MGA2013

FIQH MUAMALAT 1
GROUP ASSIGNMENT
SHARIKAH PARTNERSHIP AND MODERN CORPORATIONS
PREPERED BY
TMD1
NAME
ARIF MOHSIN BIN MOHD YAAKOB
NURUL NAJIHAH BINTI MAMAT
NURATIQAH BINTI MAD BADRI
NOR AZURA BINTI AHMAD SUBARI
FATIN NADIAH BINTI ISMAIL

MATRIC NUMBER
1132104
1132093
1132094
1132106
1132095

PRESENTED TO
PUAN NURUL AINI BINTI MUHAMED
SEMESTER 4 2014/15

SHARIKAH (PATNERSHIP)

AND MODERN CORPORATIONS

Firstly the meaning of partnership by four jurists from Maliki is a right

for all the partners to deal with any part of the partnerships joint property.
Secondly from Hanbali is sharing the rights to collect benefits from or deal in
the properties of the partnership. Thirdly from Shafii is an establishment of
collective rights (pertaining to some property) for two or more people. Lastly
from Hanafi partnership is a contract between a group of individuals who
share the capital and profits.
A corporation is a company or group of people authorized to act as a
single entity (legally a person) and recognized as such in law. Early
incorporated entities were established by charter (i.e. by an ad hoc act
granted by a monarch or passed by a parliament or legislature). Most
jurisdictions now allow the creation of new corporations through registration.
Registered

corporations

have

legal

personality

and

are

owned

by

shareholders whose liability is limited to their investment. Shareholders do

not typically actively manage a corporation; shareholders instead elect or
appoint a board of directors to control the corporation in a fiduciary capacity.
It is best to consider the concept of modern corporations or companies
in the light of the major rules and regulations as practiced today. Although
these corporation have some similarities with Islamic sharikah by virtue of
the fact that they all can come into being when at least two individuals
"form" the company or sharikah, and have them registered with the Registrar
of Companies, yet once established and registered with the relevant
authority these modern companies are recognized by the law as separate
legal entities distinct from their shareholders.

In the context of Islamic sharikah however, the shariah envisages the

role of the partners as individuals who are to carry out their business
activities jointly with a view of making profit. This furthermore boils down to
whether what is formed is a mufawadah or inan structure: in the case of the
former the partners are agents and guarantors among themselves, whereas
in the later case, they are only agents. Hence in the context of Inan, a
partner is considered to be acting personally with regard to his portion of the
equity of the sharikah, and at the same acting as an agent with regard to his
partners portion. It is a requirement in Islamic law however that all partners
need to put their capitals in an indistinguishable form in a common fund or
account separated from their other assets. Nevertheless the liability of the
parties in the context of their business dealings with third parties is not
necessarily limited to their shares in the sharikah as any act carried out
properly in accordance with the agency will bind the respective partners,
although loss is to be shared in proportion to their capital contribution.

But if we look closer at modern corporations it will become clear that

the purpose or objective of the separate legal entity is to allow for a separate
account be created for the entities so that it will be made possible to identify
their assets and liabilities because those need to be treated independently
from the assets or liabilities of their shareholders. These entities can sue and
be sued in the course of their business dealings with outsiders. In a company
limited by shares however the liability of the shareholders are limited to the
number of shares of certain value subscribed by them precisely because the
law consider these corporation as different from their shareholders. Given
this position one may think of a mudarabah structure in Islamic law, where
the manager is supposed to be different from the capital provider meaning
that this mudarib is a different or separate legal entity distinct from the
entity of the capital provider. Hence can we consider modern corporations as

individual managers/mudaribs in the context of their dealing with the

shareholders?

In the case of Islamic mudarabah, it is provided that the rabulmal is

going to be held liable up to the amount of the capital he actually
contributed and duly handed over to the mudarib. He will not be made
answerable for any liability of the mudarabah in excess of the capital so
contributed. However in modern company structure, it is the requirement
that a shareholder must pay up all shares that he owns but he is not duty
bound to pay up for the share until a call is made by the company, and he
will be imposed with interest charge in favor of the company if he fails to do
just that after the call. This effectively means that he is considered indebted
to the company by not obliging to the demand of the call; hence a debt is
thus created for which interest is charged.

