Moucharaka Moutanaqisa

 

 

Are you a promoter of SMEs and in the quest for funds? This is a product of the Islamic capital risk for you: regressive participation.

 Definition

Regressive Moucharaka is an association of two parties in the capital of a company: the promoter and the bank. The participation of the bank comes with its idea of progressively withdrawing the company when the promoter has completely paid it off.

 Conditions of conformity of the Moucharaka to the Islamic principle

  • The availability of the support of each party during the funding
  • Acceptance by both parties of the principle of joint participation in the losses and gains of the financing company.
  • The bank can  request collateralization from its partner but only in the event where a clause of the Mousharaka contract has been violated, heightened negligence in managing the issue (with reference to rules applied on the issue) and cases of bad faith, concealment, abuse of confidence and other similar acts.
  • Explicit adoption of the distribution method of the benefits between both parties during the signing of the contract in order to avoid any reason for dispute.
  • Profit sharing can only take place after the effective realisation of benefits (no anticipation on results)

Steps to follow

  1.  Are you a company promoter and in search of funding compatible to your Islamic faith? Come to us with a request for the funding of your project, acquiring machines or property.
  2. We will conclude a co-ownership accord with you (Moucharaka) and together, we will pay our respective shares to the vendor of the asset.
  3. You are interested in buying our shares (units) on the duration of the transaction through an order of intent. 
  4. You pay the rents to use our share of the property/asset.
  5. You buy units every month through an offer and a separate acceptance every month.
  6. The property is progressively transferred to you when the asset is being paid for. (With the help of a market sale between us at the end of each period).