Islamic Corporate Governance - Essay Example

There is an understanding that corporate governance covers crucial standpoints from both the Islamic and the westernized perspectives. For this case,the subject covers the goals of both the corporations and contributors of the organizations. It is noteworthy that the Islamic view also includes additional values to the existent corporate governance practices, which is the fact that it relies on the principles of Islam. Having mentioned such, the purpose of corporate governance in the Islamic set-up is to upgrade the existent corporate legal regimes in the Muslim world. Another function of the corporate governance to ensure the imposition of Islamic values and principles to the daily lives and the corporate activities of the people. Another undertaking of corporate governance is to ensure that there is a challenge to the Islamic social justice concepts. At the same time, to encourage the Muslims to live their lives according the Quran and attract the blessing of God. As such, this chapter will explore the concept of corporate governance from the point of view of the Islamic world. The principle target of this section will be an examination of whether or not the Islamic laws supplement the concepts of corporate governance. In the event that the work shall identify a relationship between the two concepts, the work will measure the extent to which they supplement each other. Therefore, the work will examine the level to which the Saudi Arabian Kingdom takes advantage of the laws to the corporate activities. There is a need to consider that the Saudi legislators consider Islamic legislation as the first and the national law of the Kingdom. Another consideration is the fact that the Muslim world perceives the Sharia laws as the most vital inclusion of all laws. There varied sources of the Sharia laws that exist within the Saudi jurisprudence. All Muslims across the world consider the Quran and Sunna as the most fundamental of such sources. There are other sources as well, but the two commonly used in the Kingdom of Saudi Arabia are Ijma and Qiyas. Additionally the sources of Islamic legal matters mentioned are the cornerstone of support and proof of the principles of corporate governance from the perspectives of Islam. The sources of the same law are among the most relevant material for the sustainability of policy aspects of corporate governance from the views of Islam as well as the development of a corporate governance ideal. Additionally, the laws mentioned are the reference points of the laws that apply in the Saudi context. Arguably, approximately all the principles of corporate governance have their concentration on the sustainability of the benefits of the stakeholders because they have contractual dealings with the same corporations. Such a principle is mentioned in the corporate governance are also in the Islamic perspectives as the undertaking of contracts. The objective of wealth from the Islamic point of view concerns the involvement of contracts and requires all the Muslims to record information regarding their business contracts. The Muslim faith holds particular views regarding wealth. As such, they believe that Allah reveals that all that believes in the fundamentals of Islam should write their contracts down. Allah further shows that the process should involve a scribe who should so in justice and that no scribe should refuse to do what He has thought him. Additionally, undertaking contracts focuses on fair dealings for all the parties involved in the process. For this case, Allah declares that not all those who believe in Islam should eat up their property among themselves in unjust manners except in trade between them in terms of mutual agreements and that they should not kill themselves. There is a need to base corporate governance practices on the undertakings of company managers. Therefore, according to the teachings of Islam, there is a need that the corporations undertake contacts with Muslim managers with particular reference to the Islamic laws (Sharia). Altogether, there is a need to realize that the managers are not to dominate their debtors and should respect them. Nevertheless, there is also the need to consider that contacts should consider the nature of products under the contract as well as specify the rights of both the buyer and the seller. Islamic values There is a developed argument that principles of corporate governance across the globe, as well as codes of best practice founded over the past decade, do not only concentrate on maximizing the profits but also on the ethical lines of the society. The Sharia laws have the principles mentioned and, therefore, ensure that the reliability of humans in relation to their relationships with others. However, the Muslims should assume the Islamic values in regard to their financial endeavors such that their actions should not harm others who they involve with. As such, the Islamic principles attack the human vices such as selfishness, greed, and scarcity, which have the ability to develop business malpractices such as corruption and irregularities. For instance, the laws will outlaw the revenue boosts by the members of the board as well as other top executives. A person involved in the management process of a company has the duty of directing the mainstreams of the business towards the goal of making wealth but through fair channels. The visions of values according to the Islamic frameworks contain a variety of ethical concerns. For instance, there is the principle of accountability, which the Muslims interpret as the requirement of the involvement of the transparency of God towards humans. The prophet Muhammad highlights a number of Islamic responsibilities like the religious accountability, family accountability, and the social accountability. The prophet asserts that every Muslim is a guardian and a custodian of the property that they own. Similarly, a ruler is a custodian of his subjects and has accountability levels of them; a husband is a keeper for this family and is accountable for them too. In the same line, a woman is the guardian of her husband and is accountable for him. As such, the prophet communicated that all people are guardians of the things placed under their custody. There is a revelation of the study of the ancient Islamic codes that the Muslims of that time practiced something that resembles the modern accountability undertakings. The Caliph of the second Islamic empire, Omar Ibn Al Khattab ensured that the pilgrimage time was also the time for accountability for the local employee and governors especially those that went to Mecca. Another proposal is that Islamic accountability may be anticipated according to corporate governance from the Islamic perspectives. As such, the Muslims consider that their accountability is a requirement of the teachings of the religion and the will of Allah. The concepts of the principles are, therefore, inclined to the feeling that God shall hold each person accountable on the Day of Judgment. The corporate leaders such as the managers and the directors and other concerned parties should be responsible for their actions. Read More