1. Best Practices, Growth, Continuity
Muslim Business
Best Practices, Growth, Continuity
5 May 2012
The Square - Umhlanga
Organized and presented by the Centre for Islamic Economics and Finance
South Africa – (CIEFSA)

2. Shariah Compliance Checklist
1. Structure of the Company
Shariah recognises the concept of a separate legal entity provided not set up for defrauding.
The Memorandum and articles of association should not contain any clauses that are objectionable.
Advisable to include a clause that business will be governed by Shariah principles so that any future directors are governed in this manner.
Musharakah- Mudarabah – Sole Proprietary

3. Shariah Compliance Checklist
2. Capital Structure
Purpose of any business is to earn profit. Shareholders contribute capital for this purpose.
Contribution of capital in the form of ordinary shares.
No guaranteed returns allowed
Contributions must be in the form of equity and not debt to the business
Capital structures on the basis of preference shares guaranteeing a return are not compliant.
Fixed returns /guaranteeing capital not permitted

4. Shariah Compliance Checklist
3. Product Quality, Quantity and Trading practices
Importance of weight and measure in trade
Cheating and hiding defects
Transparency and proper disclosure – product dimensions
Markups and Selling at cost
Rules of Shirkat 4

5. Shariah Compliance Checklist
4. Financing and Investing Activities
No Interest bearing finance and investing
Banking/Current Accounts...
Credit Cards/Garage Cards
Islamic Finance and Investments
Interest Monies must be given away – Purification of impermissible income.
5. Human Resources and Labour
Employ individuals who are conscious of Shariah principles – esp Key persons
Employment Contracts to be written, unambiguous
Concern for the spiritual well being of the staff – Salaah etc
Upright competent individuals who are conscious of Shariah principles
If partner is an employee ...

6. Shariah Compliance Checklist
Checked by a competent person to ensure no offending clauses
Provident fund – Most provident funds are forced to invest some monies in money market instruments. (regulation 28)
6. Zakaat and Corporate Social Responsibility program (CSR)
Proper Calculation of Zakaat
Zakaat on Shares
ROIH principle

7. Shariah Compliance Checklist
7. Best Practices
Maintain a friendly and obliging approach in business
Be ready to always give more when its your turn to give and accept less when it is your turn to accept
Be a good payer
Don’t be an oppressor (delaying payment for no reason)
8. Revenue and Sales
Economic activity fulfils Shariah principles
No offending clauses in sales invoices
عن جابر قال قال رسول الله صلى الله عليه و سلم: رحم الله رجلا سمحا اذا باع و اذا اشترى و اذا اقتضى رواه البخاري
عن حذيفة قال قال رسول الله صلى الله عليه و سلم: ان رجلا كان فيمن كان قبلكم اتاه الملك ليقبض روحه فقيل له هل عملت من خير قال ما اعلم: قيل له: انظر: قال ما اعلم شيأ غير اني كنت ابيع الناس في الدنيا و اجازيهم فأنظر الموسر و اتجاوز عن المعسر فأدخله الله الجنة : متفق عليه:
عن ابي سعيد قال قال رسول الله صلى الله عليه و سلم: التاجر الصدوق الأمين مع النبيين والصديقين و الشهداء
عن عبيد بن رفاعة عن ابيه عن النبي صلى الله عليه و سلم قال: التجار يحشرون يوم القيامة فجارا الا من اتقى و بر و صدق

8. Shariah Compliance Checklist
9. Contract Documentation
Insurance, Copiers, equipment, advertising
10. The Bigger Picture
The primary objective
Contentment and advices to Qaaroon
Da’wah

9. QUESTIONS ? 9