chap 06 - musharakah

7/21/2019 Chap 06 - Musharakah

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Islamic Financial

Products and Processes

Ameenullah Sheikh [email protected]



MUSHARAKA – EquityFinancing-



Musharaka - Illustration

Partner

Musharaka(Partnership)

6! "#nership $! "#nership

Partner



Musharaka

• Musharaka literally means sharing

• Musharaka means a joint pool of funds formed for conducting some

business in which all partners share the profit according to an agreedratio while the loss is shared as per the ratio of investment

• All partners have a right to participate in the

management of the project. However, the partners also have a right to waive the right of management

in favor of any specified partner or person



MUSHARAKAH

FROM HADITHS%



• SHIRKAH

• SH&RKA'-U-M&K • SH&RKA'-U-A*

• SH&RKA'-

U-+U,H

• .A&R &KH'&AR&

(Man/at"ry)

• &KH'&AR&

(pti"na0)

• SH&RKA'-

U-AAMA

• SH&RKA'-

U-AM+A

• Shairkat-u0-Mu1a#a/a • Shirkat-u0-&nan

2ateg"ries "1 Shirkah



MUSHARAKAH

It has been divided into two kinds:

SHIRKAT-UL-MILK

It means joint ownership of two or more persons in a particular

property without any commercial intention.

SHIRKAT-UL-AQD

oint venture of two or more persons in a particular property with

commercial intention.



MUSHARAKAH

SHIRKAT-UL-MILK

'his kin/ "1 Shirkah 3ay c"3e in t" e4istence in t#"

/i11erent #ays%

A. Optional Shirkat-ul-Milk (Ikhtiari)

e5g5 A 7 8"int0y purchase a H"use

B5 Compulor! Shirkat-ul-Milk ("hair Ikhtiari)

e5g5 7 2 are the 8"int "#ners "1 inherite/ car



MUSHARAKAH

SHIRKAT-UL-AQD

Shirkat-ul-A#$ i $i%i$&$ in to thr&& t!p&'

a. Shirkat-ul-Amal

. Shirkat-ul-Aamal

*. Shirkat-ul-+u,ooh



MUSHARAKAH

SHIRKAT-UL- AM+AL

A partn&rhip in hi*h all th& partn&r in%&t om& *apital into

a *omm&r*ial %&ntur&.

or /ampl&'

A0 1 2 C op&n an automoil& horoom ith 3440444

*apital 5rom &a*h.



MUSHARAKAH

SHIRKAT-UL- AAMAL

A partn&rhip in hi*h th&

partn&r ,ointl! $&*i$& to o55&r

om& &r%i*& to th&ir *utom&r.

or /ampl&'

A 2 1 op&n a HR *onultan*! 5irm

60 7 2 8 op&n a ri$al 9arlour :Sa In;



MUSHARAKAH

SHIRKAT-UL- +U<OOH

+h&r& th& partn&r ha%& no in%&tm&nt at all0

th&! pur*ha& *ommo$iti& on $&5&rr&$ pri*&

! th&ir =oo$ill an$ &ll th&m on pot.

or /ampl&'

Ari5 Hai 2 <ahan=ir Si$$i#ui pur*ha& Ri*& 5rom th&

hol&al& mark&t on *r&$it an$ al& in Cli5ton on *ah.



MUSHARAKAH

A00 the three are 1urther /i9i/e/ in t" t#" types%

1. SHIRKAT-UL- MUFAWADAH

2. SHIRKAT-UL- AINAN



MUSHARAKAH

SHIRKAT-UL- MUFAWADAH

+here capita0: pr"1it: 0"ss an/ 3anage3ent areequa0 a3"ng the partners5

SHIRKAT-UL- AINAN

'he partners share capita0: 3anage3ent: pr"1it:

an/ risk in an agree/ pr"p"rti"n #hich 3ay n"t;e equa05

'his is the 3"st c"33"n type "1 Shirkah5



Musharaka In Islamic Banks

- Illustration

&s0a3ic 7ank Partner

(cust"3er)

