With the increase in demand for equity-based funding, Musharakah will aim to help alleviate the Islam banking industry and lead Malaysia into a new dimension of innovative and attractive product offerings.

Musharakah: An Islamic term for partnership. It refers to two or more persons jointly owning an item or contracting jointly for profit

Shirkat-ul-‘aqd: A partnership created through a contract. This can also be translated to mean a type of joint commercial enterprise.

The breakdown of Shirkat-ul-‘aqd
a) Shirkat-ul-amwaal (Partnership by investment):
This shirkah or partnership is formed when partners invest some small capital into a business.

b) Shirkat-ul-a‘maal (Partnership by work):
This is where all the partners jointly undertake to render some services for their customers, and the fee charged from them is distributed among them according to an agreed ratio.

c) Shirkat-ul-wujooh (Partnership by face):
Here the partners have no investment at all. All they do is that they purchase items on credit and attempt to resell them for cash at a higher price. The resulting profit is shared among the partners after the debt is repaid from the proceeds.

Shirkat-ul-milk: Joint ownership between the parties involved, where each party has provided capital in order to purchase a particular property.

This implies that one partner is buying another partnership’s share gradually and the process continues until full ownership belongs to a partner. Once all shares of one partner has been bought by his/her partner then Musharakah is no longer exist.

FINTERRA’s Endowment Chain community are in an essence, contributing capital to develop land provided by a waqf agent into commercial properties. It is worth to understand that once the partnership has been set up, all partners are co-owners. Based on this premise, there is a need to provide a broad framework to facilitate the healthy involvement of such contracts in the Islamic banking industry.