Mu' meneen Brothers and Sisters,

As Salaam Aleikum 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:

If I am intended to be a silent partner in a business, and my partner agreed to pay me a fixed amount every month, is it considered as interest? Can a muslim involved in such a business agreement? And is the income halaal?

(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.)

Answer:

Silent partner fixed income

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

If one invests some capital and chooses to become a ‘silent’ partner of the business, to receive a fixed amount on a monthly basis, regardless of how much profit or loss the partner makes in the business or absolutely unrelated to the profit or loss the business makes would indeed constitute ‘riba’ in the Sight of Shariah Law; such an income would indeed be prohibited for the believers who sincerely fear Allah and the Last Day.

But if one invests some capital and chooses to become a ‘silent’ partner, a specific percentage of ownership is mutually agreed between the partners….and based on that percentage of ownership one receives a fixed amount on a monthly basis and it is determined between the partners that at the end of the year the partners will take an account and settle the balances, whether positive or negative, according to the partnership agreement and based on the profit/loss the company made during the year…such a partnership would be absolutely legal in the Sight of Shariah Law.

But to simply receive a fixed amount every month from one’s investment, absolutely regardless of whether the business itself makes a profit or a loss would indeed constitute ‘riba’ in the Sight of Shariah Law.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan