A Co-operative is one kind of share stock company. It is a company even if called a Co-operative. It means participation between a group of people who agree amongst themselves to associate according to their individual activities.

The Co-operative originates in the usual trading form aiming to help its members or to secure their defined economical interests. Thus the Cooperative is a corporate body regarding rights and duties, although it differs from the other Co-operatives which are not economically oriented. The Co-operative works to increase the profit of its members, not the interests of others, a matter that requires establishing a strong linkage between its economic activity and the economic activity (i.e. business) of each of its members.

A Co-operative is formed between as many as seven or more members or as few as three, but cannot be less than that. Co-operatives may be of two types: One is a company with established shares where any person in the company may be considered a partner by virtue of acquiring shares. The second is a company with no established shares, where joining the company is achieved through paying an annual fee decided at the annual general meeting.

Five conditions must be fulfilled in the Co-operative:

Firstly: Freedom of joining the Co-operative. Subscription stays open for everybody, according to the same conditions that applied for preceding members.Where the Co-operative laws, limits and reservations are applied on the new members, whether these laws were of a local nature like those for the people of a village, or they were of professional nature like those for Barbers (Hairdressers) as an example.

Secondly: Co-operative members have equal rights, particularly the right of voting, thus every member is given one vote.

Thirdly: A specified profit is assigned for the shares. The Co-operative pays to its permanent shareholders a certain profit, provided the profits of the company allow.

Fourthly: The surplus profits of the investment are repaid, where the net profits are distributed amongst the members in proportion to the transactions they carried out with the Co-operative, such as purchases or use of the utilities and facilities of the Co-operative.

Fifthly: A Co-operative fund must be formed by crediting the reserve funds.

The authority which runs the Co-operative through its management and carries out its activity is the board of directors elected at the annual general meeting and formed from the shareholders, where every shareholder has a vote irrespective of the number of his shares. So one with one hundred shares is no different from a shareholder with one share, and each of them has one vote in electing the directors.

Co-operatives are of many kinds, like professional Co-operatives, the consumer Co-operatives, agricultural Co-operatives, and production Cooperatives. These Co-operatives, as a whole, are either consumer Cooperatives, where profits are divided according to purchases, or production Co-operatives, where the profit is divided according to the production.

This describes the Co-operatives, which are invalid and contradict the rules of Islam according to the following:

1. The Co-operative is a company, so it should fulfil the conditions of a company as stated by the Shar’a in order to be valid. The company in Islam is a contract between two or more persons, in which they agree to run an economic project for the purpose of achieving a profit. Therefore, there must be a body so that the activity of the company is carried out by partners. In other words, the company should include a body (partner) who has a share in the company to be legal. Thus if there did not exist a partner in the company who has shares in it and additionally runs the work which the company was established for, then no company exists. If we apply these conditions to Co-operatives we find that they are not legally valid companies, because they are built upon property (capital) only. They are not based on an agreement to carry out work; the agreement is to provide capital and establish a management that will run its activities (work). Therefore, the people who subscribed to the company only associate together via their properties (capital); thus the company does not have a body. Accordingly, the Co-operative does not represent a legal company, as it does not include a body. It is considered non-existent in the first instance as the company is a contract to manage capital, and this action requires a body. When a company has no body, it fails to be a company from the Shar’a point of view.

2. Furthermore, distributing profits proportional to purchases or according to production, rather than relative to the capital or relative to the work is not allowed. If the company was concluded on the basis of capital then the profit should be determined by the capital, and if it was concluded on the basis of work it should also be determined by work. So the profit follows either the capital or the work, or both of them. But to stipulate the distribution of the profit according to purchases or according to production is not allowed, because this contradicts the contract in the opinion of the Shar’a. And every condition that contradicts what is required by the contract or it is not for the interest of the contract, is an invalid condition (Fasid). Distributing the profit according to purchases or according to the production contradicts what is required by the contract, because the contract in the view of the Shar’a, applies upon the property (capital) or the work, so the profit should be in proportion with the capital or the work. If it is stipulated according to purchases, or the production, it would be an invalid (Fasid) condition.

