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United Kingdom
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Shirka meaning
Published by a LexisNexis Banking & Finance expert
What does Shirka mean?
Shirka describes, in Islamic law and finance, a partnership or joint venture based on shared contribution, management, and profit-and-loss sharing. It is not defined in UK or Irish legislation or case law; rather, it is a descriptive Sharia term encountered in Islamic finance documentation, comparative law, or expert evidence. Typical features include co-ownership of assets or investments, agreed profit ratios, and losses borne in proportion to capital contributed, with activities structured to avoid interest (riba) and prohibited sectors. Related concepts include musharakah (joint enterprise) and shirkat al-milk (co‑ownership).
In UK and Irish legal practice, the effect of a “shirka” depends on the governing law and the contract. To create a domestic partnership, the Partnership Act 1890 applies in England and Wales, Northern Ireland and Scotland (where a firm has separate legal personality), and in Ireland. Parties commonly implement shirka-style arrangements via a general partnership, LLP, company or contractual joint venture to ensure enforceability, liability allocation and tax clarity. Careful drafting is needed to align Sharia principles with UK/Ireland partnership or corporate law and regulatory requirements.
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PRACTICE NOTES
UK Banking, Finance, Capital Markets, Derivatives and Insolvency Law Glossary including Islamic finance
Banking & Finance glossary A Auditing and Accounting Organisation for Islamic Financial Institutions (AAOIFI) The foremost Islamic, international, autonomous, independent, not-for-profit corporate body that develops and issues accounting, auditing, governance, ethics and Shari’ah benchmarks and standards for Islamic Financial Institutions (IFIs) and the wider Islamic finance sector. Founded in Bahrain in 1991, it is backed by a number of institutional members across more than 45 countries, including central banks and regulatory authorities, financial institutions, accounting and auditing practices, and legal firms. Its pronouncements are currently applied by leading Islamic financial institutions across the world and have advanced a progressive and gradual harmonisation of global Islamic finance practice. It also delivers professional qualification programmes—notably Certified Islamic Professional Accountant (CIPA), Certified Shari’ah Adviser and Auditor (CSAA), and the corporate compliance programme—in efforts to strengthen the industry’s human capital and governance frameworks. For further details, see Practice Note: Key participants in the Islamic finance industry—Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Acceleration Acceleration is the formal action...
22 May
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