Two parties agreed to form a company, one of whom owns a piece of land, and they agreed to lease it on the condition that the other party receives half of the rent.
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Q: Two businessmen intend to form a company for the purpose of establishing a commercial project on land leased for a period of twenty years. Ownership of the completed project will revert to the landowner after the project period ends, and each partner bears half of the costs of suitable land to secure his share of half the profits. Since one of the partners owns land suitable for the commercial project and has agreed to lease it on the condition that the other partner pays half of its rent, regardless of the profits realized in the project . Furthermore, the other partner will manage the execution and investment of the project in exchange for a fixed monthly amount deducted from the profits. We ask your Eminence to inform us about the permissibility of forming the company in this manner and under the aforementioned conditions.
A: The question mentioned consists of two issues: The first is your statement: "Since one of the partners owns land suitable for the commercial project... etc." This is permissible, as it falls under the category of lease (ijarah). The second is your statement: "Furthermore, the other partner will manage the execution of the project... etc." This is ambiguous between being a fee for managing the project for a fixed amount, whether the company profits or not, which is permissible, and being a mudarabah (profit-sharing partnership) with the condition that it be for a fixed amount of the profits. Stipulating a fixed amount in a mudarabah is not permissible; rather, what is permissible is that it be for a specific percentage of the profits, as agreed upon by the two parties.
A: The question mentioned consists of two issues: The first is your statement: "Since one of the partners owns land suitable for the commercial project... etc." This is permissible, as it falls under the category of lease (ijarah). The second is your statement: "Furthermore, the other partner will manage the execution of the project... etc." This is ambiguous between being a fee for managing the project for a fixed amount, whether the company profits or not, which is permissible, and being a mudarabah (profit-sharing partnership) with the condition that it be for a fixed amount of the profits. Stipulating a fixed amount in a mudarabah is not permissible; rather, what is permissible is that it be for a specific percentage of the profits, as agreed upon by the two parties.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.