In the name of Allah and prayer and peace be upon the Messenger of Allah,

This is a brief explanation about the zakat on the shares of joint-stock companies. We present it to the brothers who own the shares, hoping that Allah Almighty will help them to pay zakat on it and clear their obligations from it.

The most prominent provisions of zakat on stocks are clarified by the following two points:

#1# Whoever owns shares for the purpose of trading with them, buying and selling in the market, his ruling is the same as that of a trader; Whenever a year has passed since his trading, he pays zakat on the total value of the shares according to their market price, if it reaches the nisab.

And if all or part of the shares stagnated, he could not sell because of the low price, for example, or because the trading of shares was stopped; He does not have to pay zakat on the remaining part of it, provided that no sale takes place during the year. And his ruling in this case becomes the ruling of who owns his shares for the purpose of saving, as will be explained in the next point.

With caution, that when the stock market stagnates, and its owner refrains from selling until the market recovers and prices rise; If he sells the shares with reference to the first intention, which is trading, then zakat is due on their price immediately after selling them, for one year only, even if he has been waiting for several years.

#2# Who owns the zakat for the purpose of benefiting from its annual profit or for the purpose of saving and the company pays zakat on its activities, in this case no zakat is due on the shareholders to prevent duplication.

But if the company does not pay zakat, then the ruling is transferred to the shareholders as follows:

Zakat is calculated on the value of the company's zakat assets, and it is based on an accurate calculation of the company's annual budget; And if it is not possible to reach this information and so that the shareholder's liability does not remain occupied; He has to take the precautionary path here and pay zakat on what pertains to each share of the zakatable assets - which is the value of the share after deducting the company's obligations and dividing its current assets by the number of shares issued -.

Taking into account that the annual profits of the shares must be paid zakat on them immediately upon receipt if the company does not pay zakat on them; Where distributions are usually made at the end of the fiscal year, which is considered the time for paying zakat to companies.

If the shareholder is unable to know what pertains to each share of zakat, the Sharia Committee of the Zakat Fund has issued a fatwa that zakat varies according to the company's activity as follows:

1/ Shares of service companies: Zakat on them is on the annual profits distributed to the shareholders if they reach the quorum.

2/ Shares of commercial companies: Dealing with the trader as in the first point is a discharge of the shareholder's liability instead of being preoccupied with zakat.

This opinion is that the zakat of the shares should be paid based on the market value, if the market value of the shares was moderate and was not unusually high or low, then - from my point of view - the shareholder moves to pay his zakat on the book value.

Here is an invitation that we direct to companies in general and to joint-stock companies in particular, not to neglect Allah's right in their trade, so they pay zakat on it and appoint shareholders so that they do not bear their negligence.

Just as we do not forget the owners of shares, by praising Allah for what He has bestowed on them of money, and to dispose of it well, and not to forget Allah's right to their money, and to be faithful to Allah and fear Him, "And whoever fears Allah, He will make a way out for him."

Allah only knows

May Allah bless and bestow peace upon our Prophet Muhammad and his family and disciples.

Dr. Abdul Rahman Salman Al Hammadi

Director of Zakat Resources and Media Department

Member of the Sharia Committee Rapporteur

Zakat Fund