A company under liquidation: Is zakah obligatory upon it?
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Q: We inform Your Eminence that we are four Saudi partners in a company. Our company obtained a subcontract from a Saudi company acting as the main contractor for the construction of 190 houses. The main contractor is owned by a father (99%) and his son (1%), and they are executing the project for a third company that owns the property. The main contractor was responsible for building the walls and roofs, while we were responsible for the rest, starting with the foundations, then finishing, and ending with some furnishing. During execution, the owning company wanted to reduce the number to 100 houses and notified the main contractor, who in turn notified us. We were asked to submit a list of losses resulting from the reduction so that they could compensate for the damages and losses caused by this reduction, as stipulated in the contract. We actually submitted a claim of approximately eight million riyals to the main contractor.
The main contractor added his own losses to this and submitted them all as a single claim of approximately twenty million riyals for both parties. The owning company made an initial offer of approximately three million and a quarter, which the main contractor rejected at the time without showing it to us. After a period of time, the main contractor voluntarily declared the liquidation of his company, and we thereby lost the work. We filed a lawsuit against him before the competent authority at that time, which was the Commercial Disputes Resolution Committee. They ruled in our favor regarding compensation for losses, stating: "Since the compensation amount claimed by the plaintiff for the reduction of residential units, and since both parties agreed that what the owning company approves in this regard shall be binding on the plaintiff regardless of the amount, this was established religiously, and we obligated both parties to proceed accordingly." This was dated 2/4/1410 AH. After the ruling, one of the partners passed away, may Allah have mercy on him, on 14/2/1411 AH. Then the four partners, including the heirs of the deceased partner, decided to liquidate the company. I was appointed as the liquidator from 12/6/1416 AH. That liquidation is nearing completion, and the only thing remaining is that pending amount, whose minimum limit we do not know, because
the owning company says that it set a deadline for the main contractor to accept the offer. The agreed time has passed, and he did not inform them of his acceptance, so they consider themselves released from the obligation. Also, the final limit is unknown, as they now deny it entirely. They claim that they have a claim against the main contractor for the excess amount because he voluntarily liquidated his company and caused them losses before even 40% of the project was completed. The liquidator of the main contractor has filed a lawsuit against them in the Sharia court, and it is still being heard to this day. We attend as listeners and rights-holders from the subcontract, having been ruled in favor of the largest part of that claim between them. However, the duration has been long, and we do not see a near end, and Allah knows best. Our question, O Shaykh, is: Is annual religious zakah obligatory upon us for that pending amount, estimated at approximately three million and a quarter riyals, from which we have received nothing and for which we have not been definitively ruled to receive anything? It is pending on the approval of the owning company, as stated in the aforementioned ruling. Also, even if a ruling is issued, we do not know if we will be able to obtain anything from it, because it will be handed over to the liquidator of the main contractor's company, since there is no contractual relationship between us and the owning company. We will be among the creditors,
and we may not receive anything significant due to the large debts of that company. If the answer is yes, what is the amount of zakah we must pay annually, and when does the obligation begin? Suppose we do not receive any amount from it later; from where do we return those paid amounts to their owners? This question is for the exoneration of the liability of all partners, living and dead, and also for the exoneration of my liability as the liquidator, since I am the direct party responsible for handling this liquidation after Allah until it is completed. And Allah is the Helper.
A: There is no zakah upon you, because ownership has not become established, as it is wealth whose acquisition is not guaranteed. Therefore, zakah is not obligatory upon it until you receive it and complete a new lunar year with it.
The main contractor added his own losses to this and submitted them all as a single claim of approximately twenty million riyals for both parties. The owning company made an initial offer of approximately three million and a quarter, which the main contractor rejected at the time without showing it to us. After a period of time, the main contractor voluntarily declared the liquidation of his company, and we thereby lost the work. We filed a lawsuit against him before the competent authority at that time, which was the Commercial Disputes Resolution Committee. They ruled in our favor regarding compensation for losses, stating: "Since the compensation amount claimed by the plaintiff for the reduction of residential units, and since both parties agreed that what the owning company approves in this regard shall be binding on the plaintiff regardless of the amount, this was established religiously, and we obligated both parties to proceed accordingly." This was dated 2/4/1410 AH. After the ruling, one of the partners passed away, may Allah have mercy on him, on 14/2/1411 AH. Then the four partners, including the heirs of the deceased partner, decided to liquidate the company. I was appointed as the liquidator from 12/6/1416 AH. That liquidation is nearing completion, and the only thing remaining is that pending amount, whose minimum limit we do not know, because
the owning company says that it set a deadline for the main contractor to accept the offer. The agreed time has passed, and he did not inform them of his acceptance, so they consider themselves released from the obligation. Also, the final limit is unknown, as they now deny it entirely. They claim that they have a claim against the main contractor for the excess amount because he voluntarily liquidated his company and caused them losses before even 40% of the project was completed. The liquidator of the main contractor has filed a lawsuit against them in the Sharia court, and it is still being heard to this day. We attend as listeners and rights-holders from the subcontract, having been ruled in favor of the largest part of that claim between them. However, the duration has been long, and we do not see a near end, and Allah knows best. Our question, O Shaykh, is: Is annual religious zakah obligatory upon us for that pending amount, estimated at approximately three million and a quarter riyals, from which we have received nothing and for which we have not been definitively ruled to receive anything? It is pending on the approval of the owning company, as stated in the aforementioned ruling. Also, even if a ruling is issued, we do not know if we will be able to obtain anything from it, because it will be handed over to the liquidator of the main contractor's company, since there is no contractual relationship between us and the owning company. We will be among the creditors,
and we may not receive anything significant due to the large debts of that company. If the answer is yes, what is the amount of zakah we must pay annually, and when does the obligation begin? Suppose we do not receive any amount from it later; from where do we return those paid amounts to their owners? This question is for the exoneration of the liability of all partners, living and dead, and also for the exoneration of my liability as the liquidator, since I am the direct party responsible for handling this liquidation after Allah until it is completed. And Allah is the Helper.
A: There is no zakah upon you, because ownership has not become established, as it is wealth whose acquisition is not guaranteed. Therefore, zakah is not obligatory upon it until you receive it and complete a new lunar year with it.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.