• Profit ratio must be agreed at the beginning.
• Shari‘ah does not impose one universal percentage.
• Parties may agree on equal or unequal shares.
• A fixed lump sum is not valid as a guaranteed profit share.
• A percentage tied to capital is also not valid as profit.
• Valid: 40% of actual profit to managing partner (مضارب) and 60% to capital provider (رب المال).
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Profit Must Be a Share of Actual Profit
investment partnership (مضاربة): Business, Profit and Termination
• Profit ratio must be agreed at the beginning.
• Shari‘ah does not impose one universal percentage.
• Parties may agree on equal or unequal shares.
• A fixed lump sum is not valid as a guaranteed profit share.
• A percentage tied to capital is also not valid as profit.
• Valid: 40% of actual profit to managing partner (مضارب) and 60% to capital provider (رب المال).