How Do I Purify My Wealth From Non-Shari’a Compliant Investments?

Answered by Shaykh Abdul-Rahim Reasat

Question

Assalamu ‘alaykum.

How do you purify your wealth if you have invested in a non-Shari’a compliant stock? The company is halal (chorus aviation/ CHR) but they are under a lot of interest-bearing debt making them non-Shari’a compliant.

If 100% of my profit from holding this stock is is haram for me? Can I use that amount to pay off my annual zakat? Would my original investment of X number of dollars be halal for me? Lastly, is there any kaffara or zakat on the original amount?

Answer

Wa ‘alaykum assalam wa rahmatullah wa barakatuh.

I pray you are well.

Difference of Opinion 

There is a difference of opinion amongst contemporary scholars on the issue of investing in a company that has some dealings with interest even if its trade is halal. Some say it is impermissible.

There are others who understand one’s position as a shareholder in a different manner, and therefore, they say it is permissible to have shares in such companies. This is with two conditions: as long as one objects at the AGM to the company’s engaging in interest-based enterprises, and as long as the proportionate amount of profit gained through interest, such as interest from long-term deposits in banks, are removed from one’s possession.

You may follow this latter position and continue with your investments. If you fulfill the conditions your profit will be halal for you, as is the initial investment. 

You would pay zakat on the profit at the end of your lunar year if you made the investment to benefit from the profit. If you purchased the stock with the intention of resale you would need to pay zakat on their value every year. Finally, any haram money that needs to be removed from your possession needs to be given to the poor. Zakat cannot be paid with it, nor can you benefit from it. (Usmani, Fiqh al Buyu’)

May Allah grant you the best of both worlds.

[Shaykh] Abdul-Rahim

Checked and Approved by Shaykh Faraz Rabbani

Shaykh Abdul-Rahim Reasat began his studies in Arabic Grammar and Morphology in 2005. After graduating with a degree in English and History, he moved to Damascus in 2007, where, for 18 months, he studied with many erudite scholars. In late 2008 he moved to Amman, Jordan, where he continued his studies for the next six years in Sacred Law (fiqh), legal theory (Usul al-fiqh), theology, hadith methodology, hadith commentary, and Logic. He was also given licenses of mastery in the science of Quranic recital. He was able to study an extensive curriculum of Quranic sciences, tafsir, Arabic grammar, and Arabic eloquence.