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

**juyrett** · 08-06-2012, 06:22 AM

Assalamu alaikum,

I have read arguments from both sides and personally I am not convinced at all by the arguments made by Mufti Ebrahim Deai saheb. The arguments put forward by Mufti Taqi and his father Mufti Shafi', I find are much more reasonable, both of who permit investing in shares of limited liability corporations.

و عليكم السلام و رحمة الله و بركاته و مغفرته

بسم الله الرمن الرحيم

Mufti Ebrahim Desai said that the arguments provided by Mufti Taqi were incomplete and by Mufti Taqi's own words further research is necessary on this topic, therefore it is clear that it was not a fatwa detailing it's permissibility and more research was needed before a conclusion could be drawn. Nevertheless, I am intrigued. I am not an alim, so I won't even attempt to debate, but for my own curiosity I would like to ask a few questions and maybe the aalim's of this forum can contribute or I can go ask someone else.

1) How is the concept of a limited liability corporation legal in Shariah? It clearly contradicts many hadeeths by the Prophet SAW which clearly state that profit without risk is Haraam, and profit is in proportion to risk. The risk of a shareholder is capped at their investment into the company, whereas their profit is unlimited. Hence, if the company is to be wound up, the shareholders can walk away without any of their assets being touched. As a result the shareholders have a partial risk and do not bear the full force of the risk. Neither do the directors. This results in bigger risks being undertaken without care for the consequences and results in creditors being extremely vulnerable.

2). How is a share entitled to dividends in a company despite that fact that it owns none of the company? Or despite that a shareholder does no work for the company? Or the fact that a member of a company does not bear the full risk? It violates all the ways halaal profit can be made.

Needless to say there are two camps on this issue, and those who prohibit investing in shares is clearly the minority. I do not think there is any point in actually discussing the merits of the arguments of the two parties as I am sure the ulema on both camps have considered the arguments. The intention of this post is merely to bring to the attention of the members of the forum that as far as I know majority of the scholars and the majority of the Deobandi scholars permit investing in the shares of limited liability corporations. With all due respect, that entire paragraph is meaningless. The entire world could be on baatil but that does not make the baatil haq nor the haq baatil. For example, the majority of the world is not Muslim, that does not make them correct.

Regarding a difference of opinion, I think I wrote about that somewhere in the previous page. You have talked about Mufti Taqi and his respected father. If they provide good evidence for permitting shares then I guess we can say there is a valid difference. But until then merely saying there is a difference of opinion is not enough. This was also discussed in the discussion. I assume you have just forgotten as these points you raised in this paragraph were dealt with in much detail. Until valid evidence can be provided it is not enough to say there is a difference of opinion.

Again I am not a scholar. I am merely interested in why you disagree with the impermissibility of shares. I look forward to your reply and will try and research into the matter.

08-06-2012, 06:22 AM	#33
juyrett Join Date Oct 2005 Posts 429 Senior Member	Assalamu alaikum, I have read arguments from both sides and personally I am not convinced at all by the arguments made by Mufti Ebrahim Deai saheb. The arguments put forward by Mufti Taqi and his father Mufti Shafi', I find are much more reasonable, both of who permit investing in shares of limited liability corporations. و عليكم السلام و رحمة الله و بركاته و مغفرته بسم الله الرمن الرحيم Mufti Ebrahim Desai said that the arguments provided by Mufti Taqi were incomplete and by Mufti Taqi's own words further research is necessary on this topic, therefore it is clear that it was not a fatwa detailing it's permissibility and more research was needed before a conclusion could be drawn. Nevertheless, I am intrigued. I am not an alim, so I won't even attempt to debate, but for my own curiosity I would like to ask a few questions and maybe the aalim's of this forum can contribute or I can go ask someone else. 1) How is the concept of a limited liability corporation legal in Shariah? It clearly contradicts many hadeeths by the Prophet SAW which clearly state that profit without risk is Haraam, and profit is in proportion to risk. The risk of a shareholder is capped at their investment into the company, whereas their profit is unlimited. Hence, if the company is to be wound up, the shareholders can walk away without any of their assets being touched. As a result the shareholders have a partial risk and do not bear the full force of the risk. Neither do the directors. This results in bigger risks being undertaken without care for the consequences and results in creditors being extremely vulnerable. 2). How is a share entitled to dividends in a company despite that fact that it owns none of the company? Or despite that a shareholder does no work for the company? Or the fact that a member of a company does not bear the full risk? It violates all the ways halaal profit can be made. Needless to say there are two camps on this issue, and those who prohibit investing in shares is clearly the minority. I do not think there is any point in actually discussing the merits of the arguments of the two parties as I am sure the ulema on both camps have considered the arguments. The intention of this post is merely to bring to the attention of the members of the forum that as far as I know majority of the scholars and the majority of the Deobandi scholars permit investing in the shares of limited liability corporations. With all due respect, that entire paragraph is meaningless. The entire world could be on baatil but that does not make the baatil haq nor the haq baatil. For example, the majority of the world is not Muslim, that does not make them correct. Regarding a difference of opinion, I think I wrote about that somewhere in the previous page. You have talked about Mufti Taqi and his respected father. If they provide good evidence for permitting shares then I guess we can say there is a valid difference. But until then merely saying there is a difference of opinion is not enough. This was also discussed in the discussion. I assume you have just forgotten as these points you raised in this paragraph were dealt with in much detail. Until valid evidence can be provided it is not enough to say there is a difference of opinion. Again I am not a scholar. I am merely interested in why you disagree with the impermissibility of shares. I look forward to your reply and will try and research into the matter.
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