Managing Properties for One’s Wife

By Mufti Shafiq Jakura
Posted: 26 Jamad ul awwal 1434, 06 April 2013

Q.) My wife has various properties and businesses in UAE and India. She is one of the Director of family owned business in UAE. If I spend time and money to represent my wife in the meetings and policy making in all her business activities and investing her money in reliable profit making businesses, can I claim a certain percentage of the profit? If it is allowed, how much I can claim so that it is “Halal” for me?

A.) Among the different options two appear to be most appropriate to your circumstance.

1. You could be appointed by your wife as an agent to manage her investments. In this case you could be paid an agreed upon wage/salary. Fixing of a wage in such an arrangement is mandatory. In addition to this, an incentive which could be a percentage of profits earned could also be agreed upon. This is left to mutual agreement.

2. With regards to any new investments, you could be appointed by your wife to undertake investments under what is termed in the Sharia as a Mudharaba arrangement. In this case, the financial investment will be that of your wife whereas the work will be your responsibility. In this arrangement, the two of you could agree that the profits earned will be distributed between the two of you in accordance with a pre agreed upon profit sharing ratio, e.g. 20:80, 40:60, 50:50 etc.

It is necessary to adhere to the following points when undertaking such an arrangement:

a) The profit sharing ratio must be fixed as a percentage of actual profits earned. It cannot be a lump sum amount or an amount as a percentage of the capital invested.

b) In the case of loss, the loss will be borne by the partner providing the capital, whereas the loss of the working partner will be that he will not be remunerated for his efforts. I recommend that you contact a competent Aalim to advise you regarding the most suitable structure and the regulations that you should adhere to.

However, if the loss is suffered due to your negligence, then you are liable for such loss.

I also suggest that you study the chapter on Mudharaba in the book, An Introduction to Islamic Finance, by Mufti Muhammad Taqi Usmani, which will Inshallah guide you further.

And Allah Ta'ala Knows Best.