It was hoped that the discussion be confined to academic proofs. The DI has exhausted all reasonable efforts in trying to convince those holding the opposite view, and has now presented the full details for the public. The public may then see for themselves that the fatwa of DI was after extensive research into the matter, and after engaging other Ulama on the issue. It is the ruling of DI that trading in shares on the stock-market is Haraam. And Allah Ta'ala knows best.

The detailed discussion
the fatwa

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