Stipulating the profits in proportion to the investment

Q: I would be grateful if you can guide me through my problem. I am currently staying in the UAE  (United Arab Emirates) and supporting my family (Parents, wife and two kids) who are also staying with me in the UAE as they cannot go back to Pakistan. My father is unemployed. My problem is that I have a limited income and everything is very expensive in the UAE. The house rents are also very high. In this situation I have got an offer from a businessman, that if I invest with him in the business he will give me 10% share of my investment every month. Understanding that his business is already well established and there are apparently no possible chances for any loss, please advise if this is halaal for me?

A: Stipulating a share of the profits in proportion to the investment (e.g. 10% of the investment every month) is impermissible. This, in actual fact, is riba (interest). However stipulating a share of the business’s profits is permissible (e.g. 10% of the business’s profits). For further details refer to

( وشرطها ) أي شركة العقد ( كون المعقود عليه قابلا للوكالة ) فلا تصح في مباح كاحتطاب ( وعدم ما يقطعها كشرط دراهم مسماة من الربح لأحدهما ) لأنه قد لا يربح غير المسمى (الدر المختار 4/ 305)

و لا يجوز الشركة إذا شرط لأحدهما دراهم مسماة من الربح لأنه شرط يوجب انقطاع الشركة فعساه لا يخرج الا قدر المسمى لأحدهما (الهداية 2/ 632)

قال ومن شرطها أن يكون الربح بينهما مشاعا لا يستحق أحدهما دراهم مسماة من الربح لأن شرط ذلك يقطع الشركة بينهما ولا بد منها كما في عقد الشركة (الهداية 3/ 258)

Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)