Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks
Customarily, joint equity ventures embarked on by Islamic banks define the profit shares accruing to the partners as a ratio of the total profit realisable through the venture. This is due to the fundamental principle that profit division should necessarily be based on a stipulated ratio. However,...
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Zes Rokman Resources
2018
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| Online Access: | http://irep.iium.edu.my/69216/1/69216_Profits%20realised%20beyond%20a%20ceiling.pdf http://irep.iium.edu.my/69216/ http://www.klibel.com |
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my.iium.irep.692162019-01-16T04:49:53Z http://irep.iium.edu.my/69216/ Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks Sadique, Muhammad Abdurrahman HG3368 Islamic Banking and Finance KBP173.25 Islamic law and other disciplines or subjects KBP639 Muʻāmalāt Customarily, joint equity ventures embarked on by Islamic banks define the profit shares accruing to the partners as a ratio of the total profit realisable through the venture. This is due to the fundamental principle that profit division should necessarily be based on a stipulated ratio. However, Islamic banks are noted stipulate in some equity partnership contracts that profits realised in excess of an agreed level should accrue to one partner, and will not be subject to division based on the ratio. The paper scrutinises the possibility of limiting the operation of the profit sharing ratio up to a pre-defined ceiling, with reference to accepted sources of Islamic law. It argues that restricting the application of the ratio to a stipulated level of profits defeats the objectives of equity financing. This would enable a partner to claim unlimited profits while the profit share of the other is restricted to a maximum, thus curtailing the free operation the profit sharing mechanism. Zes Rokman Resources 2018-12-22 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/69216/1/69216_Profits%20realised%20beyond%20a%20ceiling.pdf Sadique, Muhammad Abdurrahman (2018) Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks. In: 17th Kuala Lumpur International Business, Economics and Law Conference (KLiBEL 17) 2018, 22nd-23rd December 2018, Putrajaya. http://www.klibel.com |
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HG3368 Islamic Banking and Finance KBP173.25 Islamic law and other disciplines or subjects KBP639 Muʻāmalāt |
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HG3368 Islamic Banking and Finance KBP173.25 Islamic law and other disciplines or subjects KBP639 Muʻāmalāt Sadique, Muhammad Abdurrahman Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks |
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Customarily, joint equity ventures embarked on by Islamic banks define the profit shares accruing to the partners as a ratio of the total profit realisable through the venture. This is due to the fundamental principle that profit division should necessarily be based on a stipulated ratio. However, Islamic banks are noted stipulate in some equity partnership contracts that profits realised in excess of an agreed level should accrue to one partner, and will not be subject to division based on the ratio. The paper scrutinises the possibility of limiting the operation of the profit sharing ratio up to a pre-defined ceiling, with reference to accepted sources of Islamic law. It argues that restricting the application of the ratio to a stipulated level of profits defeats the objectives of equity financing. This would enable a partner to claim unlimited profits while the profit share of the other is restricted to a maximum, thus curtailing the free operation the profit sharing mechanism. |
| format |
Conference or Workshop Item |
| author |
Sadique, Muhammad Abdurrahman |
| author_facet |
Sadique, Muhammad Abdurrahman |
| author_sort |
Sadique, Muhammad Abdurrahman |
| title |
Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks |
| title_short |
Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks |
| title_full |
Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks |
| title_fullStr |
Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks |
| title_full_unstemmed |
Profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of Islamic banks |
| title_sort |
profits realised beyond a ceiling being exempted from sharing in joint equity based facilities of islamic banks |
| publisher |
Zes Rokman Resources |
| publishDate |
2018 |
| url |
http://irep.iium.edu.my/69216/1/69216_Profits%20realised%20beyond%20a%20ceiling.pdf http://irep.iium.edu.my/69216/ http://www.klibel.com |
| _version_ |
1643618872923783168 |
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13.211869 |