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Definition. Musharakah is a word of Arabic origin which literally means sharing. The Mejella (1329) define it as an Agreement for association on the condition that the capital and its benefit be common between two or more persons .

The essential conditions of a valid Musharakah capital are shown under BNM parameters are: i) shall be readily available; ii) shall be contributed by all partners; and iii) may be in the form of monetary asset such as cash or non-monetary assets that includes tangible and intangible assets.

Types of Musharakah Shirkat has been divided into two kinds: 1. SHIRKAT-UL-MILK It means joint ownership of two or more persons in a particular property/asset. 2. SHIRKAT-UL-'AQD This is the second type of Shirkah which means a partnership effected by a mutual contract for .

What is Musharakah? Musharakah is similar to a joint venture. It allows equity participation by the parties, who finance a project in agreed proportions in either cash or kind. They each agree to accept a percentage of the returns and risk, sharing the profit and loss of a project in proportion to their investment.

In musharaka, the labor (including management skills and business expertise) is to be provided jointly by the parties (partners), whereas in mudaraba, it falls on the mudarib to provide for all labor requirements (the other partner's contribution is generally confined to providing capital).

Types of Musharakah Shirkat has been divided into two kinds: 1. SHIRKAT-UL-MILK It means joint ownership of two or more persons in a particular property/asset. 2. SHIRKAT-UL-'AQD This is the second type of Shirkah which means a partnership effected by a mutual contract for .

All assets of Musharakah are jointly owned in proportion to the capital of each partner. All partners must contribute their capital in terms of money or species at an agreed valuation. Share capital in a Musharakah can be contributed either in cash or in the form of commodities.

An 'aqd or contract under shari'a covers all types of obligations in all walks of life: commercial obligations, religious obligations, political obligations, etc. ... In this transaction, there is an agreement about certainty in the beginning of the transaction between both parties.

Mudarabah or "Sharing the profit and loss with venture capital", is a partnership or trust financing contract (similar to western equivalent of General and Limited Partnership) where one partner (rabb-ul-mal or "silent partner"/financier), gives money to another (mudarib or "working partner") for investing in a ...

The normal principle of Musharakah is that every partner has a right to take part in its management and to work for it. However, the partners may agree upon a condition that the management shall be carried out by one of them, and no other partner shall work for the Musharakah.

In a conventional house financing contract, the client has ownership, but his property papers remain in the bank until after paying of all scheduled amounts. ... In Diminishing Musharaka house financing contracts, the client and the bank jointly buy the house on the basis of a debt equity ratio, usually (80:20 or 60:40).

Musharakah is a joint enterprise or partnership structure in Islamic finance in which partners share in the profits and losses of an enterprise. ... Musharakah is a type of shirkah al-amwal (or partnership), which in Arabic means "sharing."