Question: May Allah be good to you. We want an elaboration on the ruling of doing business with stocks/shares?
Answer: “The contemporary Scholars differed on stocks/shares: is it allowed to sell it and purchase it?
Some of the People of knowledge took the opinion that selling stocks/shares is haram. They said: it does not have a reality and they are only papers which do not have a benefit for which they can be sold or purchase.
The majority of the contemporary jurists took the opinion, and this is the correct statement, that selling stocks/shares is permissible if the Legislated conditions are met because shares/stocks are an expression for a well-known portion of a well-known company that is present in the market. It is not an imagination. The company has principle wealth and it has work, and it has a value in the market in accordance to its strength and its profits. Following this, the conditions of buying/selling are fulfilled [in such transaction]. And this is correct.
However, it is obligatory that the stocks/shares which are sold and bought are permissible.
As for the companies which are impermissible, then it is not permissible to buy its stocks/shares nor sell them. Like usurious banks, for example. If you buy it, then you are a partner with the usurious bank and a partner in usury; refuge in Allah is sought. Likewise the commercial insurance companies.
Also the ambiguous stocks/shares in which the work of the company is halal except that the administration accepts haram financing. This financing is not present in its original structure/system. However, the administration takes a usurious loan. The stocks/shares in this company is a mixed and ambiguous. What is best is to leave it and avoid it. This is the conclusion in regards to that which is associated with stocks/shares”.
[Sharh Kitab at-Tawheed tape no. 30, question no. 4]
Faisal Ibn Abdul Qaadir Ibn Hassan