3 people wish to enter into a business deal as follows

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Plz assist with info regarding the ffg:

3 people wish to enter into a business deal as follows – person A & B provide finance 50% + 50%, person C runs the business to ensure a profit. Profit is shared 50% -50% between person A & B. person A & C share his (person A’s) portion of the share 50 -50.

1. is this permissible?

2. how must the loss, if any, be shared?

3. if permissible what type of Islamic finance is involved?

4. is there a doc that they can use as guideline with terms and conditions/


Muhtaram / Muhtaramah

In the Name of Allāh, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāh wa-barakātuh.

1-2.   According to our understanding person A and B form a partnership and contribute capital on a 50/50 basis. Person C is employed by A and B to run the business and makes no capital contributions. After profits are declared, person A gives portion of his profit to C. If our understanding is correct, the partners in the business will be person A and B. They are entitled to the profits and losses. If person A gives person C a portion of his share of the profits he may do so. However, this will be regarded as Tabaru (gesture) on his part. Person A is not obliged to offer anything to C neither does C have a legal claim against A. since person C will be an employee of the partnership, he will be entitled to a set wage payable by the partnership.

3.      Your question is unclear. What do you mean by what type of Islamic Finance is involved. Kindly elaborate.

4.      We do not have a standard document of terms and conditions as the nature of partnerships differ. We advise that the parties draw up their own agreements and forward it to us to verify its Shariah compliancy.

And Allah knows best
Darul Iftaa

Madrasah Inaa’miyyah

· The Sharée ruling herein given is specifically based on the question posed and should be read in conjunction with the question.

· The Darul Ifta bears no responsibility to any party who may or may not act on this answer. The Darul Ifta being hereby exempted from loss or damage howsoever caused.

· This answer may not be used as evidence in any Court of Law without prior written consent of the Darul Ifta.