Law and Society in the Evolution of Malaysia’s Islamic Capital Market Regulation

The strong growth of Islamic capital markets internationally has seen the corresponding development of regulatory frameworks incorporating sharia law. Malaysia has been at the forefront of Islamic capital market regulatory development, merging corporate law drawn from its common-law heritage with sharia principles. This article examines the interaction of law with political economy and sociocultural influences in Malaysia which has underpinned the evolution of hybrid Islamic capital market regulation. It analyses the evolution of Malaysian Islamic capital market regulation against theories of legal origin and legal evolution. The analysis suggests that the sharia and common-law components of Islamic capital market regulation have evolved along two separate and seemingly inconsistent trajectories. While the secular corporate law component continues to evolve in tandem with its common-law tradition, development of the sharia component represents a distinct shift away from common-law traditions.