MGA2013FIQH MUAMALAT 1GROUP ASSIGNMENTSHARIKAH PARTNERSHIP AND MODERN CORPORATIONSPREPERED BY TMD1NAMEMATRIC NUMBER

ARIF MOHSIN BIN MOHD YAAKOB1132104

NURUL NAJIHAH BINTI MAMAT1132093

NURATIQAH BINTI MAD BADRI1132094

NOR AZURA BINTI AHMAD SUBARI1132106

FATIN NADIAH BINTI ISMAIL1132095

PRESENTED TOPUAN NURUL AINI BINTI MUHAMEDSEMESTER 4 2014/15

SHARIKAH (PATNERSHIP) AND MODERN CORPORATIONSFirstly 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, interest-based 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-modern-corporations-are.html

Syirkah musahamahEtymologically 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 MuhasamahScholars 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;and2)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, al-Zuhaili informed that the number of shareholders in a limited liability company that is open is 50 syarik / partiescriteria 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 persero (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.