Islamic Finance (Equity Funds)

Dear students

Liman rahim today we will discuss about equity funds i mean islamic equity funds or mutual funds as you know that there are variety of mode of investments one of them is equity fund in quran allah subhanaw taala says allah has permitted trade and forbidden reba but not all share is allowed in islam like gambling my glove exactly so now we will come towards our topic

That is the equity funds that is the mode of islamic investment fund the islamic investment fund means are giant food were in the investor contribute their surplus money for purpose of its investment to earn a lower profit these subscribers are funds may receive our document certifying their subscription these documents may be called certificates units shares are

May be given any other name so this equity funds is one one of world of investment in an equity our mutual funds the amongst our and message in the shares of giant stock companies the profits are mainly drive through the capital gains by purchasing the shares and selling them with their prices are increased profits are also earned through dividends distributed by

The relevant companies actually the dividend is the distribution of profits by corporation to its share the amounts not distributed taken to be reinvested into the business is called retained earning so from this thing in dealing in equity shares can be acceptable in sharia in islam subject to the following conditions we have some conditions so the first condition

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Is the main business of the company does not violate shariah so it is not permissible to acquire the shares of the company providing financial services on interest like insurance companies conventional banks or the companies involved in some other businesses not approved by sharia for example companies manufacturing selling or offering pork haram each are involved

In gambling nightclub etc now the second condition is if the business of these companies is halal like automobiles textiles companies but they deposit the surplus amount in the excess of extra amount in an interest-bearing accounts or borrow money on interest the sheer order must express the disapproval against such dealings preferably by raising the voice against

Such activities energy meeting of the company so now we will come towards our third condition that is if some income from interest-bearing accounts are non hollande activities is included in the income of the company the proportion of income should not exceed 5% of the total income in case it exceeds 5% it is not permissible to invest in that company however if

It does not exceed 5% it must be given in the charity and must be changed by him for example if 5% of the whole income of the company has come out of interest being deposit 5% if the dividend must be given in into the charity so it may be questioned what is the basic reason or the logic behind the limitation of the 5% in fact there is no specific basis drives from

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The holy quran and sunnah for the 5% rule of non allah are recorded now in immiscible income however there is only we college the consensus or that is the heart of islamic scholars so now our fourth point is our ricard condition is detective equity ratio so the debt to equity ratio is a financial ratio in indicating the relative proportion of shareholders equity

And that used to finance a company assets we need to say it’s the indicator of the company debt a low debt to equity ratio indicates a low amount of financing by intent a high ratio indicates the company is getting more of its financing by boring money so these are the conditions under which we can invest in islamic way so inshallah in our last lecture you will

Explain some other conditions and we will go towards our next topic next mode of islamic investment thanks

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Islamic Finance (Equity Funds) By Online Business Commerce Study Hub