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Written by Suraya
Monday, 05 January 2009 09:20 - Last revised Monday, 05 January 2009
DEFINITION OF MUSHARAKAH
of striking up a partnership.
words are from the same derivative and are used interchangeably.
However, the
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Written by Suraya
Monday, 05 January 2009 09:20 - Last revised Monday, 05 January 2009
highly flexible concept and may cover various situations. In its broader
sense
all partners share the profit according to a specific ratio while the loss is
shared
law.
CLASSIFICATION OF MUSHARAKAH
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the various types of Shirkah. All of this could prove to be quite bewildering
to the
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undertake to render some services for their company, and the income is
distributed
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All of the above three are then further divided into two types:
-- Mufawadhah: Where capital & labour are at par. All partners share
capital,
for the validity of this partnership. Every partner who shares equally is a
Trustee,
but not in all respects, meaning either profit is equal but not labour or vice
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versa.
There are also hybridized type of partnerships, which have not been
catalogued in the
As stated earlier on, all these modes of partnership are termed as Shirkah
in the
terminology of Islamic law, while the term Musharakah is not found in the
books of
Fiqh. This term has been introduced recently by those who have written on
the subject
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amaal
types of partnerships.
It is evident from the above explanation that the term Shirkah has a
much wider
sense than the term Musharakah as it is being used today. The latter is
limited to
partnerships.
2. Shirkat ul ‘Aqd
1. Shirkat ul Mufaawadah
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Some of the conditions necessary for this type of partnership to be valid are:
In this type of partnership the partners clearly stipulate their rights according
to their wishes through mutual contract.
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Musharakah is a term not found in the books of Fiqh. This term has been
introduced recently by those who have written on the subject of Islamic
modes of financing and is restricted to this particular type of Shirkah , ie, Sh
irkat
ul ‘Inaan.
Some of the conditions necessary for this type of partnership to be valid and
other conditions that can be included in the contract may be summarized as
follows:
1. Partners’ Capital
8. Termination of Musharakah:
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the shareholders. They cannot be held liable for more than the amount of
capital they
If one of the partners wants the termination of the partnership, whilst the
other partner/s like to continue with the business, this purpose can be
achieved by mutual agreement. The partners who want to run the business
may purchase the share of the partner who wants to terminate his
partnership, because the termination of the partnership with one partner
does not imply its termination between the other partners.
However, in this case, the price of the share of the leaving partner must be
determined by mutual consent, and if there is a dispute about the valuation
of the share and the partners do not arrive at an agreed price, the leaving
partner may compel the other partners on the liquidation or on the
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The question arises whether the partners can agree, while entering into the
contract of partnership, on a condition that the liquidation or separation of
the business shall not be effected unless all the partners, or majority of
them want to do so, so that the partner/s who want to come out of the
partnership shall have to sell his/their share to the other partners and shall
not force them on liquidation or separation.
IF a particular business has been started with huge amount of money which
has been invested in a long term project, and one of the partners seeks
liquidation in the infancy of the project, it may be fatal to the interests of the
other partners, as well as to the economic growth of the society, to give him
such an arbitrary power of liquidation or separation. There such a condition
seems to be justified and it can be supported by the general principle laid
down by Nabi Sallallaahu alaihi wa sallam in his famous hadith:
All the conditions agreed upon by the Muslims are upheld, except a
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Shirkat us Sanaa’I
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Example :
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profits.
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ul Taqabbull.
Shirkat ul Wujooh
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1. Existence of Mutaaqide
en (Partner
s): A
partnership cannot be
constituted without
2. Legal capacity of
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partners ( ahliyah):
Partners must be sane &
mature; the contract
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determined in proportion to
the actual profit accrued to
the business and not in
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partnership is invalid.
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6. Management of Mushar
akah :T
he normal principle of
Musharakah
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is that every
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7. Rights of partners in Mu
sharakah
:
After entering into a
Musharakah
contract,
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partnership)
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THE STATUS OF
PARTNERS IN A
PARTNERSHIP
Written by Suraya
Monday, 05 January 2009 09:20 - Last revised Monday, 05 January 2009
Written by Suraya
Monday, 05 January 2009 09:20 - Last revised Monday, 05 January 2009
a Mutawallie or trustee of
the assets of the
partnership, and also that
of a Wakeel or agent of
the partnership.
As a trustee, each
partner has to look after
the assets of the
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Written by Suraya
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As an agent, no partner
should use the assets of
the partnership for his
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Jews said : “ It is
because of his fairness
and justice that the
heavens and the earth
are standing” (i.e. .
otherwise Qiyaamah
would have come )
In the terminology of
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Written by Suraya
Monday, 05 January 2009 09:20 - Last revised Monday, 05 January 2009
1. Shirkah ul Milk
2. This means a
partnership effected by
a joint ownership of two
or more persons in a
particular asset.
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something.
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themselves elected to
purchase the asset
jointly.
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partners unintentionally
in something i.e. without
their will.
Written by Suraya
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of his death.
IMPORTANT RULES
AND REGULATIONS
OF SHIRKAT UL
MILK
Written by Suraya
Monday, 05 January 2009 09:20 - Last revised Monday, 05 January 2009
For example –
Someone leaves ten
thousand rands and
four houses in his
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Written by Suraya
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consent to the
proposed distribution.
Concluding remarks.
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There is immense
scope for expansion
in the forms of
different business
organizations based
on partnership in the
modern world. These
forms of business
organizations are
particularly suited to
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the Muslim
communities where
capital is scarce and
greater effort is
needed on the part of
the Muslims
themselves.
Partnerships will
enable the Muslim
communities not only
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to mobilize their
internal resources but
also stand on their
own two feet in
matters of finance
and save them from
going to conventional
financial institutions,
where the paying of
interest is a curse. In
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the formation of
partnerships,
according to the true
spirit of the Shari’ah,
Muslims will increase
their financial position
to maintain
themselves, their
families and other s
and pay their
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