Q.12 Defines Shirakat and its classification under Islamic trade provisions.
The words “Musharika” is derived from Arabic word “Shirakat” which means sharing. In a Muslim country, where there is an interest – free economy “Musharika” means the type of financing where a bank of financial institutions participate in the risk of any concern to whom they are financing.
In the contract of “Sharikes” two or more persons participates known as “Shirakat”, join their hands to share the profit out of a business. “Sharikes” is classifiably divided into two different categories i.e. (i) Shirakat-e-Milk, (ii) Shirakat-e-Akad.
Shirakat-e-Milk i.e. partnership by state and Shirakat-e-Akad, i.e. partnership by contract/agreement.
Shirakat-e-milk is the kind of co-ownership die to joint possession or property acquired through inheritance.
Shirakat-e-Akad is a firm of partnership in which a contract of sharing the profit and loss is executed between parties to the contract If is farther divided into the following sub-categories.
(a) Shirakat-e-Mufawaziat (partnership on receiprocracy)
(b) Shirakat-e-Ainan (partnership by traffic)
(c) Shirakat-e-Sinnain (a sort of private company)
(d) Shirokat-e-Woojooh (a son of business by some old salesmen having good reputation).
(a) SHIRKA T-E-MUFAWAZIA T
It is based on the Doctrine of Equality. In this form of business, every Sharike is a partner, all his relations with other Sharikes. No performance is allowed to any Sharike in relation to his co- Sharike. Since all Sharikes of equal status in all respects, they are required to be “adult” and to contribute “equal capital”.
It is based on the point that every party is only an agent of the other party, it is not a surety or guarantor of the other party. In this contract, in equality of the stock contributed by the Sharikes is allowed and as such one Sharika may contribute ,Rs. 100,000/= as against Rs. 60,000/- contributed by other Sharike. Since capital counterpart is allowed in equally so that the profit will also be allowed disproportionately to be allowed in the capital ratio.
It is a sort of private company in which Sharikes belonging to some profession start a business with their capital and the profit as agreed among them. It is also known as Shirkat-e- Takabul or “Shirakat-e-Aladan”.
It is a sort of business in which some old sale men having good reputation in the business start working as businessman, traders and sales and creditor losses sin equal ratio only.