Examining Profit and Loss Sharing for Partners in Corporate Entities: a comparative study in Saudi Arabia and United Kingdom companies Act (Law)

This study investigates how corporate partners in Saudi Arabia and the United Kingdom share revenues and losses to enrich the research on corporate governance. This study examines company law under the United Kingdom’s common law system and Saudi Arabia’s Islamic Law ('Shariah') system. In the common law corporate group structure, parent firms own most shares and control their subsidiaries. Corporations are defined by Islamic Law ('Shariah') or by the wakalah covenants between partners. This study is critical for comparing the United Kingdom’s common law to Saudi Arabia's Shariah in terms of company structure and profit distribution. The investigation provides a comparative legal analysis to prove that fundamental differences make it impracticable to apply common law ideas to Islamic Law ('Shariah') structures -based corporate structures, or vice versa. Both legal systems recognize autonomous legal entities, while Saudi Arabian law follows Islamic Law, known as "Shariah." The results underline the need to adapt common law to Islamic Law ('Shariah') principles and the challenges of arranging business groupings according to Islamic Law ('Shariah'). The extent to which business organizations can be structured by Islamic Law, known as "Shariah," is crucial for legal scholars, practitioners, and governments interested in corporate governance in emerging economies.