This research examines the validity of categorizing "Diminishing Musharaka," a product of Islamic financial engineering, as a property partnership between a bank and its customer. Employing a comparative descriptive analytical approach, the study delves into juristic texts pertaining to this topic, meticulously analyzing their content. The primary focus lies in comprehending the concept accurately and subsequently drawing a parallel with the characteristics of a "declining company." The findings of the research indicate that considering Diminishing Musharaka as a property partnership faces challenges due to inherent jurisprudential issues. These issues encompass the impermissibility of profit differentiation when shares are equal and the partner's lack of authority to dispose of their counterpart's share without explicit permission. These legal intricacies give rise to pragmatic complications, constricting the scope of this partnership model. Moreover, they curtail the participants' autonomy in selecting profit percentages and exerting control over the company's funds. The study concludes that categorizing Diminishing Musharaka as a novel company type aligns more accurately with its nature. This categorization circumvents the aforementioned problems, enhancing the flexibility of its application. Consequently, this approach empowers the involved parties to exercise greater freedom in determining profit distribution percentages and making decisions regarding the company's capital. Keywords: Diminishing Musharakah, Islamic finance, jurisprudential consideration, joint ownership, joint venture.
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