A Legal, Shari’ah, and Financial Perspective on Merger of Islamic Banks

Abstract

This research aims to explain the concept of merger for the legal, jurisprudential, and financial aspects of Islamic banks, how Islamic banks are one of the parties to the merger, and what legal and financial procedures are followed to do so, taking into account compliance with jurisprudential provisions to ensure that no infringement of the right of any of the parties, in addition to the successful completion of the process And achieving the desired goals without falling into loss or other risks, and not violating the legislations and laws governing this activity. The analytical descriptive approach based on previous studies that discussed the merger has been followed in the paper. The research concluded that merger is one of the best methods used by companies and banks, especially Islamic ones, to reach huge economic blocs with effective competitive strength and financial solvency that make them able to face all difficulties that may pose a threat to their continuity and success and that merger needs more legal regulation of merger provisions and procedures. And its effects, especially the effects that affect those who are outside the framework of the merged banks, such as creditors and debtors, for example and the jurists organized the merger as a kind of Al Taqaul (The parties to the contract agree to cancel it after its conclusion); Where we can consider the agreement to merge the company as an approval of its dissolution and termination, and this is what is adapted to the case of the merger of Islamic banks.  The research recommended educating Islamic banks and financial institutions with Islamic activity, especially the weak ones, about the effectiveness of the merger and its positive effects and that the authorities provide the conditions that contribute to the success of the merger of Islamic banks.