Zakaah on company shares

Question

Praise be to Allah.

The zakaah on shares is obligatory upon the owners of
the shares. It may be paid on their behalf by the company if that is
stated in the company’s constitution, or it is decided by the board
of directors, or if the law of the land obliges companies to pay zakaah,
or if the shareholder authorizes the company to pay zakaah on his shares.

Secondly:

The company should pay zakaah on the shares just as an
individual pays zakaah on his wealth, in the sense that all the money
of the shareholders is to be considered like the wealth of one person,
and zakaah is calculated on that basis, depending on the category of
wealth on which zakaah is obligatory, the nisaab (minimum threshold),
the amount on which zakaah is to be paid, and other matters which are
to be taken into account with regard to the zakaah to be paid by an
individual. This is based on the principle of khultah (collectivity),
according to the fuqaha’ who apply this to all kinds of wealth, excluding
the amount of shares on which zakaah is not obligatory, such as shares
belonging to the public treasury, charitable waqfs, charitable organizations,
and shares belonging to non-Muslims.

Thirdly:

If the company does not pay zakaah on its wealth for
any reason, then the shareholders are obliged to pay zakaah on their
shares. If the shareholder can find out from the company’s statements
how much the company would have to pay in zakaah if it did pay zakaah
in the manner described above, then he should pay zakaah on that basis,
because this is the basic principle with regard to paying zakaah on
shares.

If the shareholder is not able to find that out:

If he holds shares in the company with the intention
of benefiting from the annual profits of the shares, and not for the
purpose of trading in those shares, then he should pay the zakaah similar
to that paid on things that are rented out, in accordance with the resolution
of the Islamic Fiqh Council (Majma’ al-Fiqh al-Islami) passed
during its second session, with regard to the zakaah on real-estate
and non-agricultural land that is rented out. The owner of these shares
does not pay zakaah on the value of the shares, rather he pays zakaah
on the profits, which is 2.5% after one year has passed from the day
when he acquired that profit, bearing in mind the conditions of zakaah
and provided that there are no impediments.

If the shareholder bought the shares with the intention
of trading, then the zakaah on the shares is the same as zakaah on trade
goods. If one year has passed and they are still in his possession then
he should pay zakaah on the value of the shares, based on the evaluation
of experts, and he should pay 2.5% of that value and of the profit,
if the shares have made any profit.

Fourthly:

If the shareholder sells his shares during the year,
he should include their price in his wealth and pay zakaah on it after
one year has passed. The purchaser should pay zakaah on the shares that
he has bought in the manner described above. And Allaah knows best.