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Is the BT share save scheme Shariah compliant?

Question:

 

This is how it works. It’s for Employees of BT or Companies involved in the scheme.

 

It gives employees the opportunity to make monthly savings direct from the net pay (before tax is deducted), you can decide between £5 to £300 per month to be deducted from your wage. For 3 years or 5 Years.

 

At the end of the chosen period (3 years or 5 years) you you have 2 options:

 

Option 1. Buy BT shares at a discount rate

 

a) On 5 year Scheme you can buy them at 319p

 

b) On 3 year scheme you can buy them at 359p

 

Both figures are below the current Live Public Share Value which is above 400p

 

Option 2. Have your money back.

 

There is also a bit of interest added to the savings.

 

So let’s say you put £300 per month at the end of 60 months you have a saving of £18,000. You then buy the shares with that money at the reduced rate, you end up with 5,642 shares – you cash in all the shares at the current Market Price – you are automatically in profit (note: after 5 years the BT share price will be higher, predicted at £6.00 per share).

 

The scheme is a win win situation as if the market crashes you have not lost your money, you can easily withdraw all of your money at the end of the period. and If the market is above the price you have bought the shares – you are in profit.

 

Answer:

 

In the name of Allah, Most Compassionate, Most Merciful,

 

From the information provided and after consulting with other competent scholars the BT share save scheme appears to be permissible because there is simply a discount on shares available for staff and employees which they can avail of, or receive their saved money. It is clearly within the rights and power of the company to provide such a scheme and give a discount price on the shares.

 

However, upon receiving the interest accumulated to the savings, it must be given to charity without the intention of reward and must not be retained by oneself. The charity must also be notified of it being interest money so that it can be used appropriately.

 

Furthermore, in the information provided there is no mention regarding the nature of the shares. Therefore, a blanket ruling cannot be given with regards to the permissibility of the shares. Thus,investing in BT shares will only be permissible subject to the following information:

 

It is permissible to invest in common stocks as long as the company one is investing is in compliance with the following conditions (as highlighted below by Shaykh Mufti Taqi Uthmani [Allah preserve him], a renowned and respected scholar in the field of finance and economics):

 

1. The main business of the company is not in violation of Shariah. Therefore, it is not permissible to acquire the shares of the companies providing financial services on interest, like conventional banks, insurance companies, or the companies involved in some other business not approved by the Shariah, such as the companies manufacturing, selling or offering liquors, pork, harām meat, or involved in gambling, night club activities, pornography etc.

 

2. If the main business of the companies is halal, like automobiles, textile, etc. but they deposit there surplus amounts in an interest-bearing account or borrow money on interest, the share holder must express his disapproval against such dealings, preferably by raising his voice against such activities in the annual general meeting of the company.

 

3. If some income from interest-bearing accounts is included in the income of the company, the proportion of such income in the dividend paid to the share-holder must be given to charity without the intention of reward, and must not be retained by him. For example, if 5% of the whole income of a company has come out of interest-bearing deposits, 5% of the dividend must be given in charity. (The charity must also be notified of it being interest money so that it can be used appropriately like mentioned at the start).

 

4. The shares of a company are negotiable only if the company owns some non-liquid assets. If all the assets of a company are in liquid form, i.e. in the form of money that cannot be purchased or sold, except on par value, because in this case the share represents money only and the money cannot be traded in except at par. [http://albalagh.net/Islamic_economics/finance.shtml]

 

Moreover, one participating in such a scheme will also need to be cautious of the Zakat that will need to be given by him/her on the saved money and on the shares (subject to permissibility in light of the above mentioned detail).

 

And Allah, the Almighty knows best,

 

Mufti Sufyan

 

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