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Article
Publication date: 18 January 2021

Khurram Parvez Raja

The Sharīʿah Standard No. (35) issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) aims to identify the zakāt base for institutions…

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Abstract

Purpose

The Sharīʿah Standard No. (35) issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) aims to identify the zakāt base for institutions (including Islamic insurance companies) as well as the subsidiary and the mother company of the institution (the company). By zakāt base, the standard means the items of financial statements that should or should not be included in the calculation of the zakāt base, and the liabilities or allocations that should or should not be deducted from zakatable assets. The standard also covers payable zakāt rates, disbursement of zakāt funds on the eight categories of zakāt recipients and the rulings pertaining to disbursement. The focus then is on companies or corporations. There is no indication in the aims as to who owns the wealth of the corporation, that is, whether it is the company itself or it is the shareholders and whether it is treated as a joint wealth of the shareholders or of a single individual in the form of the company. The author will rely on this issue as one factor on the basis of which the standard is to be judged.

Design/methodology/approach

Quran and hadith. Works of earlier jurists.

Findings

In this study, the author has summarized the provisions of zakāt according to the traditional law, but only those that are relevant for the financial institutions and the standard issued by the AAOIFI. After that, the author mentioned the major points that have been addressed by the standard. In the last section, the author has shown that the rulings of the Islamic Fiqh Academy and the AAOIFI on zakāt are totally confusing and merely a reproduction of the rulings of traditional law. The main reason for this confusion is that the nature and entity of a corporation have not been addressed and have been treated like a partnership, thus, jumbling up the entire issue of zakāt through banks.

Originality/value

The main purpose in undertaking this original work is to examine the AAOIFI Sharīʿah Standards from the perspective of traditional Islamic law, that is, the law of the senior schools as laid down in their authentic manuals. If there is an extensive deviation from this law, then this must be pointed out in the hope that it will be corrected by the concerned institution and the banks that adopt these standards. Neglecting such a corrective action for long will result in damage not only to these institutions in the long run but also to the law of Islam that has been so carefully crafted over centuries. The purpose is to show how far this standard deviates from traditional Islamic law and claims to be called the authentic view on a particular subject. Nevertheless, it is not the purpose of this work to explain and elaborate on the meaning and utility of these standards.

Details

Journal of Money Laundering Control, vol. 24 no. 2
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 1 January 2013

Khurram Parvez Raja

The unfair prejudice remedy as contained in s.290 of the Companies Ordinance 1984 entitles a member with a shareholding of twenty percent or more to petition to the court for…

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Abstract

Purpose

The unfair prejudice remedy as contained in s.290 of the Companies Ordinance 1984 entitles a member with a shareholding of twenty percent or more to petition to the court for suitable and appropriate court orders in circumstances where the member has been unfairly prejudiced. The major difficulties and complexities emerging from the examination of s.290 relates to (but not limited to) locus standi, high cost of litigation due to the length and complexity of the unfair prejudice litigations, lacunas in share valuation, cumbersome court procedures, low quality of pleadings, unethical conduct of lawyers, etc. The purpose of this paper is to shed light on these topical questions. It is contended that the legislature and the courts will have a strong role to play in providing clarity and certainty to the law.

Design/methodology/approach

The first part provides a brief overview of the statutory unfair prejudice remedy contained in s.290. The second part discusses the concept of unfair prejudice in the United Kingdom and its difficulties. The third part provides a framework of the unfair prejudice remedies available under s.290 and discusses the inefficiencies and shortcomings of the remedy.

Findings

This article concludes that the statutory unfair prejudice remedy in Pakistan is inefficient and inadequate to redress personal and corporate wrongs in an unfair prejudice petition. The deficiencies of the statutory unfair prejudice remedy pose a challenge to the minority shareholders and the overall corporate governance and corporate law regime in Pakistan.

Originality/value

This article sheds light on the complexity and difficulty of the statutory unfair prejudice remedy, as contained in s.290 of the Companies Ordinance 1984 from a comparative law perspective.

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