1
PRESENTED TO:
PROF. SHAHID GHORI
PRESENTED BY:
SYED WAQAS HASSAN
ABDUL HASEEB
JONATHAN JIWAN MALL
MUHAMMAD ALI RAZA
ARSLAN AHMAD
CONTENT
 DEFINITION
 NATURE OF MUSHARAKAH
 EVIDENCE
 PILLARS OF MUSHARAKAH
 FLOW OF MUSHARAKAH
 TYPES OF MUSHARAKAH
 CATEGORIES OF MUSHARAKAH
 CONDITION OF MUSHARAKAH
 DISSOLUTION OF MUSHARAKAH
DEFINITION
 Musharakah is also known as al-sharikah (‫)الشركة‬
 Literally:
 mixture of properties whereby one cannot be differentiated
from the other
 Mixing of two properties so that they could not be
distinguished from each other
 Technically:
 A form of partnership where two or more persons combine
either capital or labor or creditworthiness together to carry on
a business venture on condition that they will share the
profits, enjoying similar rights and liabilities.
NATURE OF MUSHARAKAH
 It is basically a profit and loss sharing partnership whereby the
ratio for the distribution of profits must be determined and
specified in advance
 If one partner is to be paid a fixed remuneration he will not be
deemed a partner
EVIDENCE
 Hadith:
 Reported by Abi Hurairah R.A that the Prophet S.A.W said
“Allah had said that: “I am the third of the partners, as long as
any one of them does not betray the other. If he/she does
betray the other, I will withdraw (move away) from them”
 Reported by As–Saib Al–Makhzumi R.A that he used to be a
partner of the prophet S.A.W (in business) before his
prophet-hood. During the opening of Mecca he said to the
prophet S.A.W: “Welcome my brother and partner!”
ABDUL HASEEB
PILLARS OF MUSHARAKAH
1.
Shuraka’
 Shareholders
2.
Ra’sul Mal
 Capital
3.
Mashru’
 Project or business venture
4.
Ribh
 Pre-determined profit allocation
5.
Sighah
 Ijab (Offer)
 Qabul (Acceptance )
FLOWS OF MUSHARAKAH
Profit
Shuraka’
(Shareholders)
Ribh
Ijab & Qabul
(Predeter
mined
profit
rate)
Ra’sul-Mal
(Capital)
Shuraka’
(Shareholders)
Profit
Mashru’
(Project)
TYPES OF MUSHRAKAH
 SHIRKAT-UL-MILK :
 It means joint ownership of two or more persons in a
particular property
 SHIRKAT-UL-'AQD:
 This is the second type of Shirkah which means "a
partnership effected by a mutual contract"
JONATHAN JIWAN MALL
TYPES OF SHIRKAT-UL-MILK
 OPTIONAL SHIRKAT-UL-MILK
This comes into operation through the act of parties e.g., purchase
of asset with mutual consent.
 UNOPTIONAL SHIRKAT-UL-MILK
This comes into operation without any action on the part of parties
e.g., ownership of heirs on the inherited property.
TYPES OF SHIRKAT-UL-'AQD:
 Sharikat al-Inan
A partnership of two or more to contribute the capital to
finance a project and to share the profit between them.
 Sharikat al-Abdan
A partnership of two or more to contribute their skill or craft
MUHAMMAD ALL RAZA
TYPES OF SHIRKAT-UL-'AQD
 Sharikat al-Wujuh
A partnership of two or more without contributing capital
 Sharikat al-Mufawadah
An equal partnership between two or more, where each
contributes the same amount of capital and to share the
same amount of profit and work.
CONDITIONS OF MUSHARAKAH
 The Conditions Of Shareholders And Partners
1. The shareholders and partners must be qualified person to
appoint an agent or to be appointed as an agent under the
principle of al-Wakalah. Each shareholder is considered as a
joint owner of the company and has a right to run the
business for him and other shareholders when appointed as
an agent.
2. Al-Musyarakah i.e. partnership and company based
business can be made between individuals or organizations.
CONDITIONS OF MUSHARAKAH
 The Conditions Of Capital
1. The capital must be cash or things that can be valued by
money.
2. The amount of share is not determined to be of the same.
3. The shareholder can transfer his share to other person.
4. The contract of al-Musharakah can be terminated to
become a contract of ownership. As for example, a Bank has
agreed to finance to project together with a housing
developer. At the time when the project has completed, the
bank can sell his share to the developer so that it will
become a sole owner of the property.
SYED WAQAS HASSAN RIZVI
CONDITIONS OF MUSHARAKAH
 The Conditions Of The Project
 The project must be lawful according to Islamic law, i.e. it must be
halal. The term “shariah compliance” is widely used in current
situations.
 The evaluation for works carried out by the partners is made on
individual basis, but to be putted together so that the profit can be
divided among them.
 The shareholder can designate the work to one of them and it can
be considered as a specified term or condition of the contract.
 The appointed shareholder who carried out the project is held
responsible under the principle of Yad Amanah (trust). In the case
of his negligence he is held responsible for compensation under the
principle of Yad Dhamanah (guarantee).
CONDITIONS OF MUSHARAKAH
 The Conditions Of Profit
1. The shareholders must agree to a specific ratio for profit
sharing upon execution of the contract.
2. Loss sharing, except in the case of deceit or negligence, is
according to percentage of shareholding.
DISSOLUTION OF MUSHARAKAH
1. When a partnership fulfils its obligation or when its
2.
3.
4.
5.
duration is expired.
By mutual consent of the parties.
By a request made by one of the parties which is
subsequently approved by other parties.
By death or incapacity of one of the parties whose heirs or
their guardian decide to discontinue the partnership.
The bankruptcy of the partners.
PRACTICAL IMPLEMENTATION
 MEEZAN BANK
 DUBAI ISLAMIC BANK