Is the concept of business partnerships recognized in Islam?

Q. I intend entering into a partnership agreement with a friend of mine. Both of us will be investing money in the business and both of us will be sharing the profits equally. Is there any concept of such business partnerships in Islam?

A. Yes, the concept of business partnerships are recognized in Islam. In fact, the agreement in reference is a Musharakah agreement.

Musharakah is a joint commercial enterprise enacted by mutual agreement wherein two or more partners invest some of their capital or undertake to render some services to customers in which all the partners share the profit or loss of the joint venture on an agreed ratio.

Allah Ta’ala Knows Best

Mufti Ismaeel Bassa