PRESENTATION. Pre Conference Workshop On Financing and Investment on the Basis of Contractual Musharaka (Shirkatul Aqd)

Similar documents
CONTRACTS OF INVESTMENTS

Islamic Financial Accounting Standard on Profit and Loss Sharing on Deposits. The Institute of Chartered Accountants Of Pakistan

Musharaka. The term Musharaka has been derived from the Islamic fiqh concept of Shirkah which means sharing or partnership.

Running Musharakah Product of Islamic Banks: An Alternative of Running Finance


The Guide to Islamic Economics, Banking, and Finance

SHARIAH STANDARDS AND OPERATIONAL REQUIREMENTS. Amir Alfatakh Yusof 28 September 2017

Fixed Income Securities Shari a Perspective

CHAPTER - 5 MUSHARAKAH AS AN INSTRUMENT OF FINANCING

Shariah Guidelines for Sukuk. Mufti Ismail Ebrahim Shariah Advisor Malta, October 2014

Sukuks. Bin Shabib & Associates (BSA) LLP. 1. Legal and Regulatory Issues: a. Introduction. Overview of the Sukuk Market

In the name of Allah, the Compassionate, the Merciful CHAPTER - 3 M USHARAKAH - DEFINITION & EARLY D EVELO PM EN T

Islamic Home Financing

SBP issues instructions to improve transparency and bring standardization in IBIs Profit & Loss distribution policies and practices

Islamic Finance and Banking: Modes of Finance

Islamic Banking Bulletin. June Islamic Banking Department State Bank of Pakistan

THE PROSPECT OF ISLAMIC FINANCE IN THE PHILIPPINES. MEHOL K. SADAIN Commissioner NCMF February 9, 2015

HBL Islamic HomeFinance A financing facility that enables you to own your dream house with ease and flexibility.

[Exposure Draft (ver. 1.6) of] Financial Accounting Standard No. 29. Sukuk Issuance

CIFE STUDY NOTES

Prof. Umar Qudoos Date of Submission

Murabaha is one of the most commonly used modes of financing by Islamic banks and financial institutions.

Exploring Islamic Banking Solutions for SMEs. Ahmed Ali Siddiqui & Mr. Suleman Muhammad Ali

A Review of the Discussion on Islamic & Traditional Banking Products

Al Salam Bank-Bahrain B.S.C.

SUKUK MARKET AND REGULATIONS IN PAKISTAN

Glossary Of Islamic Finance Terms

CONTINGENCIES AND COMMITMENTS 24. The annexed notes 1 to 48 and Annexures I to IV form an integral part of these financial statements.

Deferred tax assets that rely on future profitability excluding those arising from temporary differences - -

Glossary of Islamic Capital Market Terms

Shariah compliant securitization challenges under Kuwait Law & Practice a Case Study

Islamic Finance Rules (IFR)

JCR-VIS Credit Rating Company Limited. Affiliate of Japan Credit Rating Agency, Ltd.

MODELING AN EXIT STRATEGY FOR ISLAMIC VENTURE CAPITAL FINANCE

SHARIAH COMPLIANCE MECHANISM

Ind-AS 111 JOINT ARRAGEMENTS

Basic Islamic Finance and Islamic Contracts

LICR FUND, INC. Financial Statements. December 31, 2016 and (With Independent Auditors Report Thereon)

Rate of Return. Issued on: 17 January 2018 BNM/RH/PD

LICR FUND, INC. Financial Statements. December 31, 2014 and (With Independent Auditors Report Thereon)

THIS MONTHLY/QUARTERLY/HALF YEARLY PAYMENT AGREEMENT is made at this day of 200 (the Monthly/Quarterly/Half Yearly Payment Agreement ) and is made

Sri Lanka Accounting Standard-LKAS 31. Interests in Joint Ventures

Fatwa and DFM Shari a Standard Supervisory For Board. DFM Standard For Issuing, Acquiring and Trading Sukuk

Dubai Islamic Bank P.J.S.C. Review report and condensed consolidated interim financial information for the three-month period ended 31 March 2016

BOARD OF DIRECTORS TERMS OF REFERENCE

Dubai Islamic Bank P.J.S.C. Consolidated financial statements for the year ended 31 December 2015

Developing Islamic Finance Secondary Markets

GREENOCK MORTON SUPPORTERS SOCIETY LIMITED LOAN NOTES 2001 ISSUE INSTRUMENT AND GOVERNING RULES

Abu Dhabi Islamic Bank PJSC INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2012 (UNAUDITED)

Read the following and answer questions 2 and 3.