From an Islamic perspective in the context of mudarabah and

musharkah all capitals must be passed on to the account of the mudarabah
or

partnership

otherwise

the

contract

is

compromised

in

term

of

effectiveness and validity. Because a party in mudarabah if he a capital

provider, is free to withdraw from the mudarabah, nonpayment of the capital
to the account of the mudarabah will practically end the agreement as this
contract is in the nature of non-binding contract, or at least the mudarabahis
to be valid only up to the amount of capital actually contributed. Similarly in
the context of sharikah it is part of the requirement of the Islamic scheme
that the capital is to be pooled together to create common ownership
available for all partners to utilize in the name of the musharakah in line with
the concept of mutual agency as between all the partners. However if one
party refuses to provide the capital in such a manner, he can be considered
as to withdraw from the sharikah since to effectively establish the
partnership all capitals contributions must be actually made and not just

promised. Like in the case of the parties in mudarabah, partners also can
withdraw from the sharikah as a matter of general rule if they so wish.

From a different perspective, practically the operation of modern

companies and corporations is not necessarily in line with the rules and
conditions of the Islamic sharikah . Modern companies issue shares and loan
capitals of various kinds, some of which are subject to interest. Debentures,
for instance, are resorted to by modern companies when they want to raise
additional money through debt instruments, which are, in essence, interestbased and thus not approved by Islam. They may also issue securities (loan
stocks) that pay a fixed rate of return to holders - a process which is also
contrary to Islamic law. Then there are the issues of preference share that
gives more priority to a certain class of shareholders in relation to profits or
returns and the right to repayment of capital upon dissolution of the
companies. Therefore, there are many issues that need to handle if the
companies and modern corporations are to achieve Shariah compliant
status. Not only that they must avoid dealing in haram goods and services,
they also need to ensure that their setup and structure are Shariah
compliant.
http://islamiclawoffinance.blogspot.com/2009/07/sharikah-and-moderncorporations-are.html

Syirkah musahamah
Etymologically al-syirkahmean al-ikhtilath (mixing) and the
communion, which is a mixture of things with others, making it difficult to
distinguish. In the terminology;
According to scholars Malikiah: "Permission to act legally for two
people who cooperate against their property."

According to scholars Syafi'iyah and Hanabilah: "Determination of the

legal right to act for two or more people on something they agree on."
According to Hanafi scholars: "Akad done by people who work in the
capital and profits."It can be concluded that syirkah is cooperation between
two or more people in a business with consequent advantages and
disadvantages borne jointly.
Pillars of syirkah are something that should be there when shirkah it
lasts. According to the Hanafi scholars, harmonious syirkah only consent and
qabul or handover. Meanwhile, people who berakad and the object of the
contract is not included in harmony, but a condition. According to scholarly,
harmonious syirkah includes shighat (lafaz) consent and qabul, berakad
second person, and the object of the contract.
General conditions shirkah:
1. Shirkah it is a transaction which may be represented, meaning that one
of the parties if legal action against the syirkah object, with the
permission of the other party, regarded as the representative of all the
parties of association. Also, union members trust each other.
2. Percentage distribution of profits for each party association explained
when the contract lasts.
3. Advantage is taken of the results of property income trusts, instead of
other assets.
Special requirements in syirkah al-'uqud: according to scholars Syafi'iyah
union capital was clear and the cash and not in the form of debt and not a
form of goods.
Special requirements for syirkah al-mufawadhah, according to Hanafi
scholars, namely:

