Musharakah Agreement

A – There is no legal obstacle to the conclusion of a Musharakah with a bank based on interest rates for the purpose of carrying out legitimate operations. The proof of the legitimacy of this opinion is that the prophet of Allah himself, on whom he is at peace, knows that he has done business with the Jews and that they have taken an interest. Apart from the fact that the prophets who dealt with them were limited to legitimate transactions that did not come from interests. After him, his companions did the same. Musharakah is often used for the purchase of real estate and real estate, the granting of loans, investment projects and the financing of major purchases. In the case of real estate transactions, the partners require a bank to assess the value of the property via the imputed rent (the amount that a partner could pay to live in the property concerned). The winnings are distributed among the partners in predefined proportions, depending on the value assigned and the sum of their different bets. Any party raising capital has the right to have a say in the management of the property. When Musharakah is used to finance large purchases, banks tend to lend using variable-rate loans linked to a company`s performance. This link serves as a profit to a credit partner. THE MINISTER – If the agreement is reached between the bank and its client to contract a Musharakah for the purchase and sale of goods and the amount of capital to be invested (by both parties) is fixed, it is the same as a mutual promise of partnership.

However, a partnership will not be legal until both parties have actually paid their shares into the capital. Subsequently, the entire recognition of profits and losses is based on the percentage of the amounts actually invested by each of the partners. A permanent Musharakah has no specific end date and will continue until the partners decide to dissolve it. As such, it is often used to meet long-term financing needs. A decreasing musharakah may have a few different structures. The first is a successive partnership where each partner`s share remains the same until the end of the joint venture. It is often used in the financing of projects, and especially in the purchase of houses. The agreement states that both parties share profits in this way: Jamaldeen, Inc.

receives 80 percent and the bank 20 percent. (Why inequality? Jamaldeen, Inc., brings more manpower and expertise to the project as well as a decent percentage of the capital.) Similarly, both parties bear any losses based on their capital contributions (40 per cent for the company and 60 per cent for the bank. . . .