Borrowing company shares

A question about borrowing company shares and returning them later against a cheque held as security, in which Jordan's General Iftaa Department answered that shares may not be lent, because their value fluctuates and like-for-like return is impossible. ¹

The questioner asked whether he may borrow company shares and later return them to their owner, giving him a cheque for their value to be held only as a pledge and security for his right. ¹

The Department answered that a loan is handing over property to someone who benefits from it so that he returns its like, and that it is permitted for the borrower and recommended for the lender. ¹ It said shares are undivided portions of ownership in joint-stock companies whose value changes with the company's assets and activities, so their like cannot be returned; the gap between their value when lent and when returned may be large, causing gross unfairness. ¹ It cited Sharia Standard No. 24 of the Shari'ah Standards for Islamic Financial Institutions, which bases the prohibition on lending shares on the fact that, given the constant change in a company's assets, shares at the time of return are not the like of what they were when lent. ¹ It concluded that company shares may not be lent, given the large fluctuation in their value. ¹

Jordan's General Iftaa Department published this fatwa on aliftaa.jo as no. 3907, dated 6 August 2024. ¹ The museum records this text as a historical document attributed to the body or scholar that issued it; it issues no ruling of its own.