1. Both sides ably used as a representative.

2. Capital provided each party must be the same, the work done is the
same, the profit received all parties must also be the same quantity.
3. All parties have the right to legal action in the whole object of the
union.
4. Lafaz used in the contract is lafaz al-mufawadhah. If one of the
conditions is not met, then akadnya invalid, and turned into shirkah
al-'inan.
Shirkah law Muhasamah
Scholars differed as to the law

musahamah. First, there are scholars

who argue that musahamah syirkah is not allowed, because there is a

transfer of an individual syarik into shares owned in terms of determining the
direction of the company, including determining the manager / board of
directors and / or other terms which apply in business institutions. Total
syarik as shareholders cannot determine the direction based company
shirkah musahamah but the decisive factor is the majority shareholder. In
addition, the scholars did not allow the contract syirkah musahamah found
musahamah syirkah waive the pleasure aspect (willingly); whereas the
pleasure aspect is an important aspect in bersyirkah. Secondly, there are
scholars who argue that mushamah syirkah allowed (ja'iz) performed during
the (provided) business activities that do not include:
1)

Objects that are unlawful as khamr (alcoholic beverages) and pigs; and

2)

The way business is forbidden as usury and gambling businesses.

Liability limited views of nature can be divided into two: Closed

Company Limited and the public limited liability company (PT). Public Limited
Liability Company is conceptually connected with syirkah mas'uliyah
mahdudah because there is a criterion regarding the number of shareholders

of the company concerned. In the book of al-Fiqh al-Islami bi al-Adillah, alZuhaili informed that the number of shareholders in a limited liability
company that is open is 50 syarik / parties criteria including the company's
open is not uniform in the various countries.
In principle, Islam does not prohibit Muslims to seek treasures from
anywhere. However, the property must be lawful and Thoyib. That is, how to
get it halal, but the goods are acquired is not kosher, meaning not good. Vice
versa So it should be all good, either way get and goods. In terms of buying
and selling is permissible and lawful. But what about the law of buying and
selling shares?
Contemporary jurists agreed that legal unlawful buying and selling
shares in the capital markets of the companies engaged in the business field
unlawful. For example, a company engaged in the production of liquor, pork
and any business associated with pigs, conventional financial services like
banking and insurance, and the entertainment industry, such as casinos,
gambling, prostitution, pornographic media, and so on. Proposition which
forbids buying and selling shares of the company as this is all the arguments
which forbid any such activity.
But they differed if the shares are traded on the stock market it is of
companies engaged in legitimate business, for example in the fields of
transport, telecommunications, textile production, and so on. Syahatah and
Fayyadh said, "Planting stock in a company like this is allowed to be
shar' i. Evidence shows his skill is all arguments that show bolehnya such
activity.
But there are still Jurists law forbids buying and selling shares of the
company despite his efforts kosher field. They have, for example Taqiyuddin
an-Nabhani, Yusuf as-Sabatin and Ali al-Salus three are equally highlights the
form of business entity (PT) is actually un-Islamic. So before seeing his

company's line of business, which should be seen first is a form of business

entity, whether it qualifies as a firm Islami (shirkahIslamiyah) or not.
This aspect seems downright ignored by most of the jurist and expert
on Islamic economics today, proved they did not mention at all of this crucial
aspect. Their attention was more focused on the identification of business
(halal / haram), and various mechanisms existing transactions, such as spot
transactions (cash on the spot), option transactions, transactions trading on
margin, and so on .
Taqiyuddin an-Nabhani in An-Nizam al-Iqtishadi (2004) asserts that a
limited liability company (PT, shirkah musahamah) is a form of vanity syirkah
(invalid), as opposed to the laws shirkah in Islam. Iniquities among others,
due in PT there is no consent and granted as in the contract shirkah.
There is an only unilateral transaction from investors that include capital by
buying shares of the company or from other parties in the capital market,
without any negotiation or negotiation whatsoever either with the company
or pe r sero (investors) more. The absence of consent granted in PT this is
fatal, fatal same with the pair of men and women who only register
marriages at the Civil Registry Office, without the consent and granted in
syar'i.
Therefore, a second opinion which forbids this stock business (though
its field halal) is stronger (rajih), due to more careful and observant in
understanding the facts, especially regarding the form of legal entity
(PT). Moreover, the first to allow the backrest as long as the stock business
company business field kosher, is the argument of al-Mashalih Al-mursalah,
as well as analysis of Yusuf al-Sabatin.Yet according Taqiyuddin An-Nabhani,
al-Mashalih Al-mursalah is the source of law is weak, because kehujjahannya
not based on the proposition that qath'i .