2. Shirkah: The First Contract in HPSM

Shirkah as the first essential contract in the HPSM arrangement sets the foundation for the subsequent contracts of hire and sale. It explores the principles of mutual participation, shared profits and losses. This chapter delves into the specifics of shirkah implementation within the context of financing the acquisition of goods or assets. It analyses the different types of shirkah contracts employed in HPSM and highlights the importance of defining the scopes of the partnership, the allocation of profits and losses, and the roles and responsibilities of the parties involved. In addressing the Shari’ah implications, the chapter examines the compatibility of shirkah contracts in HPSM with the Shari’ah principles. It explores the views of scholars and jurists regarding the permissibility of such contracts and compliance with Shari’ah requirements. The discussion also delves into the potential pitfalls and challenges that may arise in the execution of shirkah contracts within the HPSM framework, offering insights into how these can be mitigated. It deepens the understanding of the conceptual framework of shirkah, its practical implementation within HPSM, and its compliance with Shari’ah principles, significances, mechanisms, and Shari’ah implications, shedding light on its role as a fundamental element of this hybrid financing contract.