Musharakah means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the ratio of the contribution. It is an ideal alternative to the interest based financing with far reaching effects on both production and distribution. It has two kinds:

• Shirkat-ul-Milk (Partnership by joint ownership): means joint ownership of two or more persons in a particular property.

• Shirkat-ul-Aqd (Partnership by contract): means, "a partnership effected by a mutual contract"as "joint commercial enterprise."