Islamic corporate governance aims to direct companies towards long-term shareholder value and accountability while considering stakeholder interests. It focuses on transparency, fairness, accountability, and responsibility based on universal Islamic principles. Directors and auditors should perform duties to satisfy shareholders and Allah. Good governance promotes economic and social transformation through upholding values of accountability, transparency, and trustworthiness that are paramount in Islam.

1. Islamic corporate Governance
Corporate governance is the process and
structure used to direct and manage the
business and affairs of the company towards
enhancing business prosperity and corporate
accountability with the ultimate objective of
realizing long with the ultimate objective of
realizing long-term shareholder value, whilst
taking into account the interest of other
stakeholders”.

2. Good governance is not simply about
corporate excellence. It is the key to
economic and social transformation. The
corporation of today are no longer sheer
economic entities. These are the engines of
economic and social transformation.

3. corporate Governance is the system by which
companies are directed and controlled. Board of
directors are responsible for the governance of
their companies. The shareholders’ role in
governance is to appoint the directors and
the auditors and to satisfy themselves that
an appropriate structure is in place

4. In the view of corporate governance is
concerned, the company directors
management as well as the auditors should
perform their professional duties with the
objectives of satisfying the needs of the
shareholders and Allah as well. Corporate
governance is aimed of enhancing
accountability, transparency and trustworthy.
The values are paramount in ISLAM

5. Universal principles of Corporate
governance
The following are the principles of
Corporate governance
1-Accountability
2-Transparency
3-Fairness
3-Responsibility

6. Accountability
In terms of accountability, Muslims believe
that they will be accounted for what ever
they doing this world and in the hereafter
(life after death)We need to fulfill the will of
Allah to seek Allah’s pleasure (redha)
Every action must be in line with Islamic
teaching

7. Accountability
There should be no such fraud and material
misstatement exist if the concept could be
internalized and could be reflected in their
conducts.
The Holy Prophet (peace be upon him)
says:
“ Each one of you is a guardian and each
guardian is accountable to everything
under his care;

8. Transparency
TRANSPERANCY
The concept of transparency has been divulged by Allah in the
follwing ayat
O ye who believe! When ye deal with each other, in
transactions involving
future obligations in a fixed period of time, reduce them to
writing. Let a scribe
write down faithfully as between the parties
(Al-Baqarah:282)
“if he does not strive diligently to promote their welfare, he
will not ent

9. Transparency
Corporation is responsible to a wide spectrum of
stakeholders
Aims should not strictly on monetary values but
social responsibility to the Ummah
Corporation should disclose information regarding
its policy.
Islam system urges integrity and honesty in the
management

10. Transparency
Applying the concept of transparency,
corporation should also disclose information
regarding its policy, activities undertaken,
contribution to the community and the use of
resources and protection of environment

11. RESPONSIBILITY
The concept of trustworthiness stated in
surah AlAnfal( (verse 27):
“O ye who believe! betray not the trust of
Allah and the Messenger, nor misappropriate
knowingly things entrusted to you. “
It is highly regarded virtues in Islam, every
individual within organization is required to
subscribe the ethical conduct while carrying
their commercial activities.

12. Responsibility
Stewardship sense will lead all to utilize the
possessions entrusted upon them to the best
of their abilities as a form of submission to
Him.
Leader should be judge by how well wealth is
managed by using the Islamic principle not by
how big the wealth grown

13. Responsibility
Trustworthiness parallel with the concept of
accountability’
The Holy Prophet (peace be upon him):
“ Righteous businessmen will be raised on the
Day of Judgment ”
“A truthful merchant will be raised on the Day of
Judgment together with the truthful and the
martyrs

14. Fairness
FAIRNESS
Islam implants collective decision – making,
tolerance, civil and political liberty, and resolve
it.
Fairness requires corporations to provide an
opportunity for shareholders to vocalize their
grievances and address any issues concerning a
violation of shareholder rights. Shareholders
have the right to accurate and timely financial
information and information about those serving
on the board of directors.

15. Components of corporate governance
1-Accountability 9-Integrity
2-Transparency 10-Faith
3-Fairness 11-Comptency
4-Loyalty/truthfulness
5-Tolerant
6-Trust
7-Honest
8-Sincerity

16. Benefits of good Corporate governance
On the corporation
 Increasing firm value
 Lowering cost of capital
 Enhancing capital efficiency
 Protection of shareholders’ rights

17. Benefits of good corporate governance
On the society
 More open,
 transparent society
 Corruption prevention
 Rule of law : fair & orderly
 Promoting ethical wealth creation

18. Benefits of good corporate governance
 Revitalizing
 market economy
 Sustainable economic growth
 Positive development on capital market,
more globally competitive
 Increasing competitiveness through fair
competition

19. Lesson Summary
In summary, You have learned the lesson
the following : Universal principles of
corporate governance , Components of
corporate governance and Benefits of
Corporate governance for corporations