Is it permissible to provide nominee services to global companies?
Question:
I am a barrister specialised in the field of taxation. The part time offer I have been given is to be the executive director of the management company. A management company normally set up, manage, and provides nominee services to global companies. These global companies are involved in financial services among others credit finance and lending and therefore involves financial dealings. My question is whether it is Halal to be a director of a management company which sets up global companies as described above. JazakAllah.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The earning of a Shariah compliant Halal income is indeed a great responsibility and an obligatory action on the part of every Muslim.
In principle, there are three aspects which are considered before determining the Shari’ah Compliancy of a job profile:
1. The nature of the job profile/description itself.
2. The major source of the funds from which the employees of the company are remunerated.
3. The Shariah compliancy of the underlying terms and conditions of the contractual position between the employee and employer
You state that you are a barrister specialized in the field of taxation. You also state that you have received a part time offer to be an executive director of a management company. The management company in reference will also setup, manage and provide nominee services to global companies which provide conventional financial services and money lending solutions.
A global company is an entity that centralizes its operations in one jurisdiction for a number of reasons including the effective management of the tax profile of such entity among other reasons. A nominee service refers to a contractual arrangement between the directors/senior management of the management company and the ultimate beneficial owners (UBO).
Essentially an individual is nominated to effectively manage the affairs of the company on behalf of the beneficial owners and may also serve as a third party director. A nominee director has the sole authority generally to manage the affairs of the company on behalf of the beneficial owner. A number of third party services are conducted in relation to the business of such global entities including third party directorship, third party shareholding and general management of the entities such as secretarial, offshore bank account management services among others. In the context of investment banking, a nominee service refers to the safe custody of securities and shares (http://www.lexmans.com/en/nominee-service#:~:text=Nominee%20service%20is%20an%20intermediary,nominee%20holder%20of%20the%20shares. Sourced and accessed on 26 September 2021. ).
Based on our understanding of the above referred nominee services that could be provided to such global entities, we advise one to adopt caution as such a service may include the direct aiding and abetting of impermissible activities such as the adoption of contractual powers in concluding impermissible and conventional financial transactions (Jawahirul Fiqh – Mufti Muhammed Shafi Uthmani – Vol.2 Pgs.439-462 – Maktabah Darul ‘Uloom Krachi). Moreover one may potentially assume the position of the ultimate beneficial owner as a wakeel (representative) through the adoption and execution of a nominee service level agreement (SLA) and hence the sinful activities of the principle will also squarely fall on the wakeel also. Therefore we advise you to seek an alternative job profile or seek an arrangement with your employer to adjust your job profile in relation to general abstention from any direct unlawful aiding and abetting of impermissible activities. You may also seek to amend the nominee contract between the management company and the global entity as the eventual client to reduce the direct powers of the nominee in relation to conducting any impermissible or unlawful and doubtful activity.
If the major source of funds through which the management company is remunerated is from interest and unlawful money, then it is not permissible for one to work at such a management company.
However, if the majority of the management company’s funds are of a permissible and shariah compliant nature, then employment at such a management company is permissible (Ahsan al-Fatawa Vol.7 Pg.329 – H.M.Sa’eed Company).
Lastly, a shariah compliant employment contract is premised on the basis of an Ijarah al—A’maal/Ijarah Mushtarakah construct. Hence we advise you to procure the general terms and conditions of such employment agreement in reviewing such contractual arrangement for shariah compliance in light of the general laws of Ijarah and Shariah Economics.
We advise you to recite Istighfar abundantly and seek the help of Allah Subhanahu Wa Ta’ala in guiding you to the correct decision in seeking a Halal Shariah compliant income.
You are welcome to contact us directly at the Darul Iftaa for any advice to structure a shariah compliant employment agreement at: https://www.shariahbusiness.com/about-us/ask-a-question/
The Darul Iftaa is open from 9 AM to 9 PM Monday to Friday and 8 AM to 12 PM on Saturday.
and Allah Ta'ala Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee
Darul Iftaa, Durban, South Africa
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