What is it about?
Ownership of asset is an important aspect in ensuring the validity of sale contract. Nevertheless, in Islamic finance, the issue of beneficial ownership as practiced in the current system is seriously debated among Shar’iah scholars. It has been argued as violating the real concept of ownership (milkiyyah) in Shari’ah law. This article aims at studying the status of beneficial ownership from the Shari’ah perspective. This study begins with examining the meaning of ownership and its attributes from the Islamic point of view and followed by the discussion on the origin of beneficial ownership from the legal perspective. The approach that is applied to clarify the concept of beneficial ownership is content analysis. Subsequently, this study explains some current applications of beneficial ownership in Islamic finance to be analyzed further from the Shariah aspect. The research finding suggests that beneficial ownership should be recognized as a real ownership due to the fact that Shariah allows the transfer of ownership after the execution of offer (ijab) and acceptance (qabul).
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Why is it important?
We explain the four inter-related Shariáh concepts with a deep examination in its application within the Shariah framework in Islamic finance
Perspectives
Beneficial ownership that is recognized as the actual ownership must have every characteristic of ownership as underlined by the Shariah. In addition, the application of beneficial ownership in Islamic finance must be critically analysed based on each of the offered products. This is because each product differs from one to another. As the law has recognized beneficial ownership as actual ownership, and the Shariah has also permitted the transfer of ownership through offer and acceptance (ijāb and qabūl) contract, thus a definite parameter must be developed to ensure the application of beneficial ownership in Islamic finance complies with the Shariah.
Nik Abdul Rahim Nik Abdul Ghani
Universiti Kebangsaan Malaysia
Read the Original
This page is a summary of: Beneficial Ownership: To What Extent It Complies with Shari’ah?, Asian Social Science, November 2015, Canadian Center of Science and Education,
DOI: 10.5539/ass.v11n27p155.
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