The shares of this type of company are currency notes which represent the value of the company at the time of its evaluation not the capital of the company at the time of its establishment. The share is an indivisible part of the entity of the company and it is not a part of its capital. It is a form of security paper representing the value of the company’s assets. The value of the shares is not fixed and can change according to the profits or losses of the company. It is not fixed for all years but can change. The share stocks do not therefore represent the capital paid at the time of the establishment of the company but the capital of the company at the time of selling at a certain time. It is like the currency paper or bank note whose value falls when the market declines and rises when the share market rises. The share thus ceases to be capital after the company starts its work; rather it becomes a currency note which has a certain value.

The divine law (Hukm Shar’i) with regard to currency notes must be examined. If they are security notes which include sums of Halal money like the currency notes which are backed by an equivalent amount of gold or silver or the like, then buying or selling them is allowed (Halal) because the property they include is Halal. However, if they were security notes that represent sums of Haram property like bonds of debt in which the property is invested by usury, or bank stocks and the like, then their trade is prohibited (Haram) as the property they represent is Haram. The shares of the stock companies are security notes which include mixed sums of Halal capital and Haram profit through a contract and transactions which are considered invalid in Shar’a, without any distinction between the original property and the profit. Each security note represents the value of a share from the assets of the invalid company. These assets have been earned by an invalid transaction forbidden by Shar’a, so this property is Haram. The stocks of the share stock company, thus, include sums of Haram property. Consequently these currency notes which are shares, are Haram property, and are forbidden to be sold, purchased or dealt in.

The above discussion raises questions about the Muslims who buy shares of these companies, associate in establishing them, or hold shares due to their subscription in such companies. Was their action Haram, even though they were ignorant of the divine law (Hukm Shar’i) at the time of their subscription into these companies? Or if some scholars, who did not understand the reality of the share stock company, gave them a fatwa (of permission) with regards to them, are these stocks and shares which are owned by them Halal properties, even though they were earned by a void transaction in Shar’a? Or are they Haram, and accordingly not legally owned by them? And are they allowed to sell these shares to other people or not?

The answer to these questions is that ignorance of the divine law (Hukm Shar’i) is not an excuse, because it is compulsory upon every Muslim to learn about that which He needs in his life of the divine laws (Ahkam Shari’ah) so that He can carry out all his actions according to the divine law. If that law is one of those laws which are usually unknown for such persons, then He is not blamed for that action and it would be a valid action for him, even though it is invalid in Shar’a. This is because of the narration: “the Messenger (pbuh) heard Mu’awiya ibn Al-Hakam praying for someone who sneezed while He was in prayer. After they finished the prayer, the Messenger of Allah (pbuh) taught Him that speaking during the prayer would nullify it, and praying for the one who sneezes nullifies the prayer, but He (Messenger of Allah (pbuh) did not order Him to perform the prayer again.” This is the meaning of what was narrated by Muslim and An-Nisai from `Ata’a ibn Yasar. This is because the rule (not talking during the prayer) was usually unknown to such a person and so the Messenger of Allah (pbuh) excused Him and considered his prayer valid. The prohibition of the share stock companies in view of the Shar’a is one of the rules whose like is unknown to many Muslims and so their ignorance can be excused. The action of those who took partnership in them is considered valid, though the companies are invalid, like the prayer of Mu’awiya ibn al-Hakam which is considered valid though He did something in it that invalidates it, as He did not know that talking during prayer invalidates it. The fatwa given by the scholars also takes the rule of ignorance with respect to the one who seeks the opinion. However, the scholar who gives the opinion is not excused because He did not exhaust his effort to understand the reality of the share stock companies before He gave an opinion about them. With regard to the ownership of the shares by the shareholders, it is a valid ownership and these shares are Halal properties so long as Shar’a judged that their action was valid. It is not invalid as they are excused for being ignorant of its invalidity. Selling these shares to Muslims, however, is not allowed, because in Shar’a they are invalid currency notes and the allowance of their ownership is incidental, i.e. based upon ignorance of the hukm that was excused. When the divine law about it becomes known, then it becomes a Haram property that is not allowed to be sold or bought, nor can one delegate other Muslims to sell it for him.

