Salary for one who is a partner in a business on the basis of his expertise and work

Praise
be to Allah.

Firstly: 

The
contract mentioned is a mudaarabah (profit-sharing) contract, which is also
called a loan-based contract. The way it is done is as follows: work is to
be done by you and the money is to be provided by the investor, who is the
owner of the capital. 

Registration of the company should be done in all of your names, because you
are all partners in it, and you are not just hired workers. But if the
company is registered in all the names, then it is essential to define the
nature of your partnership in it, lest any of the partners claim after that
that he owns anything of the capital that was put towards establishing the
company. 

If it
is the case that you have registered it in the name of one of the partners
only, then it is also essential to document the facts in such a manner as to
avoid confusion in the event of a dispute, and so as to guarantee the rights
of all parties. 

All
of this applies if what is meant by “registering the company” is registering
commercial ownership or a trademark of the company. 

But
if what is meant by registration is registering ownership of the place or
the land, and whatever furniture is there, then there is no reason why that
should not all be registered in the name of the sponsor only; in fact this
is the basic principle, so long as he paid for it from his own wealth. 

Secondly: 

The
capital in a mudaarabah partnership belongs to its owner, the investor, and
is to be returned to him in full before division of the profits. If there is
a loss, then it is to be subtracted first from the profits, and then from
the capital. 

Ibn
Qudaamah (may Allah have mercy on him) said: 

The
mudaarib (the partner) does not get any profit until the capital has been
repaid in full. What this means is that he is not entitled to take anything
of the profits until the capital has been returned to its owner, because
what is meant by profit is what is surplus to the capital; whatever is not
surplus is not profit. And we are not aware of any difference of opinion
concerning this.

End
quote from al-Mughni, 5/41 

Thirdly: 

With
regard to your taking a salary in addition to whatever proportion of the
profits you are entitled to according to the terms of the partnership, that
is not permissible. 

Ibn
Qudaamah (may Allah have mercy on him) said:  

It is
not permissible to give any of the partners extra money. The reason for that
is: if the share of one of the partners is set at a certain amount of money,
or he is given money in addition to his share, such as if he stipulates that
he should get his share and ten dirhams, the partnership is invalidated
thereby. 

Ibn
al-Mundhir said: All of the scholars from whom we learned knowledge are
unanimously agreed that an investment contract is rendered invalid if one of
the partners or both of them stipulate that they should get a certain amount
of money.

End
quote from al-Mughni, 5/28 

For
more information, please see the answer to question no.
122622 

Fourthly: 

There
is no reason why you should not enter into the partnership on the basis of
your expertise and not your work – as you mentioned – so long as you have
come to an agreement concerning that, because entering into a partnership on
the basis of offering consultation and advice is in fact work, so long as
this is stipulated from the outset when setting up the contract, so as to
avoid any conflict or dispute later on, by defining this expertise and how
the company will benefit from it, and to define the proportion of the
profits that you will receive on the basis of this expertise. 

Fifthly: 

With
regard to stipulating that ownership of the programs produced will belong
entirely to you, this condition is not valid, because that is keeping a part
of the profits for yourself, but what is required in the case of a company
or partnership is that the profits should be shared out among all the
partners. 

An-Nawawi
(may Allah have mercy on him) said: 

If he
says, “You or I will have a dirham, or one hundred dirhams, from the
profits, and the rest will be shared equally between us,” then the
investment loan is rendered invalid. The same applies if he says, “Half of
the profit less one dirham”; or if he stipulates that profit from a
particular item will be his alone if he buys it with the capital, because he
may not make a profit on it; or if he stipulates that he will be allowed to
wear a garment or ride a mount (that is bought with the capital); or if he
stipulates that profits on a particular product will be his alone. 

End
quote from Rawdat at-Taalibeen, 5/123 

And
Allah knows best.