The Structure and Elements of a Musharaka Transaction
Type
Practical Guidance
Document type
Practice Note
Date
17 Jan 2022
Jurisdiction
Kuwait
Taxonomy
Islamic Finance
Copyright
LexisNexis
Overview
This Practice Note provides a high-level overview of the structure and elements of a Musharaka transaction.
Practical Guidance
Introduction to musharaka—a profit and loss sharing instrument of Islamic finance
A fundamental principle of Islamic finance is that of “no profit without risk”, i.e., the idea that no person should make a gain or profit unless they are contributing an element of risk. This principle is best illustrated when applying Islamic instruments of profit and loss sharing. For more information on this principle, see Key Principles of Islamic Finance.