The way to dispose of these shares which were owned due to the ignorance of the divine law is to dissolve the company or transform it into an Islamic company. Alternately one can find a non-Muslim who considers the shares of the share stock company allowed and delegate Him to sell the shares on his behalf and then receive the subsequent proceeds. It was reported from Suwaid ibn Ghafala “that Bilal said to ‘Umar ibn Al-Khattab: “Your administrators (‘Ummal) take wine and pigs as Kharaj.” He said, “Don’t take (these things) from them, but delegate them to sell them and take their price” narrated by Abu ‘Ubayd in Al- Amwal. No one denied this action from ‘Umar, though it would have been denied if it disagreed with Shar’a, so it became Ijma’a. Wine and pigs are of the properties of the Dhimmis and cannot be properties for Muslims. When they wanted to give them to Muslims in exchange for Jizya, ‘Umar ordered Muslims not to accept them, but to delegate them to sell them and take the proceedings. Since shares are of the Capitalists’ properties and cannot be of the properties of Muslims, and they were passed to Muslims hands, so it is not valid for Muslims to take them. Instead they have to delegate to them their sale. Just like the right of Muslims in Jizya and Kharaj has been confirmed in wine and pigs, and ‘Umar allowed them to let the Dhimmis sell them on their behalf, it is also the right of Muslims in these shares that they are allowed to delegate the Dhimmis to sell the shares for them.

Share Companies are companies formed of partners who are unknown to the public. The founders of the Share Company are all of those who signed the initial contract of the company. The initial contract is the one which initiates between its signatories a commitment to work for achieving the common aim, which is the company. Subscription in the company is undertaken by the commitment of the person to buy one share or more in the proposed company in exchange for the nominal value of the share. This form of company is one of the forms of disposal by an individual will, where it is enough for the person to buy the shares so as to become a partner, whether the other shareholders accept Him or not. Subscription occurs in two ways. In the first instance, the shares of the company are restricted to the founders who distribute them amongst themselves without offering them to the public. This is done by writing the constitution, which organises the company and includes the conditions upon which the company proceeds, then signing it among themselves. Everyone who signs the constitution is considered a founder and a partner, and once they all have signed, the company is founded. The second way of subscription is that which is most prevalent in the world, where a few people establish the company and lay out its constitution. Then the shares are offered to the public for general subscription in the company. When the time of subscription expires, the constituent assembly of the company will be invited to meet and review the system of the company for agreement and to appoint its board of directors. Every shareholder, irrespective of the number of shares He holds, has the right to attend the constituent assembly, even if He owns only one share. The company commences its activities once the time of subscription expires.

Both of these means represent one form which is to pay for the properties. The company would not be considered as established except by completing the signature of the founders in the first method, and by the expiry of the subscription time in the second one. So the contract of the company is a contract between properties only.

There is absolutely no personal element in it. Thus the properties, rather than their owners, are the partners. These properties are entered into partnership together without the existence of any person. Accordingly, there is no authority for any partner, no matter how many shares He holds, to take charge of the activities of the company in his capacity as a partner. He also has no right to work in the company or to control any of its functions in his capacity as a partner. Rather, the one who takes charge of the activities of the company, works in it, controls it and supervises all of its work is called the Managing Director who is appointed by the board of directors. This board of directors is elected by the general assembly, in which every person has votes equal to his shares, not according to his personality, for the real partner is the capital and it is this which defines the number of votes. So every share has a vote and not every person has a vote. Thus, there is no consideration to the subscribing person but the consideration is for the capital only. Moreover, the share company is considered to be permanent, and it is not restricted to the life of the shareholders. The shareholder may die and yet the company is not dissolved and He may become incompetent and still remain a partner in the company. With regard to the capital of the company, it is divided into equal-valued shares, which are called stocks. The shareholder is a partner whose personal merits are not thoroughly investigated, and his responsibility is determined by his share in the company capital. In addition, the partners are not bound by losses except by the amount of their stocks in the company. A partner’s share is liable to circulation, so He is allowed to sell it, or associate other people in his shares, without the permission of the remaining partners. The stocks owned by every person are currency notes, securities or bonds that represent the capital. These stocks may be for the bearer (anonymous bonds) or designated to their holder where their ownership moves from person to person. The investor who subscribes by buying stocks is obliged only to pay their nominal value. So the stock is a part of the entity of the company, and it is indivisible, but it is not a part of its capital.

The stock notes are considered as registration papers in this share, and their values are not the same, but change according to the profits or losses of the company. This profit or loss is not the same every year but it can differ. The stocks therefore do not represent the capital contributed at the time of establishing the company; they represent the capital of the company at the time of its sale, namely at a specific time. They are like paper currency whose value falls if the stock market declines and increases when the stock market rises. The value of stocks declines when the company makes losses, and increases when the company profits. The stock after the company is formed thus ceases to be a capital and becomes a currency paper of a specific value that rises and falls according to the market, the profitability of the company or according to the degree of interest or otherwise of the people in it, for it is a commodity subject to supply and demand. Stocks transfer from one hand to another similar to how bank notes move among people, without any clerical measures in the company records if the stocks are for the bearer (anonymous) and through such measures if they bear their holders’ names.

