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Musharakah

English: joint venture, profit and loss sharing

Alternate spelling: Musharaka

Definition: An investment partnership in which all partners are entitled to a share in the profits of a project in a mutually agreed ratio. Losses are shared in proportion to the amount invested. All partners to a Musharakah contribute funds and have the right to exercise executive powers in that project, similar to a conventional partnership structure and the holding of voting stock in a limited company.

This equity financing arrangement is widely regarded as the purest form of Islamic financing.

The two main forms of Musharakah are:

Permanent Musharakah: an Islamic bank participates in the equity of a project and receives a share of the profit on a pro rata basis. The length of contract is unspecified, making it suitable for financing projects where funds are committed over a long period.

Diminishing Musharakah: this allows equity participation and sharing of profits on a pro rata basis, and provides a method through which the bank keeps on reducing its equity in the project, ultimately transferring ownership of the asset to the participants. The contract provides for payment over and above the bank’s share in the profit for the equity held by the bank. Simultaneously the entrepreneur purchases some of the bank’s equity, progressively reducing it until the bank has no equity and thus ceases to be a partner.

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‘AAAIS’ for Cagamas’s Sukuk Musharakah

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Further discussion on risk mitigation in diminishing partnership or Musharakah Mutanaqisah

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Risk mitigation in diminishing partnership or Musharakah Mutanaqisah (continuation)

Tuesday, 01 Dec 2020 | Volume17.Issue48

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Risk mitigation in diminishing partnership or Musharakah Mutanaqisah

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SCC prints Musharakah paper

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Tuesday, 27 Oct 2020 | Volume17.Issue43

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Termination of the contractual Musharakah

Tuesday, 13 Oct 2020 | Volume17.Issue41

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Explaining the essentials of Musharakah with non-Muslims or conventional banks

Tuesday, 06 Oct 2020 | Volume17.Issue40

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‘AA-IS’ for Kesturi’s Sukuk Musharakah

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Explanation of Musharakah Inan (limited partnership)

Tuesday, 18 Aug 2020 | Volume17.Issue33

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Explanation of different types of Musharakah structures

Tuesday, 04 Aug 2020 | Volume17.Issue31

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Debate on termination of a management agreement in Musharakah

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Importance of management agreement in Musharakah

Tuesday, 21 Jul 2020 | Volume17.Issue29

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Musharakah as an alternative trade and economic driver in fragile economies

Tuesday, 21 Jul 2020 | Volume17.Issue29

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SCC issues Musharakah paper

Monday, 20 Jul 2020 | Volume17.Issue29

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Commencement of the Musharakah contract explanation

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SCC issues Musharakah paper

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COPE Private Equity sets up Musharakah program

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SCC issues one Musharakah-based ICP

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Uzbekistan welcomes first Musharakah-based banking product

Thursday, 22 Aug 2019 | Volume16.Issue34

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SCC issues Musharakah-based ICP

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Tuesday, 28 May 2019 | Volume16.Issue21

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MARC affirms Cagamas’s Sukuk Musharakah

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IJM Land issues perpetual Sukuk Musharakah

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IJM issues Sukuk Musharakah

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AEON sells 96-year Sukuk Musharakah

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Innovation in re-Takaful: Application of a Musharakah contract

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Musharakah popular among Iranian Sukuk issuers as Republic broadens universe of Islamic capital market instruments

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NAB works Mudarabah/Musharakah cases

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Hekmat to float Sukuk Musharakah

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Rayan Saipa to float Sukuk Musharakah

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Sharikah (Musharakah) and Modern Corporations

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Kesturi’s Sukuk Musharakah affirmed at ‘AA-IS’

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SP Setia’s Sukuk Musharakah due

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BGSM buys Sukuk Musharakah

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MARC affirms Cagamas’s Sukuk Musharakah

Tuesday, 23 May 2017 | Volume14.Issue21

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Cagamas’s Sukuk Musharakah ratings affirmed

Friday, 19 May 2017 | Volume14.Issue21

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Cagamas MBS’s Sukuk Musharakah reaffirmed

Wednesday, 25 Jan 2017 | Volume14.Issue05

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SCC upsizes Sukuk Musharakah program

Thursday, 12 Jan 2017 | Volume14.Issue03

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MARC affirms Alpha Circle’s Sukuk Musharakah programs

Monday, 09 Jan 2017 | Volume14.Issue02

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