1

PRESENTED TO:PROF. SHAHID GHORI

PRESENTED BY:SYED WAQAS HASSANABDUL HASEEBJONATHAN JIWAN MALLMUHAMMAD ALI RAZAARSLAN AHMAD

CONTENTDEFINITIONNATURE OF MUSHARAKAHEVIDENCEPILLARS OF MUSHARAKAHFLOW OF MUSHARAKAHTYPES OF MUSHARAKAHCATEGORIES OF MUSHARAKAHCONDITION OF MUSHARAKAHDISSOLUTION OF MUSHARAKAH

DEFINITIONMusharakah 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

EVIDENCEHadith:

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 MUSHARAKAH1. Shuraka’

Shareholders

2. Ra’sul Mal Capital

3. Mashru’Project or business venture

4. RibhPre-determined profit allocation

5. SighahIjab (Offer)Qabul (Acceptance )

FLOWS OF MUSHARAKAH

Ra’sul-Mal (Capital) Mashru’

(Project)Shuraka’

(Shareholders)

Shuraka’ (Shareholder

s)Ribh

(Predetermined profit rate)

Ijab & Qabul

Profit

Profit

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-InanA partnership of two or more to contribute the

capital to finance a project and to share the profit between them.

Sharikat al-AbdanA partnership of two or more to contribute their

skill or craft

MUHAMMAD ALL RAZA

TYPES OF SHIRKAT-UL-'AQD

Sharikat al-WujuhA partnership of two or more without contributing

capital

Sharikat al-MufawadahAn 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 Partners1. 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 MUSHARAKAHThe 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 MUSHARAKAHThe 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 Profit1. 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 MUSHARAKAH1. When a partnership fulfils its obligation or when

its duration is expired.2. By mutual consent of the parties.3. By a request made by one of the parties which is

subsequently approved by other parties.4. By death or incapacity of one of the parties

whose heirs or their guardian decide to discontinue the partnership.

5. The bankruptcy of the partners.

PRACTICAL IMPLEMENTATION

MEEZAN BANKDUBAI ISLAMIC BANK