What Is Mudaraba?
Mudaraba is an Islamic-finance partnership arrangement in which one party provides the capital and another provides the expertise or management. Profits are shared on a pre-agreed ratio, while a financial loss is generally borne by the capital provider (the manager's loss being their effort), absent misconduct or negligence.
This page gives a plain-language definition; the structuring and Shariah-compliance of any particular mudaraba are matters for the deal's own advisers.
What is mudaraba?
A mudaraba separates capital from management: the capital provider funds the venture and the manager runs it, with returns split on the agreed ratio. The arrangement is defined by its partnership agreement, the profit-sharing terms, and the records of the underlying venture.
Why mudaraba relates to a data room
A mudaraba's partnership and profit-sharing documents are shared between the capital provider, the manager, and their advisers, so they are organised in a virtual data room with granular access so each party sees only its part of the set. See Virtual data room for Islamic finance.
Where to go next
- Virtual data room for Islamic finance — how a mudaraba document set is managed.
- Sukuk · Murabaha · Ijara — related Islamic-finance terms.
What Is Murabaha?
Murabaha is an Islamic-finance arrangement in which a financier buys an asset and sells it to the client at a disclosed cost-plus-markup price, payable over time — a sale-based structure rather than an interest-bearing loan. Its contracts and asset records are organised in a virtual data room.
What Is Ijara?
Ijara is an Islamic-finance lease arrangement in which a financier owns an asset and leases its use to a client for agreed rental payments, with returns coming from the lease rather than interest. Its lease and asset documents are organised in a virtual data room.