Beneficial ownership is applied in the modern Islamic financial contracts such as financing and sukuk structure, especially in countries where common law is dominant. It has been recognized by some scholars and rejected by others. In this regard, the concept of beneficial ownership in Shari'ah should be analysed to develop a clear interpretation of the concept of beneficial ownership from the Shari'ah perspective. The purpose of this study is to examine the meaning of beneficial ownership in Common Law system and its recognition from the Shari’ah point of view. It begins with identifying the meaning of milkiyyah (ownership) and its characteristics in the Islamic law and followed by the analysis of beneficial ownership in the current practice of Islamic finance as to whether it fulfils the Shari’ah requirements. The approach that is applied in this study is qualitative research in nature, with regards to documentation and secondary sources by reviewing and analysing the application of beneficial ownership in Islamic banking; in addition, some interview sessions were conducted with practitioners involved in the financial industry. The findings of the research are that the transfer of ownership in Shari’ah immediately occurs after the execution of ijāb and qabūl and interestingly, this idea is also shared by the Common law, which actually borrowed it from the Islamic law.

This paper is a preliminary research on studying the application of beneficial ownership in Islamic financial products. It aims at investigating the meaning of beneficial ownership and its recognition in the Shari'ah perspective. This paper starts with identifying the meaning of milkiyyah (ownership) and its characteristics in the Islamic law and followed by the discussion on beneficial ownership from legal perspective. The study emphasizes on the historical and theoretical aspects of beneficial ownership. It then critically elucidates the meaning of beneficial ownership and its use in commercial transaction as to ascertain whether its use is in compliance with the requirements of ownership in Shari'ah. Analysis is done via the method of takyif fiqhi (fiqh characterisation) on the use of beneficial ownership. Some Shari'ah issues would be examined carefully by comparing the views of classical jurists and then supported by modern jurists. Finally, the study suggests that the beneficial ownership should be considered as real ownership since it is exclusively used in registration and legal documentation because Shari'ah has allowed the transfer of ownership based on a sole basis of contract.