Definition:
"Mudarabah" is a special kind of partnership where one partner gives money to another for investing it in a commercial enterprise. The investment comes from the first partner who is called "rabb-ul-mal", while the management and work is an exclusive responsibility of the other, who is called "mudarib".
FEATURES OF MUDARABAH
1. It is an important feature of this kind of business that the money should be handed over by the Rab-ul-Mall to the Modarab and he should not control the money.
2. Modaraba must be incorporated and register under Modaraba ordinance, 1980.
3. Its activities are controlled by the Modaraba companies and Modaraba rules, 1981.
4. The certificates issued by Modaraba are transferable.
5. The Modaraba has right to receive at least 10% share in Modaraba business.
6. The profit of Modaraba business is distributed among the partners according to the agreement, and one partner cannot enjoy entire profit of the business.
7. The money of Modaraba cannot be contributed to another person without the prior consent of Rab-ul-Mall.
8. It may be formed for specific period and it will be dissolved by the expiry of that time.
9. It may be formed for single purpose or for multiple purposes.
10. The Modaraba will be dissolved by the death of any partner.
"Mudarabah" is a special kind of partnership where one partner gives money to another for investing it in a commercial enterprise. The investment comes from the first partner who is called "rabb-ul-mal", while the management and work is an exclusive responsibility of the other, who is called "mudarib".
FEATURES OF MUDARABAH
1. It is an important feature of this kind of business that the money should be handed over by the Rab-ul-Mall to the Modarab and he should not control the money.
2. Modaraba must be incorporated and register under Modaraba ordinance, 1980.
3. Its activities are controlled by the Modaraba companies and Modaraba rules, 1981.
4. The certificates issued by Modaraba are transferable.
5. The Modaraba has right to receive at least 10% share in Modaraba business.
6. The profit of Modaraba business is distributed among the partners according to the agreement, and one partner cannot enjoy entire profit of the business.
7. The money of Modaraba cannot be contributed to another person without the prior consent of Rab-ul-Mall.
8. It may be formed for specific period and it will be dissolved by the expiry of that time.
9. It may be formed for single purpose or for multiple purposes.
10. The Modaraba will be dissolved by the death of any partner.
