Question
We have recently entered into a partnership in a business with the following partner shares:
Partner 1 – 50% share ( director of Company)
Partner 2 – 40% share
Partner 3 – 10% share.
We would like to enquire the following:
The business has monthly expenses which include staff wages, rates and taxes, transport costs and payments to suppliers. The monthly income fluctuates depending on the number of sales for the month. We have decided on a monthly salary for each member from which they should see to their own expenses. Is this sort of agreement correct according to the Shariah?
Answer
In a partnership, partners may not draw a salary. Yes, they make advance drawings against their profits/ shares that they will be receiving in the future (when profits are shared amongst shareholders).
For example, all shareholders have agreed that profits will be split every 6 months. Partner 1 was entitled to receive R100 000.00. However, he has been drawing R10 000.00 per month for his household and personal expenses, thus his total drawings total to R60 000 for the six- month period. When profits are split he will receive only R40 000.00.
Checked and Approved By:
Mufti Muhammed Saeed Motara Saheb D.B.