In the Name of Allāh,

the Entirely Merciful, the Especially Merciful

Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.

Resolution No. 121 (3/13)

Zakāh on Shares Owned to Earn their Income

The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, holding its 13th session in Kuwait City, State of Kuwait, on 7–12 Shawwāl 1422h (22–27 December 2001),

Having examined the research papers submitted to the Academy concerning

Zakat on Shares Owned to Earn their Income,

Having listened to the discussions of the Academy’s members and experts on the subject,

Having considered the Academy resolution no. 28 (3/4) concerning Zakāh on Company Shares, which states in its paragraph (3) as follows:

If the company, for any reason did not pay Zakāh on its wealth it becomes obligatory on shareholders to pay Zakāh on their respective shares. Therefore, if the shareholder is able to know, from the accounts of the company, the exact amount of Zakāh due on his shares had the company paid the due Zakāh; he should pay that amount, as this is the normal original way for determining the Zakāh due amount.

If, however, the shareholder is unable to know that amount and his intention of retaining the shares is to benefit from their annual return, not for the sake of trading them he should apply the rules of Zakāh on returns. The owner of such shares is not required to pay Zakāh on the assets of shares, but only on the returns, which is at a rate of ¼ of 1/10 after the elapse of one (lunar) year from the date of the actual reception of the dividends, provided that all other conditions are met and no impediment exists.25

Resolves

If the Zakāh non-paying company owns Zakāh-liable properties such as cash balances, goods for trade, and debts owed by solvent debtors; and the shareholder fails to know from the company’s accounts the exact portion of the Zakāh-liable properties that correspond to his own shares; he should make the maximum possible investigations and then pay Zakāh for the portion of the Zakāh-liable

• Resolution 120 (3/13) concerning Zakāh on Shares and their dividends.

properties that correspond to his shares. This arrangement holds true if the com- pany is not facing large deficits where their debts exhaust all its assets.

However, if the company has no properties liable to Zakāh, the resolution no. 28 (3/4) applies to its shares so that: “the shareholder should pay Zakāh on the income only and not on the principal of the shares.”

Indeed, Allāh is All-Knowing.