1. Shirkat-al-Milk (Partnership by Joint Ownership): It means joint ownership of two or more persons in a particular property. This kind of Shirkah may come into existence in two different ways:
a) Optional (Ikhtiari): At the option of the parties (e.g. if two or more persons purchase equipment, it will be owned jointly by both of them.
b) Compulsory (Ghair Ikhtiari): This comes into operation automatically without any action taken by the parties. For example, after the death of a person, all his heirs inherit his property, which comes into their joint ownership as a natural consequence of the death of that person.
2. Shirkat-al-Aqd (Partnership by Contract): It means a partnership effected by a mutual contract (joint commercial enterprise). Shirkat-al-Aqd is further divided into three kinds:
(i) Shirkat-al-Amwal (Partnership in capital): Where all the partners invest some capital into a commercial enterprise.
(ii) Shirkat-al-Aamal (Partnership in services): Where all the partners jointly undertake to render some services for their customers and the fee charged by them is distributed according to an agreed ratio. It is also called Shirkat-at-Taqabbul or Shirkat-Sanai or Shirkat-al-Abdan.
(iii) Shirkat-ul-Wujooh (Partnership in Goodwill): Here the partners have no investment at all. They purchase commodities on deferred price, by getting capital on loan because of their goodwill and sell them at spot. The profit so earned is distributed between them at an agreed ratio.