What is the Islamic ruling on investing in a trading company on the condition of profit and loss sharing?


While providing guidance concerning a report by the nazim of Dar-ul-Ifta on investing in a trading company on the condition of profit and loss sharing, Hazrat Amirul Momineen, Khalifatul Masih Vaa, in a letter dated 1 July 2020, said: 

“Even the world’s largest companies do business in various kinds of industries. They openly declare some of those businesses that do not contravene the Shariah or the law of the land in any way. However, they also own some subsidiaries, which they do not highlight in their profiles. Sometimes, religious or legal rules and regulations are not fully observed in [the latter] businesses. 

“Hence, if the business details of a company are clear or the details of their business can be easily obtained and there is any un-Islamic or illegal aspect in them, then one should not do business with such a company even on the condition of sharing profit and loss.

“However, it is true that, nowadays, most of such matters have become muddled. Hence, if the dealings of the company that are accessible do not have any un-Islamic or illegal aspect, then there is no problem in joining the business on [the condition of] profit and loss sharing. If the company has a portion of its business as a subsidiary on the side, about which it does not disclose anything to its partners, then there is no need to unduly probe or be concerned. However, if it is found to be illegal, one should pull out of it.”

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