Q: Zaid bought a cow worth Rs. 2 lakh. He gave it to Aslam on the condition that Aslam will take care of the cow, and will be responsible for providing it with food. Zaid will be taking 3kg of the total milk, and Aslam will take the rest of the milk, whether (4 kg, 5 kg or more). Is it a valid deal?
Q: Four men (A, B, C & D) started a joint halaal business by investing Rs.50,000 each. The business could not be established well and after a year, two of the men (A & B) decides to leave the business as they don't find it profitable.
At this point, how will the shares be given back to A & B, who have decided to discontinue out of their own free will?
Q: Generally, in certain property or livestock investments, they have a reserve which they keep for expenses and unexpected circumstances. In other words, they don’t distribute this money to the shareholders as dividends. Is this permissible?
Q: Please advise in the following matter.
Preamble:
1. Zaid, Amr and Khalid are equal partners in COMPANY A i.e. each one is a shareholder of 1/3 of COMPANY A.
2. Zaid and Amr are partners in COMPANY B. Zaid owns 75% and Amr 25%
3. Both companies have their own assets and liabilities including debtors and creditors
4. Zaid, Amr and Khalid have agreed to merge COMPANY A and B.
5. The agreement has been that in the new merged company “COMPANY AB” the shareholdings will be as follows:
a) Khalid 10%
b) Amr 27%
c) The balance of 63% will be owned by Zaid
6. When the merger takes place, then Zaid, the majority shareholder, wants to simultaneously sell 30% of his portion to his three sons in equal proportions for a nominal sum (R100 per 10%). Thus, each of his three sons will also own 10% each of COMPANY AB. Consequently, Zaid will only own 33% of COMPANY AB.
Questions:
1. What is the correct procedure to give effect to the merger, keeping in mind that both are major running companies?
2. How does Zaid sell off his shares to his sons and incorporate them into COMPANY AB?
3. How will the creditors and debtors be handled in both instances: (a) In merging COMPANY A and COMPANY B. (b) When Zaid sells off 10% each to three sons for a nominal value of R100 per share?
4. If, at the time of entering into the partnership, the condition was made that a partner should accept liability of a certain portion of the previous companies’ debts together with his capital investment, will this be permissible in Shari’ah?
Q: I am living in Dubai and I bought a limousine on instalments. I paid the down payment. I have a cousin who is working with me night shift. He did not pay anything for the limousin. I paid everything. Before buying the car, we agreed that we will share the profit half half end of the month. Now my question is, can I take a little more money?
Q: Is a decreasing partnership arrangement correct? This arrangement is used by some Islamic banks who call it diminishing mushaarakah.
An example of a diminishing mushaarakah is where the client wants to purchase a property, but does not have the full amount required. Instead, he only has 50% of the funds. Hence, he approaches the Islamic bank who purchases the property with him in partnership. Accordingly, they each contribute 50% of the funds and own 50% of the property. The client will then pay the bank rental for the 50% of the bank that he is occupying.
When entering into the partnership with the bank, the client is made to sign a promissory agreement, which is legally binding, in which he unilaterally undertakes to purchase a stipulated portion of the bank’s share at fixed intervals. For example, he will purchase 10% of the bank’s share every year. In this manner, the bank’s share will continue to diminish over 5 years, until it has sold its entire share to the client. However, since the agreement is legally binding, the client does not have the option of refusing to purchase the bank’s share when the stipulated intervals arrive.
Since the bank’s share diminishes over time, the rental which the client pays to the bank also decreases proportionately. Nevertheless, when drawing up the contract, the bank often uses the interest rate to determine the profit that they will make from the partnership.
Is this type of diminishing mushaarakah permissible?
Q: Ayyoob and Junaid each contributed R200 000 as their capital investment to start a business partnership. They both agreed that Ayyoob will work in the business and Junaid will be a sleeping partner. Is it permissible for Junaid to stipulate his share of the monthly profits as 60% (i.e. 10% more than his capital investment)?
Q: Muhammad and Mahmood started a business partnership by each contributing R250 000 as capital. They have mutually agreed that Muhammad will work in the business and Mahmood will remain a sleeping partner. In exchange of the work he does, is it permissible for Muhammad to stipulate an extra 10% of the monthly profits for himself over and above his 50% share?
Q: A partnership was dissolved with one partner buying out the other partner. They agreed that the payment will be made over a period of one year in instalments. Does the partner who sold his share have any right in the profit which the business generates during this one year?
Q: I did a partnership with someone and we both agreed that whatever profit would be generated, we would share it equally. We both partners have access to the bank account and we can withdraw money from the bank.
Now when the business has started generating profit, my partner didn’t share the profit with me. He uses money from the bank and when I ask for my share, he starts fighting with me. When I argue he says "you have access to the account, you can get your money". When I take out money and tell him, he fights. If I don’t inform him and get my share as decided, would it be sin?