A GENERAL ANALYSIS OF MUSHARAKA IN PAKISTAN: AN ISLAMIC WAY OF DOING BUSINESS AND PROHIBITED ACTIVITIES IN BUSINESS VENTURES

Abstract

The modern business is legitimate under the concept of Musharaka if it is not mingled with the concepts of usury, uncertainty and gambling. Musharaka is an Islamic Concept of Modern-day Partnership and a Company. It is a legal way of doing business, according to verses of the Holy Quran, Traditions of Holy Prophet Muhammad ﷺ and Practices of the Companions of Prophet Muhammad ﷺ. Islamic law unlike modern day laws does not differentiate between a modern-day partnership firm and a company or a corporation, somehow all civilized countries have separate laws for the partnership firm and a company or a corporation. All types of business ventures are allowed under the concept of Musharaka if they are pure from the rules of usury, uncertainty and gambling. The usury is an increase that has no corresponding consideration in an exchange of property for property. There must not be an uncertainty about the ultimate outcome of a venture which leads towards a dispute and litigation and the gain must be obtained on the probability of loss. No business is legitimate under the concept of Musharaka if it is purely beneficial without any possibility of loss. Musharakah is an Islamic finance partnership where parties share profits and losses aligning with Shariah principles. While considered ideal, its usage in Pakistan is limited compared to other Islamic financing modes like Murabahah due to perceived higher risks and lack of awareness. Promoting Musharakah is crucial for fostering equitable economic growth and strengthening Pakistan's Islamic financial system. Modern day business entities must not indulge in sinful activities as prohibited by the verses of the Holy Quran and the traditions of Holy Prophet Muhammad ﷺ for their benefits and for the benefit of the people at large and for that purpose, clauses should be added in the existing laws of the trade, investment, contract, partnership and a company.