THE CONCEPT OF SHARIKAH AND ITS BENEFITS TO SOCIETY
by Zuhairah Ariff Abd Ghadas and Engku Rabiah Adawiyah Engku Ali 1

Abstract
In the Malaysian society, majority of the trade are carried out in the form of small and medium businesses. This can be seen from the statistics whereby 92% of the registered companies are the small and medium businesses. In carrying out the trade, there are three types of business vehicles which are available in the market place, namely sole proprietorships, partnerships and company structure.

Different from the common law practices, business vehicles under the Islamic law are not segregated into different types. Emphasize is given to the agreement of the trading rather than the structure. This article aims to highlight one of the important structures of carrying out trade under the Islamic law, known as musyarakah or sharikah and how the society can benefit from it.

Introduction
In Malaysia, most of the businesses carried out by the local entrepreneurs are in the form of small and medium businesses. This can be seen from the statistics which show that the small and medium business represents about 92% of the companies registered whereby 33% comprises of the trading businesses, 25% covers the banking and finance sector and 7% on the manufacturing industry2. In carrying out the business, the option of business vehicles in which the people can opted are the traditional business structure, namely, sole proprietorships, partnerships and company. In certain sectors, particularly the professionals, for example, lawyers and accountants, the business can only be carried out in the form sole proprietorships or partnerships. This article intends to highlight the Islamic version of partnerships and how the society can benefit from it.

Definitions and Concepts
The Islamic law recognizes a wide range of business structures for the purpose of trading, investment and profit-making. One of the structures recognized is the structure known as 'sharikah/shirkali' or 'musharakah'. This structure has been frequently construed to be similar or at least equivalent, to what is contemporarily termed as partnership. Nonetheless, the term sharikah or musharakah actually connotes a wider meaning than normal partnership. The term may include not only the modern partnership structure, but also any other structure that involves capital contribution and the subsequent profit and loss-sharing, including that of shareholding in modern companies, and even, certain parts of financing arrangement in a joint venture.3

The literal meaning of sharikah is ‘intermingle’, implying the intermingling of properties that form the capital, whereby, one cannot be differentiated from the other4. As noted above, the term has later been used to connote the modem-day contract of partnership. A study of the classical definitions of sharikah reveals a variety of legal meanings given to the term. For example, the Malikis define sharikah as a permission to transact (tasarruf), where each of the partners permits the other to transact with the partnership property while at the same time retaining his right to transact with the said property also. The Hanbalis define sharikah as the amalgamation of rights or freedom to transact (tassaruf). The Shafiis define sharikah as the confirmation of the rights of two persons or more over a common property. The Hanafis define sharikah as a contract between two parties in relation to capital and profit.5