The article’s
objective is to find out the legal conflicts facing shariah corporate
governance of Islamic Financial Institutions in Malaysia. The writer defined
shariah corporate governance as an Islamic version of corporate governance. Meanwhile
the corporate governance was defined by the writer as a vital aspect of
managing and directing a company. This function is important in determining the
continuity and stability of the company through-out the existing period.
Traditional
corporate governance consisted of three major elements which are:-
(a)
Transparency
(b)
Disclosure
(c)
Accountability
The methodology
of research was based on exploratory study in combining the conceptual, theoretical,
and foundational dynamics of the subject.
In the third
section, the paper discussed about the discussion and findings. The Islamic
financial institutions in Malaysia were fallen under three (3) categories which
are Islamic Banking Act 1983, Islamic Window through BAFIA 1983 and DFIA (Bank
Rakyat).
Among the legal
conflicts detected in this study are:-
(a)
There
is no definition on the shariah corporate governance.
(b)
There
is no clear expression regarding the position or rank of shariah committee
within the Islamic Financial Institutions.
(c) The
determination of the compulsoriness of the shariah audit and the requirement of
the shariah auditor’s qualification.
(d)
The
issues of shariah risk management.
(e)
The
identification of the legal liabilities of the shariah scholars.
(f)
The determination
of the task of shariah committee either it is supervisory or ‘watchdog’.
The main
difference between the conventional corporate governance against Islamic corporate
governance is regarding the basic tenets in which in conventional the reliance
is more to the directors and stakeholders but in Islam, it goes beyond the
standards directors and stakeholders but also to the Almighty Allah, the Most
Creator and the Most Sustainer.
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