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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Tuesday, 09 Feb 2021 | Volume18.Issue06
Back to BasicsAre modern joint stock companies a form of Musharakah?
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Back to BasicsRisk mitigation in Musharakah and Mudarabah agreements — an ideal PhD topic
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Back to BasicsBumitama’s Sukuk Musharakah reaffirmed
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Ratings UpdatesRemaining points of a diminishing partnership or Musharakah Mutanaqisah agreement
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Back to BasicsFurther discussion on risk mitigation in diminishing partnership or Musharakah Mutanaqisah
Tuesday, 08 Dec 2020 | Volume17.Issue49
Back to BasicsRisk mitigation in diminishing partnership or Musharakah Mutanaqisah (continuation)
Tuesday, 01 Dec 2020 | Volume17.Issue48
Back to BasicsRisk mitigation in diminishing partnership or Musharakah Mutanaqisah
Tuesday, 24 Nov 2020 | Volume17.Issue47
Back to BasicsSCC prints Musharakah paper
Thursday, 19 Nov 2020 | Volume17.Issue47
DealsDiminishing partnership or Musharakah Mutanaqisah
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Back to BasicsDifferent kinds of Musharakah contracts
Tuesday, 27 Oct 2020 | Volume17.Issue43
Back to BasicsAdditional aspects on the termination of contractual Musharakah
Tuesday, 20 Oct 2020 | Volume17.Issue42
Back to BasicsTermination of the contractual Musharakah
Tuesday, 13 Oct 2020 | Volume17.Issue41
Back to BasicsExplaining the essentials of Musharakah with non-Muslims or conventional banks
Tuesday, 06 Oct 2020 | Volume17.Issue40
Back to Basics‘AA-IS’ for Kesturi’s Sukuk Musharakah
Monday, 05 Oct 2020 | Volume17.Issue40
Ratings UpdatesDebate on Musharakah Inan
Tuesday, 15 Sep 2020 | Volume17.Issue37
Back to BasicsExplanation of Musharakah Inan (limited partnership)
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Back to BasicsExplanation of different types of Musharakah structures
Tuesday, 04 Aug 2020 | Volume17.Issue31
Back to BasicsDebate on termination of a management agreement in Musharakah
Tuesday, 28 Jul 2020 | Volume17.Issue30
Back to BasicsImportance of management agreement in Musharakah
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Back to BasicsMusharakah as an alternative trade and economic driver in fragile economies
Tuesday, 21 Jul 2020 | Volume17.Issue29
Correspondent ReportsSCC issues Musharakah paper
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Tuesday, 14 Jul 2020 | Volume17.Issue28
Back to BasicsCommencement of the Musharakah contract explanation
Tuesday, 07 Jul 2020 | Volume17.Issue27
Back to BasicsSCC issues Musharakah paper
Friday, 08 May 2020 | Volume17.Issue19
DealsCOPE Private Equity sets up Musharakah program
Tuesday, 14 Apr 2020 | Volume17.Issue15
Asset ManagementLBS Bina’s perpetual Sukuk Musharakah: Supporting property development
Tuesday, 14 Apr 2020 | Volume17.Issue15
Case StudiesSCC issues one Musharakah-based ICP
Thursday, 27 Feb 2020 | Volume17.Issue09
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Tuesday, 28 May 2019 | Volume16.Issue21
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Ratings UpdatesIJM Land issues perpetual Sukuk Musharakah
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DealsIJM issues Sukuk Musharakah
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DealsAEON sells 96-year Sukuk Musharakah
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DealsInnovation in re-Takaful: Application of a Musharakah contract
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Correspondent ReportsMusharakah popular among Iranian Sukuk issuers as Republic broadens universe of Islamic capital market instruments
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ReportsNAB works Mudarabah/Musharakah cases
Tuesday, 25 Sep 2018 | Volume15.Issue39
News BriefsHekmat to float Sukuk Musharakah
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DealsRayan Saipa to float Sukuk Musharakah
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DealsSharikah (Musharakah) and Modern Corporations
Tuesday, 09 Jan 2018 | Volume15.Issue02
Shariah StandardsKesturi’s Sukuk Musharakah affirmed at ‘AA-IS’
Thursday, 04 Jan 2018 | Volume15.Issue02
Ratings Updates