The company is considered in profit if the value of the assets of the company is greater than the value of its liabilities at its annual inventory. Profits are distributed annually at the end of the financial year of the company. If the value of the company’s assets increased due to unexpected conditions without there being profits, nothing prevents the company from distributing this excess. However, if the contrary occurred, and the value of the assets declined and the company made profits, but the total of its profit and value of its assets was not greater than its liabilities, then it could not distribute the profits. At the time of distribution of profits, a part of it is assigned to the reserves and that which remains is divided among the shareholders. The company is considered as a corporate entity, which has the right to sue and be sued in its own name in the courts. It also has its own residence and particular nationality (country of incorporation including where its head office may be registered). Neither a shareholder nor any member of its management, in his capacity as partner or in his personal capacity, fills its place. The only one who has this right is the one who has been authorised to speak on behalf of the company. The one who has the right of disposal is the company, i.e. the corporate personality, rather than the person who disposes directly.

This is the stock company and it is a void company in Shar’a. It is one of the transactions that a Muslim is not allowed to participate in. The reason of its invalidity, and the prohibition of associating with it, appear clearly from the following points:

1) The definition of company in Islam is as follows: it is a contract between two or more persons, in which they agree to carry out financial work with the intention of gaining profit. It is thus a contract between two or more persons, so an agreement from only one side is unacceptable. Rather, it is necessary that the agreement occurs from two or more sides. The contract of the company must be focussed on performing financial work with the aim of making profit, and not on paying the capital. It is also not enough that the aim be partnership only. Carrying out the work is the basis of the company contract, and financial work has to be by the two contractors, or by one of them together with the capital of the other. A contract between two persons in which a person other than these two contractors (signatories) carries out financial work is not legitimate and no one is bound by it. This is because it is only the contractor who is bound with the contract; it applies to his own disposal (dealings) and not on others. So carrying out the financial work must be limited to the contractors, either by both of them or by one of them with the capital of the other. The necessity of carrying out financial work by one of the signatories (partners) in order that the company is legally established makes it inevitable that there must exist a body in the company upon which the contract is concluded. In Islam it is, thus, a condition that the body exists in the company, and it is a fundamental element in concluding a company. If the body existed the company will be established and if the body does not exist in the company, then it is not established and doesn’t exist in the first place.

Capitalists define the joint stock company as a contract according to which two or more persons contribute to a financial project by providing a share of capital in order to divide the profit or loss that may result from the project. It appears, from this definition and from the reality of forming the company by the aforementioned two methods, that it is not a contract between two or more persons according to the divine law (Shari’ah). This is because legally, a contract is an offer and acceptance between two parties of two or more persons. There must be two sides in the contract. One of them is entrusted with the offer by speaking first with the offer of the contract. This Statement could be something like ‘I married to you’ or ‘I sold to you’ or ‘I leased to you’ or ‘I associated with you’ or ‘I granted to you.’ The other side is entrusted with the acceptance, such as to say ‘I accepted’ or ‘I agreed’ or the like. If the contract is devoid of the existence of two sides, or an offer and acceptance, then it would not be established, and accordingly it would not be a divine contract.

In the joint stock company, the founders agree on the conditions of partnership. They are not directly and actually involved in the partnership when they agree on the conditions of the company, rather they only negotiate and agree on the conditions. They then draw up a document, which represents the constitution of the company. This document is then signed by everyone who wishes to enter into the partnership, the signature being considered as an acceptance. Once a person does this, He is then considered as a founder and a partner. In other words his partnership is established once He put his signature or when the subscription period comes to an end. In this process it is evident that there are no two sides who concluded the contract, nor is there an offer and acceptance. Instead, there is one party who agrees on the conditions, and by its acceptance becomes a partner. It can be seen that the joint stock company is not an agreement between two parties, rather it is an agreement of one party on certain conditions. Thinkers on the Capitalist economy and Western law say that the commitment in this type of company is a type of disposition by individual will. The individual will occurs when any person commits himself with a certain matter from his side towards the public or another person, irrespective of the acceptance or non-acceptance of the public or the other person, such as a promise to give a prize. The joint stock company, in their view and in reality, is where the shareholder or the founder or any person who signs a document commits himself with the conditions contained in the document regardless of the acceptance or non-acceptance of the others. Thus they consider it as a type of disposal by individual will. The contract of the joint stock company by the individual will is invalid (Batil) in Shar’a because a contract in Shar’a is the linking of an offer originating from one of the contractors with the acceptance of the other contractor in a way that reveals its effect in the issue over which the contract is concluded. This does not occur in the contract of the share stock company as no agreement between two or more persons occurs in the contract. Rather, one person commits himself, according to this contract, to share in a financial project. Regardless of the number of contractors and partners who committed themselves to that project, the one who committed himself is still considered as one person.

