The majority shareholder (holding 70 % of the shares)‎ of a company wants to buy out the minority shareholder (holding the other 30 %)‎ and is looking for finance from the Islamic bank

Fatawa Question

The majority shareholder (holding 70 % of the shares) of a company wants to buy out the minority shareholder (holding the other 30 %) and is looking for finance from the Islamic bank. The bank is required to finance the transaction by buying the shares of the minority shareholder and selling them to the majority shareholder at a premium. Please note that it is not commercially viable for the majority shareholder to pay all the amount in one bullet payment, and from a risk perspective the bank is not willing to sell all the purchased shares in one tranche by way of Murabahah and deferred sale ; therefore the bank opts to purchase from the minority shareholder all his shares through one transaction, whereas it will sell to the majority shareholder in tranches and on spot payment considering the liquidity status of the majority shareholder.

Fatwa

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Publisher

Islamic Finance News

Publication Date

2013-05-22

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-784619

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