If I am intended to be a silent partner in a business, and my partner agreed to pay me a fixed amount every month.
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One of our brothers/sisters has asked this question:
If I am intended to be a silent partner in a business, and my partner agreed to pay me a fixed amount every month, is it considered as interest? Can a muslim involved in such a business agreement? And is the income halaal?
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Silent partner fixed income
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If one invests some capital and chooses to become a ‘silent’ partner of the business, to receive a fixed amount on a monthly basis, regardless of how much profit or loss the partner makes in the business or absolutely unrelated to the profit or loss the business makes would indeed constitute ‘riba’ in the Sight of Shariah Law; such an income would indeed be prohibited for the believers who sincerely fear Allah and the Last Day.
But if one invests some capital and chooses to become a ‘silent’ partner, a specific percentage of ownership is mutually agreed between the partners….and based on that percentage of ownership one receives a fixed amount on a monthly basis and it is determined between the partners that at the end of the year the partners will take an account and settle the balances, whether positive or negative, according to the partnership agreement and based on the profit/loss the company made during the year…such a partnership would be absolutely legal in the Sight of Shariah Law.
But to simply receive a fixed amount every month from one’s investment, absolutely regardless of whether the business itself makes a profit or a loss would indeed constitute ‘riba’ in the Sight of Shariah Law.
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