It may be argued that the partners agreed together on the conditions of the company, so their agreement is considered to be an offer and acceptance, and that the writing of the document is just a formal matter to record the contract which they agreed upon. So why is this not considered a contract? The answer to this question is that the partners agreed together on the conditions of the company. However, according to their agreement they did not consider themselves actually partners, and they did not commit themselves by such an agreement to the conditions of the company. It is allowed for any of them to withdraw and not to associate after their agreement on the conditions has been made and after the document has been written. None of them is committed to their agreement over the conditions, according to their technical terminology, except after He signs the contract. Once He signed the contract He becomes committed, while before that He is not committed to or bound by anything. Therefore, their agreement on the conditions before signing the contract is not considered, in their view and in the view of the Shar’a, as a contract. This is because the agreement over the conditions of partnership, and over the partnership, is not considered a company contract. According to their agreement, they are not considered obliged to it before the signing, whereas the contract is that which the two contracting sides are obliged with. Therefore, their agreement on the conditions of the company and on partnership is not considered offer and acceptance. It is not considered, according to the divine law and even in their own view as a contract.

It may also be said that the acceptance of the partner to sign the contract should be considered as an offer from his side towards the others and the signature of the next person is considered as acceptance. It may be asked why offering the document detailing the contract is not considered an offer and its signing not considered acceptance. The answer is that every partner who signed the contract has only accepted, but the offer did not originate from any particular person. There is no offer, either from the founders or from the first signatory; there is only acceptance from every partner. Thus the signatory accepts and commits himself with the conditions without them being presented as an offer of disposal from anyone, without anyone saying to him: ‘I shared with you.’ The action of giving Him the document for signature is not considered an offer. The reality of the share stock company is that every partner has only accepted, and acceptance added together with acceptance is not considered a contract in Shar’a. There must exist an offer in words which indicates offer not acceptance. The acceptance then comes after that in words, which indicate this explicitly. Nobody who signed the company document is therefore considered an as an offerer; they are all acceptors. Thus, only acceptance without offer has originated in the share stock company, so the company is not concluded.

The Capitalists call the document of the company its constitution and consider this as a contract. They also say that the contract was signed. However, in Shar’a, this document is not considered a contract for a contract is an offer and an acceptance between two parties. The share stock company is therefore not considered a contract in Shar’a.

In addition, there is no agreement in the contract to undertake financial work for the purpose of gaining profit. Rather the founder or the subscriber agrees to pay money into a financial project, so it is devoid of the element of an agreement to carry out work. Instead it only contains the individual commitment from the person to provide property, without any reference to the work in that commitment. Only carrying out the financial work rather than partnership is the aim of the company, and so the absence of agreement to carry out work in the contract negates the contract. A company does not, therefore, merely exist because there is an agreement to contribute capital only, as there is no agreement to carry out the financial work. From this discussion it can be concluded that the company is invalid (Batil).

It can be argued that the document of the company may have included the type of work, which the company carries out, such as production of sugar or trading. There was, therefore, an agreement to carry out financial work. However, the type of work mentioned is the work, which the company may carry out and no agreement existed on the part of the partners that they will indeed carry it out. They only agreed on being partners and on the conditions of the company while conducting the work was left to the corporate personality, which the company would have after its establishment. Thus, no agreement occurred between the partners to carry out any financial work themselves.

