Inequality of bargaining power and the doctrine of unconscionability: Towards substantive fairness in commercial contracts

The issues on unconscionability and inequality of bargaining power are common legal dictums, which are constantly and continuously discussed in consumer contracts. However, the predicaments caused by unconscionability and inequality of bargaining power in commercial contracts are often left side ways despite the alarm, which had been set on by the contractual parties in commercial contracts. Terms on earnest payment, performance bond, pre-determined damages, standard exemption and limitation terms in commercial contracts are examples of practices which arise from the unconscionability and inequality of bargaining power of the contractual parties. This paper looks into the raison de-etre and legal discussion on the principles of unconscionability and inequality of bargaining power under the law of contract and to highlight its application and effect in commercial contracts. References of the discussion are mainly made to the common law principles with occasional reference to the Australian law and Malaysian law. Research methodologies applied in this research are doctrinal and statutory analysis

The obligation of companies to pay Zakat in Malaysia: a re-examination of the maelstrom of legal issues

Since the emergence of the principle of separate legal entity in modern company law as established in the locus classicus of Salomon v. A. Salomon & Co. Ltd. (1897) AC 22, a number of Islamic-related studies have been carried out to justify the recognition of similar entities in the classical Islamic law. As much as this notion would look benign, it has touched off a maelstrom of controversy among the contemporary Muslim jurists. There is no doubt that the rulings of the National Fatwa Committee and the Selangor Fatwa Committee are in consonance with that of the Islamic Fiqh Academy of the Organisation for Islamic Cooperation (OIC) which provides that the company is obliged to pay zakat either on behalf of its shareholders or itself. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) also has its relevant Financial Accounting Standards for calculating the amount of zakat to be paid by Islamic financial institutions which are undeniably legal entities. This has been disputed based on cogent reasons which seek to examine the religiosity of a legal entity. This controversy is the crux of this paper, which revisits the issue of the (non)obligation of companies to pay zakat under the Malaysian legal and regulatory policies. While acknowledging previous studies on this subject by a learned jurist, which up till now, has remained unchallenged, this paper takes a step further to argue that considering the legal complexities involved from both the Sharī‘ah and Malaysian law, there should be some other mandatory CSR requirements for all companies regardless of whether their businesses are Sharī‘ah-compliant or not. For this purpose, the study classifies the companies in Malaysia into two: first, normal companies without any Sharī‘ah requirements, and second, Sharī‘ah-compliant companies such as Islamic financial institutions. Individual shareholders should be required to pay their zakat by themselves based on their respective dividends at the end of the financial year. The paper concludes that emotions apart, this puzzle cannot be resolved if the decision-makers are not well grounded in the dynamics of the secular legal system under which such Sharī‘ah regime operates

'The myth of corporate personality': a comparative legal analysis of the doctrine of corporate personality of Malaysian and Islamic laws

Corporate personality is an entrenched legal principle of the English company law. In Malaysia, the Companies Act 1965 (Act 125), which is modeled on the English Companies Act 1948 and the Australian Uniform Companies Act 1961, clearly incorporated the English law doctrine of corporate personality. Under this doctrine, a company is recognized as a legal person and have distinguished features, namely perpetual succession, right to enter into legal proceedings, and deals with property under its own name and ability to limit the liability of its members. Under the Islamic law, the term "musyarakah" or "shirkah" is used to refer to business entities. Shirkah literally means 'intermingle' implying the intermingling of properties that form the capital, whereby one cannot be differentiated from the other. The approach in classifying business entities is different between the common law and the Islamic law whereby under the common law, the regime of a company is totally different from a partnership and both are subjected to different laws. However under the Islamic law, shirkah could refers to both company and partnership structure. In all type of arrangements in the shirkah, the individuals are not separated from the shirkah as the shirkah is not regarded as a legal entity. In Malaysia, Shari 'ah compliance businesses are highly propagated. It is interesting to see that many Islamic institutions being established as body corporate. With such status, it is inherent that the common law principles on body corporate which are applicable in Malaysia under the Companies Act 1965 are unreservedly applicable to these institutions. An issue which arises from such practices is whether it is the corporate entity under the Companies Act 1965 is acceptable under the Islamic law and is it appropriate for Islamic businesses to be carried out by a conventional corporate entity. Objective of this paper is to analyze the status of corporate entity with special reference to the attribute of separate legal entity from both the Islamic law and the Malaysian law (which is based on the English law) and to conclude whether the principle of corporate entity is acceptable under the Islamic law

DEVELOPING SHARIAH COMPLIANT CORPORATION: AN APPRAISAL ON THE RIGHTS AND LIABILITIES OF MEMBERS UNDER THE MALAYSIA LAW AND SHARIAH

