Fixed return on investment

Assalamu alaikum

I have invested in a construction business run by a friend of my dad’s.

I receive a fixed amount of “profit” every month, this fixed amount was agreed by both parties at the time of investment, it is not based on a percentage of the profit but rather just a fixed pre agreed amount. There is however a share in the risk in that if the investment/project fails then it is of course understood I will not receive any profit and my capital could be lost

E.g. I have invested £30k, I receive a fixed amount of £350 every month for 12 months, then at the end of the 12 months my £30k is also returned to me

This is all a verbal agreement and without any official paperwork

Is this type of investment halal? As I believe some scholars quote ijma on the impermissibility of receiving a fixed amount on an investment like this, is this however more nuanced? Or is it outright haram? Or perhaps I’m mistaken?

Jazakumullaahu khairan and apologies for the long-winded question. Any guidance would be appreciated

Wa alaykum salaam,

It all depends on the answers to the following:

  1. What have you gained in lieu of your investment? Equity? Or no equity?

  2. Are the returns a liability on the business or generated from sales?

  3. If the business goes bust, do you become a senior creditor? A shareholder?

The investment should be clear on what the money is being used for and what you are entitled to.

jazaakAllaahu khairan shaykh for taking time out to get back to me. I’d like to sincerely apologise for the late reply, I was waiting on someone to provide the answers to your questions.

  1. Income receipts generated from property development rental/sales.

  2. Generated from sales.

  3. The investment is backed by property. At insolvency, treatment will be of a shareholder.

Wa alaykum salaam,

Based your responses, if it is truly an equity-based investment, then it has the potential to be Shariah compliant if everything else is in order. The terms and conditions all need to be Shariah compliant.

Allah knows best

جزاكم الله خيرا

I appreciate you taking your time out to respond to me.

Would you advise me to withdraw my investment/end my investment once my contract has concluded?

In the meantime, would you say it is ok for me to use/benefit from the profits I am receiving?

بارك الله فيكم