Muscharaka
In Islamic finance, muscharaka is a financing instrument in the form of equity financing , in which the partners share both the profit and the loss .
Muscharaka as a participation concept
Muscharaka ( Arabic مشاركة, DMG mušāraka , often Musharakah ) or Shirkat al-amwal is used to set up a company or to support individual projects. An amicable contract is negotiated between the parties involved (mostly between a company and a bank), which among other things contains all components of a legally valid contract. For example, all parties must be able to enter into contracts. In addition, the contract must be concluded without coercion, fraud or deception (according to Sharia law ).
There are a few essential points that are included in the Muscharaka participation concept:
Profit distribution
The share of the profit must be agreed between both parties at the time the contract is made, otherwise the Shari'a contract is not effective.
The ratio of profit must be determined for each partner in an appropriate proportion. Profit distribution is not made in proportion to the capital invested, but in proportion to the profit that a company has achieved. It is not allowed to tie a partner to a fixed amount or to a profit rate with his investment at all.
For example, if A and B form a partnership and they agree that A will receive Rs 10,000 per month as his share of the profits and the rest will be distributed to B, then that partnership is void. Even if it is agreed between them that z. B. A receives 15% of his investment, this contract is ineffective. The correct basis for the profit distribution would be an agreed percentage of the actual profit generated from the deal.
It is allowed that the partner who works for Muscharaka receives a higher percentage than the partner who has given it up.
Ratio of profit and ratio of invested capital
There are different opinions on this:
According to Mālik ibn Anas and ash-Shafiʿi , it is necessary for the effectiveness of the muscharaka that each partner receives the profit according to the part of his investment (capital contribution). So if you've invested 40% of the total capital, you have to get 40% of the profit. Any agreement to the contrary, which entitles the holder to receive more or less than 40%, invalidates the muscharaka according to Shari'a.
Ahmad ibn Hanbal has a completely different opinion . He thinks that the ratio of the profit to the invested capital can differ if both parties have so agreed. It is therefore permissible that one partner receives 60% or 70% of the profit with 40% of the investments, while the other partner receives only 40% or 30% of the profit with 60% of the investments.
Abu Hanifa has another opinion . His opinion is between the two previous ones. He says that the ratio of profits can differ from the ratio of investments under normal conditions. However, if a partner declares by a clause in the agreement that he will never work for the muscharaka and he remains a silent partner during the entire term of the muscharaka, then he will no longer receive a profit from the proportion of his investment.
Loss distribution
In the event of losses, each partner should share in the loss in exactly the proportion of their investment. Because of this, a partner who has invested 40% of the capital owes exactly 40% of the loss, nothing more, nothing less. There is complete agreement on this principle among the various lawyers.
Ash-Shafiʿi is of the opinion that the ratio of the share in both the profit and loss account must correspond to the ratio of his investment. But Abu Hanifa and Ahmad have a different view on this. The ratio of profit may differ from the ratio of investments if such an agreement has been made. But as far as the loss is concerned, it must always be distributed in proportion to the capital invested.
In general it can be said: The distribution of the profit is based on the agreements of the parties, the loss is always based on the ratio of the invested capital.
The administration (management) of the muscharaka
The principle of the Muscharaka states that each partner has a right to participate in the administration (management) and also to work for it. However, the partners can agree that the administration will only be carried out by one of them. In this case, the silent partners only share in the profits to the extent of their investments.
However, if all parties want to work for Muscharaka, then each is considered to represent the other in all matters of the company. The deals that either of them close are deemed approved by all partners.
Differences to loan financing
There are no fixed repayment rates in Muscharaka. The repayment of the loan depends on the profit or loss of the company. The higher the company's profit, the higher the repayment rate. With loan financing, the borrower must repay a fixed amount regardless of profits and losses. Because of this, the lender has no losses, which can happen with Muscharaka if the borrower's company does not generate a profit.
Loan financing involves injustice against both the lender and the borrower. If the borrower has no profits then he is additionally burdened with the fixed interest rate, but if he makes high profits then he pays the lender too little, which is unfavorable for the lender. Such injustices don't happen with Muscharaka. If the borrower's business generates high profits, the community benefits from it e.g. B. the bank's lenders.
Musharaka Mutanaqisah Partnership
al-Muscharaka al-Mutanaqisa /المشاركة المتناقصة / al-mušāraka al-mutanāqiṣa is a time-limited version of Muscharaka. The participation of the bank is limited in time d. H. until the customer has bought all of the shares from the bank.
The Musharakah Mutanaqisah Partnership (MMP) contract is based on a diminishing partnership concept. The MMP consists of three contracts - muscharaka (participation), idschara ( leasing ) and baiʿ (trade / sales). First, the customer establishes a partnership ( muscharaka ) with the bank under the term Shirkat al-Milik ( co-ownership ). They both jointly own and fund the asset.
Thereafter, the bank leases its share of the asset to the customer under the name of ijara . For example, the customer initially pays 20% of the cost of the asset as the initial investment in the investment, while the bank pays the remaining 80%. Then the customer buys 80% of the shares from the bank in agreed parts at regular intervals until the asset is completely owned by the customer.
The rental income is shared between the bank and the customer, according to the current participation. The customer's revenue will increase as the participation increases, and in the end the asset will only belong to the customer.
See also
literature
- Ismail Karadöl: Islamic Banking- alternative banking system , Grin, Norderstedt 2007, ISBN 978-3-638-92031-5
- Werner Ende, Udo Steinbach , Gundula Krüger: Islam in the Present. Development and expansion of culture and religion State, politics and law. CH Beck, Munich 2005, ISBN 978-3-406-53447-8 .
Individual evidence
- ↑ Andreas Huthmann: Characteristics of the Islamic banking system and economic development. Grin, Norderstedt 2002, ISBN 978-3-638-64280-4 .
- ^ Muhammad Taqi Usmani: The Concept of Musharakah and Its Application as an Islamic Method of Financing. In: Arab Law Quarterly. Volume 14, No. 3, 1999, p. 206 ( JSTOR 3382079 )
- ^ Muhammad Taqi Usmani: The Concept of Musharakah and Its Application as an Islamic Method of Financing. In: Arab Law Quarterly. Volume 14, No. 3, 1999, pp. 206-207 ( JSTOR 3382079 )
- ^ Muhammad Taqi Usmani: The Concept of Musharakah and Its Application as an Islamic Method of Financing. In: Arab Law Quarterly. Volume 14, No. 3, 1999, p. 207 ( JSTOR 3382079 )
- ^ Muhammad Taqi Usmani: The Concept of Musharakah and Its Application as an Islamic Method of Financing. In: Arab Law Quarterly. Volume 14, No. 3, 1999, p. 210 ( JSTOR 3382079 )
- ↑ Meezanbank on the Musharaka ( Memento of the original from January 2, 2010 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ Ahamed Kameel Mydin Meera / Dzuljastri Abdul Razak: Home Financing through the Musharakah Mutanaqisah Contracts: Some Practical Issues. In: ISRA, Kuala Lumpur. ( [1] )