Shareholders are members of a company through share capital ownership. They proclaim themselves as “owners” although they have no direct involvement in business management which is wholly vested in the board of directors. In Malaysia, shareholders merely receive bundles of right in the company as prescribed under the Companies Act 2016. Due to the separate legal existence of a company, they are not liable for the company’s debts and liabilities. Contrarily, under Shariah, musharakah is a partnership agreement between individual partners for participation in capital and profits. It essentially regards them as the joint owners of musharakah, treating their existence inseparable from this business entity. The partners collectively share mutual rights and duties in the musharakah business according to their contractual agreement which makes them jointly liable for any liabilities incurred by the musharakah. This article discusses the rights and liabilities of members of a company under Malaysia Law and Shariah. It highlights the substantial distinctions between the shareholders’ rights and liabilities under the Companies Act 2016 and those of partners under musharakah. This article argues that an inculcation of Shariah principles of musharakah into the current legal structure of corporation is needed so that the Shariah-compliant status is always maintained.   Keywords: Company, Malaysia, members’ rights and liabilities, Musharakah, rights and liabilities in Musharakah, separate legal entity. Cite as: Haji Mohiddin, M. N., Abdul Ghadas, Z. A., & Ramli, N. (2021). Developing shariah compliant corporation: An appraisal on the rights and liabilities of members under the Malaysia law and shariah.  Journal of Nusantara Studies, 6(1), 59-72. http://dx.doi.org/10.24200/jonus.vol6iss1pp59-7

The theory of harm under the Malaysian competition Act 2010

The Malaysian Competition Act 2010 (CA 2010) seeks to promote the process of competition in the market by preventing anti-competitive conduct that harms competition. However, ‘harm to competition’ is not clearly defined in the Act and neither are its subsequent guidelines. Without proper application of the theory of harm, the competition authority will not be able to provide a consistent approach to the assessment of the competition issues especially in determining whether or not a conduct is anti-competitive. This paper aims to analyse how and to what extent the Malaysian Competition Commission (MyCC) applies the theory of harm in competition law analysis. This paper argues that there is no standard definition of what ‘harm to competition’ means in the context of Malaysian competition law. ‘Harm to competition’ may be interpreted as harm to the competitive process and consumers (final consumers). It may also be narrowly interpreted as harm to market mechanism or the ability to compete, through, for example, unjustified exclusion of rivals from the market without the need to prove that conduct was harmful i.e. reduced aggregate consumer welfare. In most situations, the issue of competitive harm is not about interpretation but rather of proof that a particular conduct really harmed competition and consumer

Claim on future interest as matrimonial property: special reference to Malaysia Shari’ah courts

In both the Civil and Shari’ah courts, the test applied in deciding rights and proportion of the divorced parties for matrimonial property is the “contribution test” whereby if both parties contributed to the acquisition of the property than both parties shall have rights on the property. The proportion shall be decided based on the fraction which each parties contributed to the property. It is observed that the contribution test could be effectively applied for tangible assets such as houses, land, vehicles, jewelries and saving which are personally owned by the parties. However, when it comes future interest, the contribution test could not be applied until the court is willing and/able to determine the rights to claim for the future interest. This research applies legal research methodology which focuses on statutory and case law analysi

Built for people! Corporate social responsibility of contractors: a special reference to the Malaysian construction industry

In Malaysia, top of the chart on consumer complaints has long been hold by the ‘contractors’ particularly the house developers. Nearly every day, viewers of the Prime News are exposed to grievances of house buyers, be it late delivery or non delivery of vacant possession, safety of the building, defective building, incomplete/abandoned work, no certificate of fitness of occupation, misrepresentations and issues relating to environmental such as pollution and nuisance. Despite continuous complaints by house buyers, non-profit organizations (NGOs), consumer associations and environmentalists, housing projects particularly the residential home proceeded as usual (if not more) in the amidst of the unresolved issues. Corporate social responsibility generally refers to the involvement of the company in solving social problems and its contribution towards the welfare of the society. This means a company has a sense of social responsibility towards the well being of the community, besides its profit maximization objective. A company with social responsibility will anticipate the needs of the society as well as solving the social problems. Any project that is going to be undertaken by a company should address the needs of the society irrespective of whether such projects contain economic implications or not. With this ideal concept, it is highly perceived that some if not all the problems which arise in the Malaysian construction industry can be resolved by imposing corporate social responsibility on contractors. This paper intends to highlight problems encountered by Malaysian house buyers and related parties pertaining to construction projects and to emphasize the importance of corporate social responsibility of contractors and/or related parties to reduce if not resolve the ongoing problems

Internationalization and integration via benchmarking visits: the IIUM experiences

Internationalization and integration mark as one of the important visions of IIUM. In view of this, the university has established a Rectory (office of the Seputy Rector Internationalization and Innovation) as well as an International Students Office. Other than these two agencies, the Students Affairs Division, in particular, the residential accomodation (Mahallat) also plays important role to ensure that the agenda of integration and internationalization is successful in IIUM. Various efforts have been taken including several benchmarking visits to international universities. The aims of the visits is to expose the administrators of Mahallat to various aspects of the international students' life as well as the quality of services provided to the students at other universities especially in the Middle East and Asia Pacific countries. This paper highlights two benchmarking visits held in 2006 in which some of the Principals of the Mahallat were involved. The focus areas are on the students' facilities, handling of the international students' needs and cultures, security as well as fostering networking among the universities, international and locals