In addition to this, it is necessary that the body (Badan) which is the disposing person exists in the company in Islam. What is meant by the body (Badan) in the company, in trading (selling), hiring and the other contracts is the disposing person, not the physical body or effort. So, the existence of the body is an essential element in establishing the company. If the body did not exist, the company could not have been established. The share stock company has no body (Badan) at all, and in fact it intentionally removes the personal element from the company. The contract of the share stock company is a contract between properties only. The personal factor does not exist as the properties alone and not their owners are associated with each other.

In other words, the properties associate with each other without the existence of a body. The absence of an associating body means the company is not established and it is invalid in view of the Shar’a. Shar’a dictates that the body is the disposer of the property, and the disposal of the property depends upon it alone. If the body does not exist, then disposal cannot exist.

The people who own the capital are the ones who directly agree on the subscription of the properties, and they elect the board of directors who carry out the work in the company. However, this still does not mean that there is a body in the company, for their agreement is upon making the property as a partner rather than themselves as partners. So the property and not its owner is the partner. With regard to their election of the board of directors, this does not mean that the board are their deputies. Rather their property has been represented by deputies (i.e. the board) selected by them, and no deputation was made on their own behalf. The evidence for this is that the shareholder has votes equal to his shares, so the person who has one share would have one vote or one deputy. The person who has one thousand shares would have one thousand votes; that is one thousand deputies. So the deputation is on behalf of the property and not the person. This indicates that the element of the body is missing from the company, which is composed of the element of property only.

The definition of the share stock company thus indicates that it does not contain the necessary conditions required for establishing a company according to Islam, as no agreement occurs between two or more persons. Rather it is a commitment made by an individual will from one side. Furthermore, no agreement has occurred to carry out a work; instead, one person commits himself to offer property. There is also no body which practises the disposal in his personal capacity, rather it is only property without a body. The contract of the share stock company is thus invalid. It is invalid, because it was not established as a company, as defined by Islam.

2) The company is a contract over the disposal of property. Thus, the increase of the property by using a company is an increase of ownership. Increasing ownership is one of the disposals allowed by Shari’ah. All the Shari’ah disposals are verbal disposals which originate from a person and not from property. The increase of the ownership must result from the one who can dispose, that is, from a person and not from property. The share stock company assumes the increase of property by itself without a partner which is a body, and without a disposing person entitled with the right of disposal. Instead, it assigns the disposal for the property, because the share stock company consists of properties gathered together and got the right of disposal. The company is accordingly considered a corporate personality, which alone has the right of legal disposal like selling, buying, manufacturing and suing. The partners do not have a legal right of disposal; rather the disposal is confined to the personality of the company. In the Islamic company, the disposal originates only from the partners, and each one of them disposes by permission of the others. The property of the partners as a whole does not have the ability of disposal; disposal is confined to the person of the partner. The actions which originate from the company in its corporate personality are therefore invalid in the view of Shar’a. This is because the disposal should originate from a certain person and this person should be one of those who has the right of disposal (partners), a matter which is not fulfilled in the share stock company. It is incorrect to say that those who carry out the work are the hired labourers and that are employed by the shareholders who are the owners of the capital. And that the ones who handle the administration and disposal are the director and his board, who are deputies of the shareholders. This is because the partner is designated personally into the company, and the contract of the company was concluded on Him personally so He is not allowed to deputise somebody to carry out the activities of the company on his behalf, nor to hire somebody to carry out the activities of the company on his behalf. He must carry out the activities of the company by himself. Therefore, the partners are not allowed to employ labourers to carry out the work on their behalf, nor to deputise a board of directors on their behalf. Also, the board of directors is not a deputy of the shareholders, it is merely a deputy of their properties, because the person who is elected to the board is elected by the votes which are according to the amount of shares in the company not the actual shareholders. Moreover, the director and the board of directors do not have the right of disposal in the company for the following three reasons:

Firstly, they act as deputies for the shareholders, who are the partners by electing them. The partner should not deputise for himself, because He is the one on whom the company was concluded. This is similar to the fact that it is also not allowed for somebody to deputise another person to marry on his behalf. He is, however, allowed to deputise somebody to make the marriage contract on his behalf. Similarly, He is not allowed to deputise somebody to enter into partnership on his behalf. However, He is allowed to deputise somebody to conclude the company contract on his behalf, but not to be a partner on his behalf.

Secondly, the shareholders who are also the partners have deputised the board on behalf of their properties not on behalf of themselves. The evidence for this is that the election votes themselves are considered for deputation, and these votes are considered according to the quantity of shares and not according to the shareholders. The deputation is thus on behalf of their properties and not on behalf of their persons.

