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Old 08-07-2012, 01:51 AM   #39
DuesTyr

Join Date
Oct 2005
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566
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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.



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.
Brother,


Shares do denote ownership of the company. The capital structure of a company is composed of shares. You own the shares - you own the company and are entitled to payout of dividends in proportion to what you own.

The problem in this day and age is that there are many types of shares and this is where problems will occur - ordinary shares/stock give you ownership and voting rights - you can vote in and out the management of the company and vote on all major resolutions.

Preference shares/stock and some other types do not give you those rights. They merely make you a kind of secured creditor but with the effect of 'diluting' the other common stockholders. Also, sometimes debt-warrants are converted into equity thereby diluting your interest again. This needs more attention as failing managers will tend to go down this route and damage the capital structure of the company and make you r interest and holdings potentially less than you began with.

Allahu A'lam
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