Ruling on investing money in return for a share of the profit

Dear Brothers & Sisters,
As-Salaamu-Alaikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)
One of our brothers/sisters has asked this question:
I have some money that I gave to an investment company to invest, and it made some profit, but there was no agreement on a set percentage. Is this riba or not?.
(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)
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Answer:
Praise be to Allaah.

If you agreed on that, there is nothing wrong with it. If the company invested the money in return for half of the profit, or one-third, or one-quarter, there is nothing wrong with it. But if they give you a set amount (based on your capital), three or four or five per cent, this is not permissible. But if you have a share of the profit in return for giving them the money to use in buying and selling, or other kinds of business, and you have half of the profit, or one-quarter or one-fifth, that is fine. This is called mudaarabah. 

But if they take the money from you and give you a set amount, such as five percent, or one percent, this is riba and is not permissible. End quote. 

Shaykh ‘Abd al-‘Azeez ibn Baaz (may Allah have mercy on him) 

Whatever written of Truth and benefit is only due to Allah's Assistance and Guidance, and whatever of error is of me. Allah Alone Knows Best and He is the Only Source of Strength.
Your brother and well wisher in Islam

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