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

**ElectraDupu** · 07-18-2012, 10:07 AM

Have a read of this:

http://en.wikipedia.org/wiki/Criticisms_of_corporations

Share prices may drop and therefore adversely affect shareholders, but they have no control over the corporation generally in its day to day operations...managers can mismanage for their own short term gains hoping not to get caught, by the time they get caught it is too late, they have already benefitted and shareholders still holding the stock lose out. Shareholders (in joint stock companies) should be able to control the company like anyone else...I am not sure if this is shariah compliant either.

Again, with all due respect, I think you're over simplifying it. If you invest in shares of a company, you are in one sense betting on the competence of that company's internal management. Yes, bad management decisions will bring down stock prices and shareholders will complain and file lawsuits which the company will defend with limited liability and an army of lawyers. However, when management make good decisions, the shareholders are merely happy with THEMSELVES for "picking the right stocks", and the managers live to get sued another day.

And again, criminal negligence is not covered by limited liability anywhere in the world that I'm aware of. That means that if management simply make bad decisions then they are covered, but if they make criminal decisions, they are just as liable as anyone else, often more so. You'd also be surprised as to what can constitute criminal negligence in some countries.

Why are you against stock markets? I was going to start to go into them

A couple years ago, I owned a company that built software for casinos. One of my main reasons for selling the business was the first hand insight it gave me into how such companies manipulate things as basic as revenue and cashflow in order to deceive regulators and investors, and how standard such malpractice seems to be.

Share prices rarely have anything to do with the actual monetary value of a company, and they are heavily manipulated to benefit a few at the cost of many.

Stock markets are a lot like a casino, except instead of fixed rules and well known house odds that anyone can work out with a calculator, the rules are continuously made up and modified by the house, and the odds are given to some, while deliberately hidden from others.

I also have a basic issue with the idea of businesses or even currencies that have purely speculative value that isn't based on legitimate revenues or physical backing (ie, fiat economies). It just legitimises the notion that the whole thing is made up to begin with.

07-18-2012, 10:07 AM	#6
ElectraDupu Join Date Oct 2005 Posts 428 Senior Member	Have a read of this: http://en.wikipedia.org/wiki/Criticisms_of_corporations Share prices may drop and therefore adversely affect shareholders, but they have no control over the corporation generally in its day to day operations...managers can mismanage for their own short term gains hoping not to get caught, by the time they get caught it is too late, they have already benefitted and shareholders still holding the stock lose out. Shareholders (in joint stock companies) should be able to control the company like anyone else...I am not sure if this is shariah compliant either. Again, with all due respect, I think you're over simplifying it. If you invest in shares of a company, you are in one sense betting on the competence of that company's internal management. Yes, bad management decisions will bring down stock prices and shareholders will complain and file lawsuits which the company will defend with limited liability and an army of lawyers. However, when management make good decisions, the shareholders are merely happy with THEMSELVES for "picking the right stocks", and the managers live to get sued another day. And again, criminal negligence is not covered by limited liability anywhere in the world that I'm aware of. That means that if management simply make bad decisions then they are covered, but if they make criminal decisions, they are just as liable as anyone else, often more so. You'd also be surprised as to what can constitute criminal negligence in some countries. Why are you against stock markets? I was going to start to go into them A couple years ago, I owned a company that built software for casinos. One of my main reasons for selling the business was the first hand insight it gave me into how such companies manipulate things as basic as revenue and cashflow in order to deceive regulators and investors, and how standard such malpractice seems to be. Share prices rarely have anything to do with the actual monetary value of a company, and they are heavily manipulated to benefit a few at the cost of many. Stock markets are a lot like a casino, except instead of fixed rules and well known house odds that anyone can work out with a calculator, the rules are continuously made up and modified by the house, and the odds are given to some, while deliberately hidden from others. I also have a basic issue with the idea of businesses or even currencies that have purely speculative value that isn't based on legitimate revenues or physical backing (ie, fiat economies). It just legitimises the notion that the whole thing is made up to begin with.
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