A Legal Standpoint of Enforcing Corporate Governance as an Unfinished Agenda in Sharīʻah Perspective

Abstract

The accelerator for a country’s economy is investors and foreign investors are even more important for the business market of a country as they bring foreign direct investment (FDI). However, attracting investment requires strong protection for investors. The feeble laws and weak enforcement of laws is a major hurdle in attracting investment in the markets of developing countries including Pakistan. Therefore, this paper intends to investigate both corporate laws and their enforcement in the parameters of both tradition and non-traditional modes of enforcement with special reference to Pakistan along with the principles of Islamic Corporate Governance. The idea is moving from minimalism towards beyond minimalism, i.e., to examine whether the non-traditional ways of enforcement can be proven to be more effective and efficient in contrast to the more traditional methods of enforcement. The method used to conduct this research is qualitative however the methodology employed is doctrinal along with interpretative research philosophy using exploratory strategy. The results are derived by using inductive approach. The results of this study validate the authenticity of non-traditional modes of enforcement however; even the effective enforcement via non-traditional modes is also dependent upon the traditional modes of enforcement as the judiciary is the ultimate and highest forum to redress the grievance and deals with the matters of law. This research corroborate and certify this stance that without an independent and effective judicial system, effective enforcement in anyway remains an unfinished agenda. The authors believe that this paper would be a meaningful contribution in the existing literature and on-going debate on the enforcement of corporate governance around the globe.