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Preference shares: analysis of Shari'ah issues

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Date
2017
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Abstract
The purpose of this paper is to analyze the different features of preference shares from accounting and Shari'ah perspectives. It also aims to study Shari'ah issues arising from preference shares and to subsequently propose solutions for identified issues that will help in structuring Islamic preference shares. The paper uses a qualitative method by analyzing relevant documents and literature to understand the subject matter and Shariah-related issues. The paper finds that several features of conventional preference shares, such as capital guarantee, loss sharing disproportionate to capital contribution, fixed profit, profit guarantee and waiver of rights before realization of profit, make them a Shari'ah non-compliant instrument.
Keywords
Equity , Liability , Debt , Capital guarantee , Preference shares
Citation
Mohamad, S., Ahmed, M. U., & Badri, M. B. (2017). Preference shares: Ánalysis of Shari'ah issues. ISRA International Journal of Islamic Finance, 9(2), 185-189. https://doi.org/10.1108/IJIF-07-2017-0008
Publisher
Emerald Publishing Limited

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