Sharikat

Description

"Sharikah literally means mixing of two properties in a manner that they could not be distinguished from each other. It also means sharing and participation. It also means a property that belongs to several owners or co-proprietors in common, in such a way that each one had ownership of every smallest part of it in proportion to the share allotted to one. Al-sharikat could be divided into two broad divisions of shared ownership and contractual partnerships. Shared Ownership or Co-Ownership (Sharikat al-Amlak) is a type of sharika in which two or more persons become joint owners of a property without entering into a partnership contract. Contractual Partnership (Sharikat al-’Uqud) is considered a proper type of partnership because the parties concerned have willingly entered into a contractual agreement for joint investment and sharing of profits and loss. In a contractual partnership, the partners may contribute money/capital, reputation, or services. A contractual partnership could be divided into Partnership of capital (Sharikat al-Amwal), Partnership of services (Sharikat al-A'mal/Abdan), and Partnership of reputation or creditworthiness (Sharikat al-Wujuh). Partnership is a non-binding contract. However, partners may agree to make a binding partnership agreement for a certain period."

(https://onlinelibrary.wiley.com/doi/abs/10.1002/9781119198956.ch7)

Source: Partnership (al-Sharikat). Chapter 7 of 'Islamic Commercial Law'. Book Editor(s):Muhammad Yusuf Saleem