DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - Corporations and Limited Liability not Shariah Compliant

**hansen384cbh** · 07-17-2012, 08:23 PM

I can't comment on whether limited liability is Shariah compliant or not, but I would like to suggest that in context, limited liability laws aren't quite what you're making them out to be.

Firstly, you are implying the false assumption that limited liability means no liability. It doesn't. Exact laws vary from country to country, but its almost always the case that as the size of a company grows, so too does its legal liability

Also, limited liability never extends to cover criminal negligence. In such cases, the individual is still fully liable., while the company also incurs some liability.

I don't really understand what you meant about shareholders being able to hide behind limited liability, its generally the opposite. The limitation can provide short term relief to the bottom line for a month or a year, but it doesn't stop your share prices plummeting when you screw up. That means if anything that in the current structure shareholders are still exposed no matter how well protected the management may be.

Just to be clear, I'm heavily against stock markets, protectionism, and many other aspects of western financial modeling, but limited liability isn't on my list of things to object to.

07-17-2012, 08:23 PM	#2
hansen384cbh Join Date Oct 2005 Posts 418 Senior Member	I can't comment on whether limited liability is Shariah compliant or not, but I would like to suggest that in context, limited liability laws aren't quite what you're making them out to be. Firstly, you are implying the false assumption that limited liability means no liability. It doesn't. Exact laws vary from country to country, but its almost always the case that as the size of a company grows, so too does its legal liability Also, limited liability never extends to cover criminal negligence. In such cases, the individual is still fully liable., while the company also incurs some liability. I don't really understand what you meant about shareholders being able to hide behind limited liability, its generally the opposite. The limitation can provide short term relief to the bottom line for a month or a year, but it doesn't stop your share prices plummeting when you screw up. That means if anything that in the current structure shareholders are still exposed no matter how well protected the management may be. Just to be clear, I'm heavily against stock markets, protectionism, and many other aspects of western financial modeling, but limited liability isn't on my list of things to object to.
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