Part I Introduction, 5 Corporate Governance for Institutions Offering Islamic Financial Services

Subject(s):

Customer obligations and foreign law — Regulatory liability of lenders — Islamic financial services

This chapter addresses the issue of corporate governance for Islamic financial institutions. It sets against the backdrop of English law the various responsibilities that the Shari’a casts on believers in the management of their own affairs and those of others for whom they have taken—usually by contract—an obligation. As has been recognized by, for example, the Islamic Financial Services Board (IFSB), in reality many of the issues that have been addressed as matters of governance in the more developed markets of the West, have not, until recently, been particularly pertinent in Islam. The perception remains in the minds of many scholars and believers that given the all-pervading tenets of the Shari’a and their high moral content, dictating honesty and fair dealing, the essentially procedural mechanisms of Western governance are not of compelling relevance. Of course, when seeking to engage in activity in those jurisdictions where such systems are required, then it is appropriate to accommodate them. It is also increasingly accepted that adherence to such procedures might be a price worth paying for being seen as having institutions and markets that are of a truly international calibre. Indeed, this is a priority of such bodies at the IFSB.