1. Legal Constraints to the Development of Waqf
Professor Habib Ahmed

2. Presentation Plan Introduction Legal Regimes and Waqf The Way Forward
The Gambia
Bangladesh
Malaysia
The Way Forward

3. Introduction
The voluntary sector is increasingly playing an important role providing many social goods and services
Third sector is increasingly playing an important role (1999-$1.1 trill. , 4.6% GDP in 22 countries)
Islam instituted the institution of waqf—historically played a very important role
Recent expansion of the third sector has not included growth of waqf institutions
The legal environment under which NPOs and waqf operates are examined to understand the disparity in growth

4. Law and Waqf
Some papers have criticised the rigid legal (fiqh) doctrines for stagnancy of waqf
supremacy given to the deed
Mutawalli can only act according to the stipulations incorporated in the waqf deed
irrevocability of the waqf
Fiqh doctrines appear to be relaxing
In contemporary nation states, laws/statutes add another layer of legal complication

5. Law and Organizations
Literature discusses the impact of legal environment on organizations
New Institutional economics—Constructive legal environment:
Law provides building blocks of the organizations
Determines the types of organizations that may exist
Laws affect transaction costs and determine the composition and growth of different types of NPOs
Efficient models of organizations grow, inefficient ones are weeded out

6. NPO Organizational Formats
Types of NPOs in any country depend on the laws and legal jurisdictions
Associations
Trust
Charitable (nonprofit) Corporations
Foundations
Waqf
Philanthropic Waqf for General Public (social waqf) is the focus in this presentation

7. Waqf-Introduction
Waqf—”Stand still, hold still, not to let go” (Maliki- habs)
Waqf established by founder (waqif) by dedicating an asset for benefit of a defined group
Waqf deed determines:
Objectives for which waqf is created
Way(s) its revenues/fruits/services can be used
Management process and procedures of succession of managers (mutawalli) 7

8. Fiqh of Waqf
Zarqa—other than the concept of birr, everything in waqf is under the realm of ijtihad
Some flexibility in fiqh related to waqf
Waqf of movable properties (books, cash, etc. )
In certain cases waqf can be exchanged/ substituted (istibdal)
IFA Resolution (April 2009)
Types of assets that be made waqf—moveable item, benefit, money, sukuk, shares, services.
Waqf can be permanent and temporary
Waqf can be limited to time specified by founder

9. Waqf in Nation States
The flexibility of fiqh has no direct impact on waqf sector
In nation states, national laws determine the types of organizations
Establishment of waqf will depend on:
Existence of waqf law
Efficiency of waqf law
Implications of other related laws
Role of government in waqf

10. The Gambia: NPOs Laws NPO laws Membership in Associations
Charitable companies under the Companies Act 1955 (Registrar of Companies, Department of Justice)
A registered charitable company can register as NGO under the Non-Government Organization Decree 1996
Membership in Associations
The Association of Non-Government Association
The Gambia Supreme Islamic Council
General Secretariat for Islamic and Arabic Education in The Gambia
Due to absence of law, waqf cannot be established legally

11. Bangladesh: NPO Laws Laws of Formation of NPOs
Societies Registration Act 1860 (Registrar of Joint Stock Companies, Ministry of Commerce)
Trust Act 1882 (Deed Registrar, Sub-registry’s Office)
Voluntary Social Welfare Agencies Ordinance 1961 (Ministry of Social Welfare)
The Companies Act 1994 (Registrar of Joint Stock Companies, Ministry of Commerce)
Waqf Ordinance 1962 (Administrator of Waqf, Ministry of Religious Affairs)

12. Bangladesh: Waqf vs. Trust Laws
Features
Trust
Waqf
Enrollment with Government Body No
Yes
Annual payment to Government Body
Submission of Accounts to Government Body
Manager’s discretionary power restricted
Manager can be discharged by govt. body
Restrictions on manager other than deed
Limitations on upgrading/changing asset

13. Malaysia: Legal Framework
Constitution of Malaysia—the Sultan is the Head of the religion of Islam in every state and the King represents this role in federal territories and states without Sultans
All matters related to Islamic Affairs, including waqf are under the purview of either the Sultan or the King
State Islamic Religious Councils (SIRC) in each state is entrusted to deal with Islamic matters

14. Malaysia: Waqf Law
In most states, laws related to Islamic matters/waqf govern the waqf
In most cases, the laws stipulate SIRCs to be the ‘sole trustee of waqf assets’
Waqf assets are registered in the name of SIRCs (shown as proprietors)
SIRCs hold all legal documents, including title, of the asset
SIRCs makes rules related to administration and distribution of income of the waqf asset

15. Malaysia: Other Legal Constraints
While waqf is dealt with at the state level, some federal laws constrain operations of waqf
The National Land Code (NCL)1965 cover all provisions related to land
NCL has no specific provisions related to waqf land (a section on trust exists)
Most land is given leasehold and not freehold titles (constraining perpetuity feature)
Waqf treated as any other land—can be disposed or used for other purpose
Dispute related to (waqf ) land adjudicated in federal civil courts (not state Shari’ah courts)

16. Legal Regimes of Waqf Countries Waqf Law Inefficient Waqf Law
Other Legal Constraints
Role of Govt.
The Gambia No
n/a
Bangladesh
Yes ?
Somewhat
Malaysia
Dominant

17. Waqf and Legal Regimes Waqf laws are necessary
Without waqf laws, waqf-type institutions can be formed, but there are some limitations
Some of the principles of waqf may not be fulfilled
Waqf law by itself is not sufficient—what is needed are efficient laws
If waqf law has higher implicit/transactions costs, other NPO formats will be opted
Role of government in waqf—though the objective was good, it is an obstacle in the growth of waqf sector

18. The Way Forward
While fiqh of waqf is getting flexible, it will have no impact on growth of waqf unless national laws are changed
The growth of the waqf sector will depend on the efficiency and flexibility of waqf laws to meet the demands of contemporary times
Waqf was a private sector institution and should remain so