Glenn Stewart Observer

EXAMINING THE ISLAMIC CONCEPTS OF OWNERSHIP, PARTNERSHIP AND EQUITY HOLDINGS FROM A WESTERN PERSPECTIVE

December 7, 2011adminBusiness and FinanceComments Off on EXAMINING THE ISLAMIC CONCEPTS OF OWNERSHIP, PARTNERSHIP AND EQUITY HOLDINGS FROM A WESTERN PERSPECTIVE

By Glenn M. Stewart

In this paper I will examine concepts of ownership or equity under Islamic law from a Western perspective.

As with most aspects of financial transactions taking place in an Islamic context, the first point of reference for any Western businessman or business institution must be the Shari’ah law. Without a comprehensive understanding of the basis and implementation of Islamic commercial law – known as fiqh al-muamallat – to commercial transactions, it is impossible to operate effectively in this growing and important industry.

My main purpose herein is to attempt to provide the reader with an overview of the salient features of Shari’ah law as it applies to concepts of ownership in a commercial business context, and to identify how those concepts of ownership can form the basis of general industrial, commercial, agricultural, finance or insurance businesses.
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EXPLORING AND IDENTIFYING STRUCTURING TECHNIQUES TO CREATE FINANCIAL PRODUCTS THAT COMPLY WITH SHARIA RULES ON ACCEPTABLE INVESTMENTS

November 14, 2011adminBusiness and FinanceComments Off on EXPLORING AND IDENTIFYING STRUCTURING TECHNIQUES TO CREATE FINANCIAL PRODUCTS THAT COMPLY WITH SHARIA RULES ON ACCEPTABLE INVESTMENTS

By Glenn M. Stewart

In this paper I intend to address the impact of the Sharia upon financial transactions to highlight what I consider are some essential aspects of the Sharia that must be considered when structuring financial products in compliance with Sharia. I believe, that when understood, the Sharia is a clear guide to anyone structuring and creating financial products which comply with Islamic Law. In my opinion, these principles are,  fairly clear and in respect of any areas of doubt, sufficient commentary exists by learned scholars to provide additional guidance to anyone studying the sources of Islamic Law. Thus, the simple, in fact the only answer to the problem of structuring Islamic Financial Products and the ways in which this challenge can be met is to understand the Sharia.

Although, it could take a lifetime of study to be thoroughly versed in all aspects of Sharia law, parts pertaining to commercial transactions (fiqh Al-muamallat) is manageable. Sufficient works exist in English to give anyone who takes the time to consult them an adequate knowledge of this area of fiqh. The application of that knowledge can only have a positive effect on the approach to designing financial products which conform to the Sharia.
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AN EXAMINATION OF FINANCIAL DERIVATIVE PRODUCTS IN REFERENCE TO AHADITH LITERATURE AND FIQH

September 18, 2011adminBusiness and FinanceComments Off on AN EXAMINATION OF FINANCIAL DERIVATIVE PRODUCTS IN REFERENCE TO AHADITH LITERATURE AND FIQH

By Glenn M. Stewart

In the current international financial markets, a great deal of attention has been given to financial derivative products. What are derivatives?
Broadly speaking, they are financial instruments which have been created or derived from another financial product or contract. As a result, one can create new financial rights and obligations out of existing ones.
Derivatives can be built from bonds, stocks, foreign currencies, or even stock indices. In most cases one of the essential elements of a financial derivative is the existence of some sort of option contract.
I wish to examine the legal framework that exists within Islam as derived from the ahadith literature and from fiqh and consider its implications for the development, purchase and sale of these instruments within the ambit of what is permitted and forbidden in Islam as it pertains to financial transactions.
Clearly, any derivative instrument that is based upon riba either in the underlying instrument or in the derivative instrument would be forbidden. The Islamic prohibition of riba is absolutely explicit in both theQuran and Sunnah and needs no further elaboration. As a result option contracts on interest bearing debt securities, for example, would clearly not be permissible under the Sharia.
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