Date : 14-02-2019

Question :

Upon liquidation of a Mudarabah business for profit calculation, the market value of its trademark has skyrocketed. Should that value be calculated as profit for both partners or only for the financier or capital provider?

The Answer :

Praise be to Allah, the Lord of the Worlds.

Fixed assets bought with the money of the financier/capital provider are his, and the Mudarib (Manager) has no right to them whatsoever. This is whether their value went up or down, yielded profit or not. As for the trademark, each case has its own ruling: If the capital provider had paid for it or was there and owned by him before starting the Mudarabah, then the Mudarib has no right to any profit resulting from selling it or liquidating the business, because, in this situation, it is his. (Capital provider).

However, if this trademark resulted from the Mudarib`s efforts, then there is no doubt that it is a profit that should be divided between the two parties based on the agreed upon percentage. And Allah the Almighty knows best.