PRESENTED TO: PROF. SHAHID GHORI

2. PRESENTED TO:PROF. SHAHID GHORI PRESENTED BY: SYED WAQAS HASSAN ABDUL HASEEB JONATHAN JIWAN MALL MUHAMMAD ALI RAZA ARSLAN AHMAD

3. CONTENT • DEFINITION • NATURE OF MUSHARAKAH • EVIDENCE • PILLARS OF MUSHARAKAH • FLOW OF MUSHARAKAH • TYPES OF MUSHARAKAH • CATEGORIES OF MUSHARAKAH • CONDITION OF MUSHARAKAH • DISSOLUTION OF MUSHARAKAH

4. DEFINITION • Musharakah 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.

5. 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

6. EVIDENCE • Hadith: • Reported by AbiHurairah 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–MakhzumiR.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!”

7. ABDUL HASEEB

8. PILLARS OF MUSHARAKAH • Shuraka’ • Shareholders • Ra’sul Mal • Capital • Mashru’ • Project or business venture • Ribh • Pre-determined profit allocation • Sighah • Ijab (Offer) • Qabul (Acceptance )

9. FLOWS OF MUSHARAKAH Profit • Shuraka’ • (Shareholders) • Ribh • (Predetermined profit rate) • Mashru’ • (Project) • Ra’sul-Mal • (Capital) Ijab & Qabul • Shuraka’ • (Shareholders) Profit

10. 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"

11. JONATHAN JIWAN MALL

13. 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.

14. TYPES OF SHIRKAT-UL-'AQD: • Sharikat al-Inan A partnership of two or more to contribute the capital to finance a project and to share the profit between them. • Sharikat al-Abdan A partnership of two or more to contribute their skill or craft

15. MUHAMMAD ALL RAZA

16. TYPES OF SHIRKAT-UL-'AQD • Sharikat al-Wujuh A partnership of two or more without contributing capital • Sharikat al-Mufawadah An equal partnership between two or more, where each contributes the same amount of capital and to share the same amount of profit and work.

17. CONDITIONS OF MUSHARAKAH • The Conditions Of Shareholders And Partners • 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. • Al-Musyarakahi.e. partnership and company based business can be made between individuals or organizations.

18. CONDITIONS OF MUSHARAKAH • The Conditions Of Capital • The capital must be cash or things that can be valued by money. • The amount of share is not determined to be of the same. • The shareholder can transfer his share to other person. • The contract of al-Musharakahcan 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.

19. SYED WAQAS HASSAN RIZVI

20. CONDITIONS OF MUSHARAKAH • The Conditions Of The Project • The project must be lawful according to Islamic law, i.e. it must be halal. The term “shariahcompliance” 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 YadAmanah (trust). In the case of his negligence he is held responsible for compensation under the principle of YadDhamanah (guarantee).

21. CONDITIONS OF MUSHARAKAH • The Conditions Of Profit • The shareholders must agree to a specific ratio for profit sharing upon execution of the contract. • Loss sharing, except in the case of deceit or negligence, is according to percentage of shareholding.

22. DISSOLUTION OF MUSHARAKAH • When a partnership fulfils its obligation or when its duration is expired. • By mutual consent of the parties. • By a request made by one of the parties which is subsequently approved by other parties. • By death or incapacity of one of the parties whose heirs or their guardian decide to discontinue the partnership. • The bankruptcy of the partners.

23. PRACTICAL IMPLEMENTATION • MEEZAN BANK • DUBAI ISLAMIC BANK