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Islamic Finance




Capital of Sharika


Partners in a sharika should contribute capital in the form of cash or cash equivalents based on which the amount of capital can be determined and profit and loss can be recognized with reasonable surety. However, it is permissible, with the mutual consent of partners, to contribute tangible assets (such as fixed assets, commodities, etc) as the capital of sharika, provided that a proper evaluation is carried out in order to assess the monetary values of such assets and denominate them in currency units so that the share provided by each partner is estimated in a fair manner. Furthermore, the values of shares denominated in different currencies should also be translated into the official currency of the sharika at prevailing exchange rates.

Shari’a doesn’t permit using receivables as a contribution to a sharika capital, unless such items are inseparable from other assets that will be presented as capital contribution.



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