[Types of Partnerships/Companies]
There are four types: 917
[أنواع الشركات]
وَهِيَ عَلَى أَرْبَعَةِ أَضْرُبٍ:
The Book of Selling and
Commercial Transactions
Partnership & Companies
الشَّرِكَةِ
The Book of Purification
The Book of Prayer
Importance of Prayer & Ruling of its Abandonment
Facing the Qiblah & Intention in the Prayer
Etiquettes of Walking to Prayer and its Description
Description of Prayer Continued
Description of Prayer Continued
Description of Prayer Continued
Pillars and Mandatory Acts of Prayer
Two Prostrations of Forgetfulness
Supererogatory (Voluntary) Prayers
Supererogatory (Voluntary) Prayers Continued
Times of Prohibition of (Supererogatory) Prayer
Congregational Prayers & Latecomers
Jumu'ah (Congregational Friday) Prayer
The Book of Funerals
The Book of Fasting
The Book of Hajj and 'Umrah
Book of Zakat
The Book of Selling and Commercial Transactions
Introduction & Commercial and Selling
Selling of Primary & Secondary Commodities
Cancellation Options in Transactions
Cancellation Options Continued
Debt Transference & Guarantor-ship
Mortgaging & Security Deposits
Partnership & Companies Continued
Reviving Barren Lands & Per-Job Wage
Lost and Found Property & Foundlings
Prize Money & Deposits for Safekeeping
The Book of Bequests
The Book of Inheritance
The Book of Marriage
The Book of Divorce
The Book of Sadaq
The Book of Dhihar
The Book of Lian
The Book of Foods
Book of Fatal and Non-Fatal Assault
The Book of Indemnities
The Book of Hudood
The Book of Jihad
The Book of the Judiciary
The Book of Testimonies
Appendix
Glossary
Partnerships and Companies (Sharikât) 916
1. ‘Inân (full rein) partnership:
شَرِكَةُ الْعِنَانِ:
916. Partnership and forming companies is generally permissible according to the Book of Allah, the Sunnah of His Messenger (SA), and the consensus of the Ummah (as reported by Ibn Qudâmah in al-Mughni). Here are some of the reasons and points of wisdom behind this permission:
· It may be that one person has capital while another has a skill, but each one of them lacks the other. By making a muḍârabah partnership (#3 below), the money may be invested in the skill.
· Many people may have small amounts of capital that cannot be used for larger ventures. By combining their capital, they are able to embark on such ventures. together
Partnerships among people will be blessed by Allah as long as they do not cheat or deceive one another. The Messenger of Allah (SA) reported that Allah said:
“I am the third of the two partners as long as none of them cheats his or her companion. If one cheats, I leave their partnership.” (D, H – from Abu Hurayrah; as-Suyooṭi: S)
أَنَا ثَالِثُ الشَّرِيكَيْنِ مَا لَمْ يَخُنْ أَحَدُهُمَا صَاحِبَهُ، فَإِذَا خَانَ خَرَجْتُ مِنْ بَيْنِهِمَا
917. There are two major types of partnership: those involving properties and those involving contracts. The four kinds of partnerships/companies discussed here are ‘contract partnerships’ (sharikat al-‘aqd). A property partnership (sharikat al-milk) is when two or more people co-own a property. In this partnership, each one is responsible for his or her share, and they do not act on behalf of one another. Property partnerships are not discussed in this book.
Ibn Qudâmah (may Allah bestow mercy on him) did not mention a fifth type of contract partnership called mufâwaḍah (sharing full authority) where each one of the partners allows his or her companion full authority to manage and share all the profits they make and liabilities they incur. It is not permissible according to (-S). (-H, -M) generally allow mufâwaḍah with some differences between them over its conditions. It is controversial in the Ḥanbali madh-hab. The authorized view among the latter generations is its validity as long as it does not include unusual profits, such as inheritance and finding treasures, and unusual liabilities, such as the indemnity of injuries.
This is partnership with money and effort. 918
وَهِيَ أَنْ يَشْتَرِكَا بِمَالَيْهِمَا وَبَدَنَيْهِمَا.
2. Wujooh (credit) partnership:
Partners start the business using their standing (on credit).
919
وَشَرِكَةُ الْوُجُوْهِ:
وَهِيَ أَنْ يَشْتَرِكَا فِيْمَا يَشْتَرِيَانِ بِجَاهِهِمَا.
918. Called ‘inân after the bridle of the horse, because the two parties contribute both assets and work, so they are equal – like the bridles of two horses running next to each other in a race. An example of this is when two tailors open a shop, buy the necessary tools, work together and divide the proceeds between themselves. This type of partnership is generally permissible by consensus, as reported by Ibn Qudâmah in al-Mughni. There are two conditions for the validity of this partnership: · The assets contributed should be known and present at the inception of the partnership. They should be in the form of currency, not other properties, to avoid confusion at the time of dissolution of the partnership. According to (a) + (-M), the partners may contribute properties, which are evaluated at the inception of partnership.
. The profit is divided between them on the basis of an agreed upon percentage of the total profit. The loss will be divided according to their shares in the capital at inception.
919. In wujooh (credit) partnership, the partners put forth no capital, but they use their reputation with the merchants, buy merchandise on credit and sell it, and divide the profit and loss.
This partnership is permissible according to (A) + (+H) but forbidden according to (-M, -S). (-S) only permitted ‘inân and muḍârabah partnerships because, to them, the subject matter of the partnership must be money. (-M) permitted all partnerships except wujooh, because the subject matter of the partnership in wujooh is neither money nor work. (A) + (+H) allowed wujooh because it comprises agency (wakâlah) and guarantor-ship (kafâlah) between the two partners; they are both permissible alone, so they are permissible when combined.
(Note that ‘inân and muḍârabah partnerships are valid by agreement.)
The Division of Profit and Loss in Wujooh
They must agree on dividing the ownership of what they buy on credit into two halves or into percentages (for example, 60% and 40%), and the loss will be according to their shares. As for the profit (Ibn ‘Aqeel of the Ḥanbalis, -H): it must also be according to their share. This is so that no one is making profit on what they do not own and are not liable for. (A): They can mutually agree on the division of the profit since one of them may be more credit-worthy than the other, and also because there is work involved in this partnership, not pure capital.
The rulings of ‘inân partnership will generally apply to wujooh partnership.
Partnership & Companies
( Page : no 82)