Firasat Newsletter. Dear friends and clients,

Microcredit using Equity Financing: an Alternate Approach to Micro Financing in an Interest Free Economy

IPSAS 8 Financial Reporting of Interests in Joint Ventures

1st Quarter Report September

An Islamic Perspective of Business Finance (A Comparative Study with Conventional and Capitalistic Financing)

Al Salam Bank-Bahrain B.S.C.

Economic and Social Council

IAS Investment in Joint Ventures. By:

Personal. to customer needs REGULATORY DISCLOSURES UNDER BASEL II AND BASEL III FRAMEWORK SOHAR ISLAMIC

FORM 8-K. GENESIS ENERGY, L.P. (Exact name of registrant as specified in its charter)

SNA/M1.18/6.a. 12 th Meeting of the Advisory Expert Group on National Accounts, November 2018, Luxembourg. Agenda item: 6.a.

Q: What types of Financial Institutions and transactions are involved in Islamic finance?

Dubai Islamic Bank P.J.S.C. Consolidated financial statements for the year ended 31 December 2016

Financial Reporting of Interests in Joint Ventures

GUIDELINES AND BEST PRACTICES ON ISLAMIC VENTURE CAPITAL. Issued By: Securities Commission

MUDHARABAH MUSYTARAKAH CONTRACT (Profit Sharing Cooperation and Investment Financing Contract) No... Bismillahirrahmaanirrahiim

IND AS 111. Joint Arrangements

Cayman Islands Exempted Companies

MANUAL MONETARY AND FINANCIAL STATISTICS MANUAL AND COMPILATION GUIDE

Adverx ICO Terms and Conditions

NOTICE OF EXTRA ORDINARY GENERAL MEETING

FAMILY SUNTRUST SCHEME TERMS & CONDITIONS

Taxation of Islamic financial products in Ireland

Shari ah Standard No. (13) Mudarabah. (Revised Standard)

AGREEMENT ON THE ESTABLISHMENT AND OPERATION OF THE ENDOWMENT FUND. THIS AGREEMENT made this day of, 20.

DUBAI ISLAMIC BANK PAKISTAN LIMITED BALANCE SHEET AS AT DECEMBER 31, 2009

Mawarid Finance P.J.S.C. Consolidated Financial Statements for the year ended 31 December 2015

Mawarid Finance P.J.S.C. Consolidated Financial Statements

RISK MANAGEMENT MODULE

FAMILY TAKAFUL. Savings PLUS. Jubilee Life Insurance Company Limited-Window Takaful Operations

MCMA Enhancing Liquidity Management

Wealth Creation and Wealth Management in an Islamic Economy

For personal use only

Risk Management CHAPTER 11. Government Support. Risk Management. Risk Management 145

Islamic Banking vs. Conventional Banking

ABSTRACT. Keywords: Basel III, Capital Adequacy Requirements, Additional Tier 1, Tier 2, Subordination

IMPORTANT/DISCLAIMER THIS IS AN INVESTMENT ACCOUNT PRODUCT THAT IS TIED TO THE PERFORMANCE OF THE UNDERLYING ASSETS, AND IS NOT A DEPOSIT PRODUCT

Dubai Islamic Bank P.J.S.C. Review report and condensed consolidated interim financial information for the nine-month period ended 30 September 2017

Islamic Transactions September 2008

Sample Strategist SMSF. Sample Copy. Strategist SMSF Trust Deed & Rules. Prepared for: Reckon Docs

Discretionary Trust PD (EP)

1. Establishment of the Fund. A donor advised fund shall be established on the books of the Foundation that shall be known as the Fund ).

GROUP CONSOLIDATED FINANCIAL STATEMENTS

The House Building Finance Corporation Limited Pakistan: A Sharia h Appraisal of Ghar Aasān Flexi Scheme

SABA ISLAMIC BANK (Yemeni Joint Stock Company) SANA A, REPUBLIC OF YEMEN

LAW ON MODIFICATIONS AND AMENDMENTS OF THE LAW ON BUSINESS COMPANIES

Towards a theory of financialisation. Questioning the financialisation of infrastructure workshop Feb 2015 Leeds University Duncan Lindo

Introduction to Islamic Banking. Salman Ahmed Shaikh

Comparison of Laws in Bermuda, the Cayman Islands and the British Virgin Islands Relating to Offshore Companies

IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO OF and.

