This is a partnership agreement. This Islamic financing technique involves one or more parties who both provide capital towards the financing of a project or business. Both parties share profits on a pre-agreed ratio, but losses are shared on the basis of contributed capital. Management of the project may be carried out by both the parties or by just one party. This is a very flexible arrangement where the sharing of the profits and management can be negotiated and pre-agreed by all parties.
« Back to Glossary Index