Thirdly, shareholders are partners of property only and not partners of body. The partner of property has absolutely no right of disposal in the company. It is not valid for Him to deputise somebody to dispose in the company on his behalf. Thus, the disposal of the company’s manager and the board of directors is considered invalid in Shar’a.

3) The fact that the stock company is permanent contradicts Shar’a. The company is legally of the type of permissible contract which becomes null by the death, insanity or the incompetence of any one of the partners and by dissolution requested by one partner when it is formed of two partners. If the company was composed of more than two partners, then the partnership is dissolved if a partner dies or becomes insane or is judged as incompetent. If one of the partners died and He has a person to inherit from him, then the matter is examined. If the inheritor is not mature He has no right to continue in the company. If He is mature, He has the choice to endorse the company and the other partner gives Him the permission of disposal, or to demand the dissolution of the company. If the partner was judged incompetent, the company is dissolved, because it is necessary that the partner has the ability of disposal. If the share stock company is permanent, and it continues to function despite the death or the incompetence of any of the partners, then it is invalid (Fasid). This is because it included an invalid condition which is related to the entity of the company and the nature of the contract.

In summary, the share stock company is not established as a company in the first place, for those who exist are partners of property only and there is no partner of body. The presence of a partner of body is an essential condition, for the company is established as a company by Him and, without him, it would not have been established. In the share stock company however, partnership in the view of those who form it, exists by the presence of partners of property only. The company functions and conducts activity without the existence of a partner of body. It is thus, an invalid company as it was not established as a company according to the Shar’a. Those who carry out the actions in the company are the board of directors who are deputies for the shareholders, that is for the property partners. The partner is not allowed, in Shar’a, to deputise somebody with the right of disposal in the company on his behalf whether He was a property partner or a body partner. The contract of the company is concluded on Him personally, so He has to act by himself. It is incorrect to deputise or hire somebody who takes charge of disposal and action in the company on his behalf. From Shar’a view, the partner of property only has no right of disposal in the company, nor has He the right to work in the company as a partner in any way. The right of disposal and to work in the company is confined to the partner of body only. Moreover, the share stock company becomes a corporate personality which has the right of disposal. However, these actions are only accepted in Shar’a from a person who has the competence to dispose and is mature and sane, with a discerning mind. Any action that does not originate in this sense is invalid from the viewponit of the Shar’a. Entrusting the disposal to a corporate personality is thus not allowed, rather it should be referred to a human being who has the competence of action. It can be concluded that the share stock companies and their actions are invalid. All the properties earned through them are invalid properties which were earned by invalid actions, so they are not allowed to be owned.

This is a contract between two persons or more, in which they agree to trade together under a certain name. All its members bind themselves towards the debts of the company with all their wealth, with joint liability, and without any limit. Therefore, no partner of the company can concede his rights in the company to another person without the permission of the remaining partners. The company is dissolved by the death of any of the partners or by his incompetence, bankruptcy or insanity, unless there is an agreement which prevents this. The members of this company are liable jointly towards its commitments to others by fulfilling all the contractual commitments of the company, and their responsibility in this matter is unlimited. Every partner is held accountable to discharge all the debts of the company, not only from the property of the company but if necessary from his own property. He has to pay from his property what is left unpaid of the debts of the company after its property runs out. This company does not allow extension of the project. The company is formed from a few people, who trust each other and know each other well. The main element considered in this company is the personality of the partners, not by being people only but with regard to their standing and influence in the society.

This company structure is invalid, because the stated conditions disagree with the conditions of companies in Islam. For the divine rule (Hukm Shar’i) places no condition upon the partner except that He is allowed to dispose, and the company should have the option of expanding its activities. If the partners agree to expand the company by either increasing their capital or by adding other partners to them, then they are free to do what they like. The partner is also not responsible, personally, in the company except in proportion to his share in it. He has the right also to leave the company at any time He likes without the need for the approval of the other partners. In addition, the company is not dissolved by the death of any of the partners, or due to his incompetence, rather his partnership alone is dissolved, while the partnership of the other partners remains if the company is formed of more than two persons. These are the Shari’ah conditions. The conditions of the joint liability company as stated earlier differ, and even contradict with these divine conditions, thus making it an invalid company and it is not permitted by Shar’a to associate with (or becoming a partner) in it.