Musharaka

6! "#nership $! "#nership



F"r3s "1 Musharaka #5r5t &s0a3ic 7anks

!he Islamic "anks are using Musharaka in two forms namely:

#ermanent Musharaka

$iminishing Musharaka



F"r3s "1 Musharaka

Permanent Musharakais the c"n9enti"na0 1"r3

"1 partnership5



F0"# "1 Musharaka transacti"n (F"r 7anks)

Muharaka 5inan*in=

%.!he bank issues Musharaka certificates to the

general public. #rofit sharing ratio is stated in

the certificates along with other terms and

conditions.&.'eneral public subscribe the Musharaka

certificate to earn halal return from their

investment.

(.)inancing obtained is invested in industrial

projects to generate funds and provide return

to the certificate holders.*.#rofit are accrued and received from projects.

+.haring of profits between bank and

certificate holders.

"ankInvestors

Project

#rofit accrued

ubscription of certificates

% &

(

++

*



F"r3s "1 Musharaka

Diminihin= Muharaka

It is a form of partnership in which

one of the partners promises to buythe e-uity share of the other partner

gradually until the title to the e-uity

is completely transferred to him.



• CUSTOMER

The Bank enters into a Musharakah !oint O"nershi#$a%reement "ith the &ustomer an' (oth o) them #a* theirres#e&ti+e shares to the se,,er o) the asset

.ustomer #a*s rent )or the use o) (anks share in the#ro#ert*

The &ustomer a##roa&hes the Bank "ith the re/uest)or Pro0e&t1Ma&hiner*1House )inan&in%

• BANK

• JointOwner ship

• Mushar

ak a

• Rent

Diminihin= Muharaka



• CUSTOMER

• BANK

• JointOwner ship

• Mushar

ak a

• Gradual Transfer of Oners!i"

The +a,ue o) Bank2s share in Musharakah #ro#ert* is 'i+i'e'into units3 "hi&h it se,,s to the &ustomer O"nershi# o) theasset is %ra'ua,,* trans)erre' to the &ustomer u#on #a*mento) asset #ri&e

Units "i,, (e "orke' out (* 'i+i'in% Bank2s )inan&e' amount(* num(er o) months )or "hi&h )inan&e to (e a,,o"e'

With ea&h #ur&hase o) unit (* the &ustomer3 the Bank2sshare in the Musharakah #ro#ert* starts 'iminishin%3"hereas &ustomer2s share starts in&reasin%3&orres#on'in%,*

Fina,,*3 the &ustomer (e&omes the so,e o"ner o) the #ro#ert*a)ter ha+in% #ur&hase' a,, units )rom the Bank3 a,on% "ith

Diminihin= Muharaka



7asic Ru0es

.a#ita,

In Musharaka, the capital should bespecific, eistent and under disposal.It is invalid to establish a Musharakaon non/eistent fund or debt.



7asic Ru0es

9ro5it harin= ratio o5 l&&pin=

partn&r

!he ratio of sleeping partner in profit

should not eceed the ratio that his

investment bears to the total capital

of partnership.



7asic Ru0es

i/ation o5 r&mun&ration

It is not permitted, in a Musharakacontract, to specify a fiedremuneration for a partner whocontributes in managing theMusharaka funds or provides some

form of other services, such asaccounting. However, it ispermissible to give him a greatershare of profit than he would receivesolely on the basis of his share in

the partnership capital.



MUSHARAKAH

ILLUSTRATION

<5 &1 A an/ 7 enter int" a partnership an/ it is agree/

;et#een the3 that A sha00 ;e gi9en Rs5 <:=-

per 3"nth as his share in the pr"1it: an/ the rest

#i00 g" t" 7: the partnership is in9a0i/5

>5 Si3i0ar0y: i1 it is agree/ ;et#een the3 that A #i00

get <?! "1 his in9est3ent "1 pr"1it: the c"ntract is

9"i/5

. 'he c"rrect ;asis 1"r pr"1it /istri;uti"n #"u0/ ;e

an agree/ percentages "1 the actua0 pr"1it



Any uesti"ns@@

'HAK BU

chap 06 - musharakah

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