The Concept of Musharakah
In the context of Islamic finance, the term MUSHARAKAH is used primarily in connection with financing. The term "Musharakah" is derived from the root word "Shirkat." The term "Shirkat" is widely used in Islamic jurisprudence and has a broader meaning than "Musharakah." Below, we examine the meaning of these basic concepts.
"Shirkat" means "sharing" or "partnership" and in Islamic jurisprudence is divided into two types:
Shirkat-ul-Mulk
This refers to joint ownership of a specific asset by two or more persons. Such a partnership may arise voluntarily, for example, through the joint purchase of a particular asset. In this case, the co-ownership relationship with respect to the purchased asset is called Shirkat-ul-Mulk. Here, the relationship arises by the parties' own choice. However, sometimes "shirkat" arises without any involvement or desire of the parties. For example, when someone passes away, his heirs inherit the deceased's property, and their joint ownership, i.e., shirkat, comes into existence with respect to that property.
Shirkat-ul-Aqd
This is the second type of shirkat, which means "contractual partnership," or more simply, a "joint commercial enterprise."
Shirkat-ul-Aqd is divided into three categories:
- Shirkat-ul-Amwal, in which partners invest capital into an enterprise and become partners within that enterprise.
- Shirkat-ul-Amal, in which two or more partners provide paid services to clients and divide the revenue according to pre-agreed proportions (also known as "shirkat us-sanai" or "shirkat ul-abdan").
- Shirkat-ul-Wujuh, in which partners invest no capital at all; they purchase goods on credit, sell them for cash, and distribute the profit according to agreement.
It is important to note that the term "Musharaka" was not used in the classical works of Islamic jurisprudence (fiqh). Rather, this term began to gain usage relatively recently among scholars and practitioners writing on the subject of Islamic finance. Prior to that, the term "Shirkah" (partnership) was commonly employed, particularly the expression "Shirkat al-Amwal", which refers to an arrangement whereby two or more parties contribute a portion of their capital as an investment in a commercial enterprise or project on the basis of partnership. In some instances, this concept also encompassed "Shirkat al-Amal" — a form of partnership based on the joint provision of services or labor.
As can be seen, the term "Shirkah" carries a broader meaning than the contemporary term "Musharaka," which is generally limited to the concept of "Shirkat al-Amwal." The term "Shirkah" encompasses all forms of partnerships involving both capital contributions and joint labor or services.
Since the term "Musharaka" is more relevant to the subject under discussion and is, in substance, almost identical to "Shirkat al-Amwal," we shall first provide a brief overview of this type of partnership from the perspective of classical Islamic jurisprudence and then discuss its application in modern financial practices within the framework of Islamic finance.
Source: islommoliyasi.uz