Partnership

Partnership

Question:

Aslkm wb Respected Ulama : Darul Iftaa

Hope you are well

As per telecom wit Ml Anas SAHIB, attached is the darul iftaa partnership agreement regarding the business partnership we intend going into. We have forwarded this to you for checking if our agreement is shariah compliant based on the following facts :

1)  Ackerdien (partner 1 – main partner) is purchasing this business for  R 1.8 mil from the previous owner

2)  Mohamd S (partner2 – junior partner) is investing 297k cash towards the above purchase of the business

3) The 2 partners have agreed that  because of the above investment proportions, partner 1 will own 83.5% of the business and partner 2 will own 16.5% of the business.

a) Partner 1 has the expertise and will thus be operating and administrating this business

b) Profits will be paid monthly in the ratio of 83.5% to partner 1,  and 16.5% to partner2

4) Partner 1 has given partner 2 the option to run this partnership for a year and thereafter reassess and continue if partner 2 wishes to, …….. thereafter if the partnership continues, partner 1 has to give 60 days notice if partner 1 wishes to withdraw from the partnership/ business.

a) QUESTION : in  the event of death,  or partner 1 wishing to withdraw : how will partner 1’s 16.5% share of the business be evaluated and paid out to partner 1/ partner 1’s estate :

a 1)  Will the current value of the business  have to be evaluated – (by who & how) and thereafter 16.5% of this be paid out to partner1/partner 1’s estate? (after creditors etc have been paid)  OR

a 2) WILL PARTNER 1 /PARTNER 1’s estate be paid out his capital investment of 300k

As explained the passed date of the commencement of this contract, so we humbly bring to your notice the URGENCY of an answer from Darul Iftaa please.

Jazak Khayr for your advice

Request for your duas, shukran

Wassalam

Mohamd S K

Answer:

In the name of Allah, Most Compassionate, Most Merciful,

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

The contract is Shariah compliant.

You enquire how the business will be evaluated upon the death of your partner of his withdrawal from the partnership.

The partners may record in the agreement that in the case of death or termination of partnership, the market value of the business will be considered. The administrative service pertaining to paying the heirs, in the case of death, and the payout to the partner, in the case of termination, will be overseen by a mutually agreed person or organization. Their advice and guidance will be binding on both partners. 

And Allah Ta’āla Knows Best

Mirza-Zain Baig

Student - Darul Iftaa

Montréal, Québec, Canada

Checked and Approved by,

Mufti Ebrahim Desai.

21-02-1441| 21-10-2019

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