Shares in the Modern Corporation: A Comparison Between Malaysian Companies Act 1965 and the Islamic Perspective

In the modern corporation, shareholding reflects the interest of an investor Similarly shares can also be used to reflect the interest of the investor in a musharakah/ mudharabah arrangement. Currently, a company registered under the Companies Act 1965 is often referred to as a conventional company as opposed to a syariah-compliant corporation. However it is possible to harmonize the provision in the Companies Act 1965 with Syariah principles in relation to shareholding issues. The concern is to ascertain the relevant principles in relation to shareholding issues that are similar under the syariah principles on profit sharing or profit-loss sharing and under the Companies Act 1965. The article focuses on the rights attached to ordinary shares and preference shares under the Companies Act and ascertains the compatibility of the rules with syariah principles.