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I am seeking for a Mashoora on a issue raised due to allocating shares in a partnership business among 4 best friends.

The industry was clothing and capital is 400k.

I shall name the business partners as A,B,C,D

A is inputting 160k, and being a sleeping partner. (from London)
B is inputting 160K, and at UAE.
C is inputting 40K
D is inputting 40K

A has no roles and responsibilities. B will do the purchasing once in 3 months or once in 6 months or as the stock finishes. C and D will be conducting the daily operation and sales.

The shares that was allocated considering the money and effort was,
A - 20%
B - 40%
C - 20%
D - 20%

And it came in the following manner

Capital Share from 400K - A 40%, B 40%, C 10%, D 10% 

Effort Share - A - 0%, B - 40%, C 30%, D%30

so Capital + Effort share  = 40%, 80%, 40%, 40% out of 200

so out of 100 = 20,40,20,20. %

so the 2 problems that raised are,

1/ B is only doing purchasing once in 3 months or 6 months or as soon as stocks finish. C and D says Operation and Sales task are daily on going work and time consuming, so how can someone working in once in 3 months or 6 months have a greater effort share than Daily on going time consuming tasks. so they are demanding for more than purchasing or to reduce the purchasing share.

so isn't it fare to go for a percentage of

Capital Share from 400K - A 40%, B 40%, C 10%, D 10% 

Effort Share - A - 0%, B - 20%, C 40%, D% 40

so final profit/loss share will be 20%, 30%, 25%, 25% ?

2/ having two separate shares for Ownership & Profit. 2 partners are saying to merge it and keep only Ownership share, the other 2 are saying only capital is counted for Ownership share so there should be both Ownership share and Profit/Loss Share

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I think. You should discuss with your partners. Its according to your business contract. If you accepted to the contract of B=40% share. Then you should do as you promised in the contract. Or change the contract by discussing to all other 3 partners and get a solution.

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This book http://www.amazon.com/Introduction-Islamic-Finance-Arab-Series/dp/9041116192 An Introduction to Islamic Finance (Arab & Islamic Laws Series) 1st Edition by Muhammad Usmani (Author)

so this is how the calculation goes for combination of Mudharaba and Musharaka.


The example from the book:

A 100k B 50k B is the Mudarib who is running the business

B shall secure one third of the actual profit on account of his investment, and the remaining two thirds of the profit shall be distributed between them equally. However, the parties may agree on any other proportion. The only condition is that the sleeping partner should not get more percentage than the proportion of his investment.

actual profit ratio of B = (capital/ B is investment) 1/3 of 150k

2/3 will be distributed in between Investor and Mudharib

A cannot allocate for himself more than 2/3 of the total profit, because he has not invested more than 2/3 of the total capital.

it means that 1/3 of the profit shall go to B as an investor, while 1/4 of the remaining 2/3 will go to him as a mudarib. The rest will be given to A as “rabb-ul-mal.” Investor

Profit is 1 lack.

B gets 100k X 1/3 = 33,333.33333333333 | now the balance profit is 66,666.66666666667 And then Balance X 1/ 4 = 16666.66665 | Now the balance is 50,000.00001666667 will be the profit of investor

B profit = 49999.99998333333 , A profit = 50,000.00001666667

2/3 of the 100k profit is 66,666.66666666667

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