If a stock becomes non-compliant, do we have to sell it immediately? What if we are currently at a loss because the stock price dropped resulting in non-compliance - this means we would sell it at a loss, and once the price goes up then be able to buy it again but financially this doesn’t make sense.
If we are allowed to hold for some time, during this time period if there is any dividend then would that have to be purified completely?
Wa alaykum salaam,
Shariah boards have differing views on this matter. The two main approaches are as follows:
Allow holding investment for a period like 90 days to see if it becomes compliant. Any dividend or earning in that period must be purified. If after that period it is still not Shariah compliant, then you must dissolve that position.
The second approach is reasonable given the current market conditions.
Assalamu Alaikum @Mufti_Faraz_Adam,
When you say any “earning” must be purified, are you referring to dividends only or also growth in the share price? Thank you!!
Assalamu Alaikum @Mufti_Faraz_Adam
I was wondering if I could follow-up on what is meant by “earning” here - dividends only or also growth?
Also, what if one is at a loss when the stock becomes non-compliant - are we allowed to wait until we recover our losses? Or would any growth at that point (i.e. decrease in losses) also need to be purified?