Shirkat/partnership: Literal Meaning

Shirkat/partnership
Literal meaning
The literal meaning of partnership (shirkat) is the combination , sharing of two
things
Introduction
The literal meaning of Musharakah is sharing. The root of the word “Musharakah”
in Arabic is Shirkah, which means being a partner. It is used in the same context as
the term “shirk” meaning partner to Allah. Under Islamic jurisprudence,
Musharakah means a joint enterprise formed for conducting some business in
which all partners share the profit according to a specific ratio while the loss is
shared according to the ratio of the contribution. It is an ideal alternative for the
interest based financing with far reaching effects on both production and
distribution. The connotation of this term is little limited than the term "Shirkah"
more commonly used in the Islamic
Definition
When two or more person participated in business or financial enterprise to make
profit is called shirkat
Kinds of partnership (Shirkat)

1. Shirkat-ul -amlak
Shirkat al-Milk (partnership of ownership or in the right of ownership),
Partnership that arises automatically due to joint inheritance or gift, or a
partnership that arises by choice as for example when two persons buy a
house together. Its rules are different from the commercial / contractual
partnership; its objective is not the commercial business.
But there are cases where this kind of “shirkat comes to operate automatically
without any action taken by the parties. For example, after the death of a person,
all his heirs inherit his property which comes into their joint ownership as an
automatic consequence of the death of that person.
2. Shirkat-ul-Aqood/aqd
It is derived from word aqd which means A proper partnership in which the parties
concerned enter into a contractual agreement for joint investment, profit earning
and the sharing of profits and risks.
Kinds of Shirkat-ul-aqood
i.Shirkat-ul-amwal
The commonest type of Shirkatul ‘Aqd which refers to a partnership between two
or more parties for the purpose of earning profit by means of in vestment in a joint
business venture .in this type of partnership money are invested by both parties for
the purpose to run a business.
Kinds of shirkatul-amwal
➢ Shirkat-ul-inan/anan
The literal meaning of inan is to neglect, It is the commonest type of Shirkatul
amwal and refers to a partnership between two or more parties with capital not
necessarily equal, for the purpose of earning profit by means of investment in a
joint business venture.the Loss always very to capital.
➢ Shirkat-ul-Mufavdha / Mufawadhah
In this type of partnership all partners share capital, management, profit, risk in
absolute equal proportions. This is a necessary condition for the validity of this
partnership. Every partner who shares equally is a Trustee, Guarantor and Agent
on behalf of the other partners.
Condition of shirkat-ul-amwal
• The object in the contract must qualify as a commodity having value and not
as a free good which is accessible to all.
• The ratio of profit of the property must not be fixed by the parties.
• Capital of shirkat must be in shape of gold, silver and currency which also
called laqood.
ii. Shirkat-ul-amal
It is also the kind of partnership (Shirkat-ul-aqood) Between two or more person
on the basis of services.
Kinds of shirkatul-amal
➢ Shirkat-ul-inan
The literal meaning of inan is to neglect, It is the commonest type of Shirkatul-amal
and refers to a partnership between two or more parties with service not
In this type of partnership all partners share service, management, profit, risk in
on behalf of the other partner.
iii. Shirkat-ul-wujuh
partnership of creditworthiness / goodwill‟ where the subject matter is bought on
credit from the market on the basis of a relationship of goodwill with the supplier,
with the aim of reselling at a profit to be shared.
➢ Shirkat-ul-inan
The literal meaning of inan is to neglect, It is the commonest type of Shirkatul-
wujuh and refers to a partnership between two or more parties with goodwill not
In this type of partnership all partners share goodwill, management, profit, risk in
on behalf of the other partner

Shirkat/partnership: Literal Meaning

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Shirkat/partnership

Kinds of partnership (Shirkat)

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