Question
Herewith a few questions I need advice and Shariah guidance :
Our father passed away and was a director / shareholder in companies and businesses (which are currently running concerns )with his two other brothers and a deceased brothers children(which makes it four partners of 25% each )our fathers share is 25% in all the companies and businesses and farms
One of our uncles has accepted to be an executor.
My questions are follows :
From death until the estate is wound up and ready for distribution (will refer to this as the window period):
1. What rights do the heirs have during the window period ?(do they have the same rights as the other partners)?
2. Are the heirs entitled to profits / losses during the window period ?(like the other partners)?
3. Are the heirs entitled to the privilege’s and benefits of the companies and businesses during the window period . The other partners do benefit and enjoy the privilege’s)?
4. Do the heirs have the same rights as the remaining brothers and their children until the estate is wound up?
5. Do the heirs have the right to know and question all businesses and companies information as and when required?
6. Can any assests be disposed off without the consent of the heirs?
Answer
Upon the death of a partner, his partnership terminates. The remaining partners will have to co-opt the heirs as partners in the ongoing business. We assume that this has been done. It is on this premise that we furnish our reply.
1. Partnerships may be categorized into two types; Shirkat-e-Milk and Shirkat-e-Aqd. One scenario of Shirkat-e-Milk is where two (or more) partners inherit a business or property from the deceased. In this partnership, it is not permissible for one partner to transact in the share of the remaining partners without their consent. Shirkat-e-Aqd refers to that partnership that has been enacted by two or more partners. In this partnership, the transaction of anyone partner (for the partnership) will be considered to be on behalf of the remaining partners as well.
After understanding the above, we conclude that the partnership between the heirs of your late father’s estate is that of Shirkat-e-Milk and not Shirkat-e-Aqd. This means that you as partners of the Shirkat-e-Milk will be entitled to profits in the current business (that exists) if the business happens to profit, and similarly will endure losses if the case of loss. However,
if the remaining partners (other than the heirs of your late father) invest further out of current business, then the heirs of your late father’s estate will not be part of that investment.
2. The heirs will be entitled to profits and losses during the window period as explained above.
3. Yes, they will be entitled to privileges and benefits that other shareholders enjoy in existing businesses due to being shareholders of the business.
4. Yes, the heirs of your late father’s estate will be entitled to the same rights as the remaining brothers in the existing partnership.
5. Yes, they are entitled to question all existing business and company information, as there should be total transparency in a partnership.
6. Any assets belonging to the heirs may not be disposed of without their consent.
Checked and Approved By:
Mufti Muhammed Saeed Motara Saheb D.B.