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Company gifted shares

Fatwaa ID: 1037

Question:
Salaam
Question in regards to shares

1) As an employee I am given the oppurtunity to purchase company shares at a reduced price. I started a 3 year contract in which I had agreed to give £225 every month in exchange for the shares. During the 3 years I can cancel my contract and will be refunded of all money given. I am unable to sell any shares during the three year period, in essence the shares are locked. Once the three year contract is over I am given the oppurtunity to purchase the shares at the discounted rate or be refunded of all money spent. My 3 year contract is not over

Do I have to pay zakat on the current market value of the shares or do I pay zakat on the amount of money given to the company to buy the shares ?

2) similar to the above question, as an employee my company has gifted shares instead of a pay rise. I am unable to sell the shares or transfer them as they are locked for 5 years. Do I pay zakat on the current market value of these shares ?

Answer:
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

  1. It is not clear from your query whether the purchase has already taken place or it will take place after three years at the discounted price. The details of your query are contradictory. If the purchase has already taken place and the shares have been transferred to your ownership, then the shares will be subject to zakaah. The market value of the shares on your zakaah date will be considered, not the price you have paid.
    If the transaction has not taken place but will only take place after the three year period, i.e., your current payments are simply kept as a deposit, then you will not have to pay zakaah on the shares. However, you will pay zakaah on the funds that are being kept for it. Similarly, if the shares are being kept for you, perhaps under your name, but have not been vested to you yet, then you will not pay zakaah on the shares. You will, however, pay for the funds.
  2. The gifting will only be complete once you assume constructive possession of the shares. Until then, they will not regarded as yours. Accordingly, you will not pay any zakaah on the gifted shares until after the five year period.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

09/24/1444 AH – 04/15/2023 CE | AMG1-2993

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين

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