Musharaka

i) Musharaka means relationship established under a contract by the mutual consent of the parities for sharing of profits and losses arising from a joint enterprise or venture.¹⁾

ii) Investments come from all partners/shareholders hereinafter referred to as partners.²⁾

iii) Profits shall be distributed in the proportion mutually agreed in the contract.³⁾

iv) If one or more partners choose to become non-working or silent partners, the ratio of their profit cannot exceed the ratio which their capital investment bears to the total capital investment in Musharaka.⁴⁾

v) If Mudarib in a Shirkah arrangement also contributes his own capital to the business, he will be entitled to share the profit in proportion to his own capital in addition to his share as Mudarib according to the agreed proportion.⁵⁾

vi) It is not allowed to fix a lump sum amount for any of the partners, or any rate of profit tied up with his capital. A management fee however, can be paid to the partner managing the Musharaka provided the agreement for the payment of such fee is independent of the Musharaka agreement.⁶⁾

vii) Losses are shared by all partners in proportion to their capital.⁷⁾

viii) All assets of Musharaka are jointly owned in proportion to the capital of each partner.⁸⁾

ix) All partners must contribute their capital in terms of money or species at an agreed valuation.⁹⁾