El sector venezolano

(795) Is it permissible to purchase the Shares of a company that deals with riba?

In regard to the participation of the Islamic Development Bank (IDB) and others in joint stock companies that deals with riba, the participants confirmed their previous resolution during a session that was held at Jeddah. The resolution is as follows:

After a comprehensive discussion on the issue, the participants agreed that the Islamic Development Bank should not participate in any company that is not committed to avoid

ribawi transactions, even though the objectives of the company is not in conflict with the Shari‘ah. This is because being involved with riba is strictly prohibited, notwithstanding the fact that IDB invests in companies established in Muslim minority countries.

The management of IDB has to seek investment methods that are in accordance with Islamic law, while at the same time, realizing the development aims of Islamic countries. Such methods are like executing contracts of salam or manufacturing contracts.

The participants confirmed that riba is forbidden in all circumstances and there is no difference between riba related to consumption and investment. Conversely, if participation

in joint stock companies that deals with riba is done for the purpose of transforming the companies to become Shari’ah-compliant companies, the participants are of the view that this is permissible, on condition that the transformation is completed as soon as possible.

Recommendations:

The participants reminded the Muslim businessmen on the necessity of establishing companies that conduct their activities according to the injunctions of Islamic law and at the same time, present profit generating opportunities.

(796) As you know, the purchase of shares can be done through a multitude of currencies and is not limited to USD. Is it then permissible to be involved in transactions of equivalence,

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whereby the trading of currencies would be concluded in the future, in order to mitigate the risk of foreign exchange fluctuations?

It is obvious that the trading of currencies is considered a transaction of exchange. So, two

important conditions of such a transaction are ‘equal to equal’ and possession is exchanged

at the conclusion of the contract (if the subject matters exchanged are of the same category).

On the other hand, if the subject matters are of different categories, possession is exchanged at the conclusion of the contract. This is consistent with the saying of the Prophet (Allah blesses him and gives him peace), i.e. gold for gold, silver for silver, hand by hand, equal by equal. Based on that, it is not permissible to conclude a contract of exchange by deferment from the conclusion of the contract. This is because it is forbidden by the Prophet (Allah blesses him and gives him peace)

(797) What is the Islamic ruling on the following?

A person promises to buy a specific currency, at a specific price, during a specific period, with the seller committed to deliver the amount, when requested during this specific period, on the condition that the buyer pays a special amount that is called right of buying. The customer will lose this right if he does not complete the purchase transaction.

This transaction is not permissible in Islamic law, because it is a promise to buy currency. In Islam, the form of currency trading that is allowed is selling completely and possession is transferred on the spot.

(798) The prospectus of the clearance fund included guarantee of the Institute’s partnership

shares by its original value. What is the Islamic ruling on that?

This guarantee is a kind of third party guarantee and this adaptation is permissible without in the case that the main Institute will become a partner in partnership shares that is offered to recover decreasing of partnership shares, whereby it is not permissible in that for the Institute to retrieve the original value, because that is guarantee of partner for his partner.

However, if the investment amount (partnership shares) represents with asset that increased whereby the Institute does not need to buy partnership shares, in this case, its guarantee for retrieval is permissible by any value, even it is by the original value. After going around, the Council concluded:

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In case of need to complete partnership shares, the bank can enter (director of funds) to recover the decrease and it is not guaranteed, the Institute will remain to be guaranteed and far from partnership and management.

In case of the proportion of the decrease is over the bank’s ability, so the main institute can

buy the partnership shares and will promise, in this case, to retrieve the shares by market value (additional on original value or decreasing) or any profit or loss and this case as technicians have explained, is very rare, but can affect on partnership shareholders to lose the guarantee.

(799) Are the following transactions permissible in Islamic law?

A customer approaches Kuwait Finance House to conclude a murabahah contract. In this arrangement, Kuwait Finance House will buy the relevant goods from the seller (foreign party). After possession has transferred to Kuwait Finance House, Kuwait Finance House will then sell those goods to the customer.

At the same time, the customer wants Kuwait Finance House to buy the required foreign currency from him when Kuwait Finance House buys the goods from the original seller. Thus, when the price of foreign currency which the customer possessed is appropriate for Kuwait Finance House, even if it compares to the market price at the time.

The transactions can be done, provided the contract of selling the goods is separate from