Question:
The company I work for offer an incentive to employees who invest in shares. Whatever amount you invest you are guaranteed to get that back, and of course you can make a gain if the company makes a profit. Is it permissible to invest in this scheme?
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Investments are regarded as a speculative risk. A speculative risk is where a person can lose capital, gain profit or remain as he started. The possibility of loss and gain are vital for a venture to be regarded as a valid investment. The Fuqahā’ (jurists) state:
“Profit is according to the agreed amount & loss is proportionate to wealth staked.” [1]
The Fuqahā’ have placed down the following principles and maxims to highlight the importance of risk taking:
“Al-Kharāj bi al-ḍamān” (profits come with liability)[2]
“Al-ghunm bi al-ghurm” (reward comes with risk)[3]
Risk comes with one of two factors[4]:
1) Staking wealth
2) Staking labour
Hence, a person who hasn’t staked his wealth or labour has not assumed risk and cannot gain a profit.[5]
Therefore, in the scenario mentioned in the question, no risk has been borne as one’s wealth is not staked due to capital being guaranteed.
A transaction where the capital is guaranteed is regarded as a loan.[6] Any surplus on a loan is tantamount to interest.
Thus, it is not permissible to enter into this scheme. If anybody has already profited from this scheme, he must retake the amount of his capital and disburse the excess in charity.[7]
And Allah Ta’ālā Knows Best
Mufti Faraz Adam
www.darulfiqh.com