MS Omar Attorney

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MS Omar & Associates is a niche market law firm based in Durban which was established in July 1983 and specializes in all aspects of Corporate and Commercial law, Family Law, Trusts Law, Estate Planning, Litigation, Dispute Resolution, Labour Law, Conveyancing and Shariah law including Islamic Finance.

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Don’t hesitate to contact M.S Omar & Associates regarding any questions you have or for further information. You can reach us online, or by calling (031) 306 3282

 

 

Zakah Treatment of Shares in Listed and Unlisted Companies

1. Ownership of a share in the issued share capital of a listed or unlisted company , whose core activity is halaal,  represents ,in substance , a pro-rata undivided share in the underlying assets of that company, which may comprise of Zakaatable or non - Zakaatable assets, or, a combination of both.  يمثل السهم حصة شائعة في موجوداتها الزكوية..... و محل العقد عند تداول الاسهم هو هذه الحصة الشائعة .
 
2. The shareholder should, by reference to the last available financial statements, identify and reasonably estimate the value of the underlying Zakaatable assets, after deducting  those specific liabilities incurred in respect of financing  only Zakaatable assets, at the arrival of his or her final Zakah valuation date, at the end of the relevant Zakah year. If the shareholder is unable to do so , for whatever reason, he or she should then pay Zakah on the market value of the share as at the Zakah valuation date, at the end of the year.  الاستثمارات في الأسهم فغرض الاحتفاظ بها ( النماء : اذا امكن عن طريق الشركة معرفة ما يخص السهم من الموجودات الزكوية: النقود و عروض التجارة و الديون المرجوة السداد فانه يزكى ذالك...
 
3. Zakaatable assets, as prescribed by the Shariah, are gold,  silver, cash, and sound book debts , which are subject to Zakah under all circumstances, whether productively employed in commerce or not. اذا ظهر النماء او لم يظهر لان السبب قد يتحقق راجع: البناية فى شرح الهداية

4. Any other asset is exempt from Zakah, unless such asset was acquired for the primary intention of resale, and is therefore deemed to constitute trading stock, in the hands of the owner , as at the arrival of the Zakah valuation date, at the end of the relevant year. الاصل ان ما سوى الاثمان من الاموال لا تجب فيه الزكاة الا بإعداده للتجارة و نواه للتجارة.

5. Shares in a company, therefore, acquired with the primary intention to resell at a profit ( and not to hold as an investment for capital growth) constitutes stock in trade, with the result that Zakah is payable thereon on the Zakah valuation date at the market value thereof, as at the the Zakah valuation date.
من اشترى اسهمه بنية التجارة فانه تجب عليه زكاة عروض التجارة، حسب قيمتها السوقية،
وأما المساهم المستثمر ، الذى لا يقصد بشرائها المتاجرة و المضاربة فيها، و إنما قصد الاستثمار طويل الأجل ، فانه يؤدي الزكاة عن موجودات الشركة الزكوية
فقط.

6. Zakah may be paid by the shareholder,  in that capacity, pro-rata to shareholding, ( Hanafi school) , or, by the company as a separate legal entity( in substance, upon the partnership principle) , if the shareholders resolve to do so. The other schools ( mazaaib) treat the assets of a partnership, held in co- ownership, by the partners, as the ( notional) property of a single owner, ( analogous to a legal person) for Zakah purposes. و تفسير ذالك ان مالكا و الشافعى و اكثر فقهاء الامصار اتفقوا على أن الخلطاء يزكون زكاة المالك الواحد. راجع بداية المجتهد

7. If the underlying assets of a specific company are exempt from Zakah, then Zakah is payable on the dividend income, or the unexpended remainder thereof, which is added to the aggregate value of the Zakaatable assets on the Zakah valuation date, at the end of the relevant year: gold+silver +cash+book debts +stock- less allowable liabilities: 2.577% ( to cover lunar year). و اذا لم يكن لدى الشركة موجودات  الزكوية فانه يزكى ما يبقى من صافى الايراد فى نهاية الحول : الشركة

8. In relation to a subsidiary company, it may separately calculate its own Zakah, or, alternatively , the holding company may determine its pro-rata share of Zakaatable assets in the subsidiary,if any, on the same basis as stated in paragraph 2 above. Care should be taken to ensure that there is no double counting.

9. If the shareholder sells his or her shares , during the course of the year, then the proceeds thereof, or, the unexpended remainder , at the end of the year, is  added to the aggregate value of the Zakaatable assets, will be subject to Zakah. اذا باع المساهم اسهمه في اثناء الحول ضم ثمنها الى ماله الزكوية و زكاه معه عندما يجيء حول زكاته.

10. The aforegoing approach is consistent with the resolutions of the  distinguished global Islamic Fiqh Academy: resolutions number:28/3/4 and 121/3/13.

واللة اعلم بالصواب.

And Allah Knows Best
MS Omar
Durban
Updated: 15 May 2021

Our Testimonials

I personally know the honourable Shaykh Mahomed Shoaib Omar for over thirty years. I found him to be an ardent seeker of knowledge, quick of mind &  constantly devoted to the study of the books of fiqh &  has written himself a number of papers. He has been amongst the foremost participants in drafting the Muslim Personal Law for S.Africa, so that it may be enforced there; and the majority of local Ulama have endorsed this.

~ Mufti Taqi Uthmani

Contact Us

M.S OMAR & ASSOCIATES

Attorneys and Conveyancers
Suite 1603, 16th Floor
Nedbank House
30 Ingcuce Street
(formerly Albert Street)
Durban, South Africa

Tel (031) 306 3282