IslamQA

Investment scheme

Answered according to Hanafi Fiqh by Muftionline.co.za

Q: My father joins a profit sharing business which guarantee a monthly dividend between 15% to 30% for up to 1 year (with no guaranteed principal). My question is, is it permissible for me to market this profit sharing business and make out a sideline business agreement out of it with my potential client? The agreement shall stated that, I shall be the guarantor of the principal amount given for the purpose of the profit sharing business. In return, the client shall pay me 3% monthly dividend for the period of 1 year. In the event that the business collapse, I shall be liable to pay back the principal amount to my client.

Bismillaah

A: This is not permissible. Attaching the condition that the capital investment will have to be returned in all cases is not an investment but a loan. Any money given or received over and above the loan amount will be interest. This is no different to the workings of a bank. The money invested in a bank is in actual fact a loan which has to be paid back in full.

And Allah Ta’ala (الله تعالى) knows best.

 

Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)

This answer was collected from MuftiOnline.co.za, where the questions have been answered by Mufti Zakaria Makada (Hafizahullah), who is currently a senior lecturer in the science of Hadith and Fiqh at Madrasah Ta’leemuddeen, Isipingo Beach, South Africa.

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