Transcription:

PRESENTATION In Pre Conference Workshop On Financing and Investment on the Basis of Contractual Musharaka (Shirkatul Aqd) At Islamabad, Pakistan on February 20, 2016

RIPHAH INTERNATIONAL UNIVERSITY ISLAMABAD Pre Conference Workshop On Financing and Investment on the Basis of Contractual Musharaka (Shirkatul Aqd) At Islamabad, Pakistan on February 20, 2016

Introduction to Shirkah, Musharaka Muhammad Ayub

Shirkah Defined Sharing / merging Commingling by two or more persons either their wealth / capital / goods /money or work or obligations to: Cooperate with one another to help in difficult times, to manage the risks jointly Earn a profit or a yield, and to share the loss if any according to their proportionate ownership. Share in appreciation / depreciation in value benefiting / loosing.

Shirkah fil Urooz Nature of Shirkah Shirkah in ownership without making the joint property a tradable item Shirkah for business / in trading Commercial partnership Shirkah al aqad: Shirkah by services / expertise- fil amal Shirkah by capital- Shirkah al Maal

Shirkah Esteemed Hadees-e-Qudsi Allah (SWT) has declared that He Shall be a partner in a business between two Mushariks until they indulge in cheating or breach of trust esteem

Shirkatulmilk This type of shirkah is generally through inheritance, or through gift to more than one persons. It is called Ghair Ikhtiari (i.e. without option or choices- Partnership in Ain al Maal only- No investment /business as Mutual activity- with Amal al mushtarak). Shirkah with an objective of pooling of capitals for purchase of joint property which each of the partner cannot buy individually- Ikhtiari (i.e. by option / choice).

Shirkatulaqd This is the general type of Shirkah which means: A partnership effected by a mutual contract in which the partners join together with different contributions, work or obligation for the purpose of earning profit - Commercial Partnership. For the purpose of brevity: it may also be translated as Joint commercial enterprise. or Contractual Musharakah.

Types of Contractual Musharakah Each of the above three types of Shirkat-ul-Aqd are further divided into two types: Shirkat-Al-Mufawada (Capital & labour at par): All partners share capital, management, profit, and risk in absolute equals. It is a necessary condition for all four categories to be shared amongst the partners Shirkat-ul-Inan : A more common type of Shirkatul-Aqd where equality in capital, management or liability might not be equal; might be equal in one case but not in all respects.

Musharakah The term Musharakah has been introduced recently by the scholars / experts in Islamic finance. It is normally restricted to Shirkat-ul-amwal with Shirkah al Inan, where two or more persons invest capital in a joint commercial venture in varying amounts.

FEATURES of SHIRKATUL AQD Shirkatul Amwal: Mixing of Capital collective / joint ownership Use of Capital in Enterprises Rights and Responsibilities Sharing

Timing of Shirkah Contracts Permanent Musharaka: Not bound with a time period - Shares of Joint Stock Companies. Temporary (Redeemable) Musharaka: for limited time period, e.g. PTCs or Musharakah based TFCs; Diminishing Musharaka: one partner promises to buy the share of the other partner gradually until the title to the property is completely transferred to him.

Main Profit Sharing Rules 1. Ratio or the basis for sharing profit should be decided in the beginning of partnership. 2. Ratio can be changed with mutual consent for subsequent period. 3. Profit should be allocated in percentages of earning and not in a sum of money or a percentage of the capital or investment 4. It is not necessary for sharing profit according to proportionate capital contribution. 5. The partner may at the later stage agree to change the profit sharing ratio, and on the date of distribution, a partner may surrender a part of his profit to another partner. 6. One partner can cap his share of profit Tiers profit.

Profit Sharing Rules.. 7. Profit ratio can either be fixed or variable according to the tiers. 8. The final allocation of profit is not allowed to be based on expected profit. However, permissible to distribute a provisional profit, subject to final settlement after actual or constructive liquidation. 9. Partners may decide not to distribute a portion of profit Creation of various reserves. 10. Loss has to be borne in proportion of the capital provided.

Guarantee in Shirkah al aqd Guarantee of capital, part of capital, profit or part of profit from one partner to other is not allowed. Such guarantee if given becomes invalid. Guarantee or Security can be asked for only misconduct or negligence of partner (s). A third party may provide a guarantee to make up losses of one or all partners. This third party should not have more than 50% stake in guaranteed entity.

Application of Shirkah al aqd Fund Management Stocks Business Project Financing Financing of a Single Transaction Running Musharaka Securitization of Musharaka