Small Investors can make a difference

The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.Question: It seems to me that the best way a Muslim can object to the way the company might be dealing with Riba is not to hold any of its shares. Furthermore acquiring shares of a company with the intention of objecting to its practice does not seem logical because as a very small shareholder any protest will just be ignored and would not cause the company to alter the way it does business. Any comments will be appreciated.Answer: Of course, you are right in supposing that the voice of a small shareholder is not going to make much difference to management. And you are also right in thinking that a good way to object to a company's financial practices is not to hold any of its shares. But if a company is found to be Shari`ah-compliant, i.e., its primary business is halal, and it passes our financial screens, then if you invest in an Islamic mutual fund which holds shares in the company, and the company derives a small percentage of its non-operating interest from riba-based products, you are in an excellent position to object and to making your objections heard. This is because your investment, modest or otherwise, will be added to the investments of many others; and there is strength in numbers. Then, with your Islamic fund holding a sizeable block of shares, the chances that management will listen to your grievances or observations are much greater.

Contents: