[ms] An Analysis on Beneficial Ownership in Islamic Finance according to the Principle of Tarjih Bayn al-Asl wa al-Zahir

Abstract

Ownership of asset is a crucial aspect to ensure the validity of sale contract. Nevertheless, in the context of Islamic finance, the issue of beneficial ownership has been seriously debated since the system of Islamic finance operates within the Malaysian conventional legal framework. Beneficial ownership is claimed as not compliant with the Sharia standard of the concept of ownership. Hence, this research aims to study the status of beneficial ownership and its meaning from legal and Sharia perspective. This study applies the approach of content analysis to clarify the concept of beneficial ownership. The data is analysed using deductive and descriptive approach to make a preference. The research finding discovers that the beneficial ownership is recognized as a true ownership due to the fact that Sharia allows the transfer of ownership after the execution of ijab and qabul. This study is very important to be a guideline for Islamic financial institutions in structuring Sharia compliant products.