Dear brothers
Recently we have sold our company, all of our shares were ordinary shares so all shareholders treated equally. The sale was a mix of cash and shares in the buying company which has different classes of shares including pref shares with a fixed value and a fixed return.
The buyer offered us 80% of total shares in pref (they are cheap fixed value and 11% fixed return) and 20% ordinary shares with no dividends. The ordinary share value tracks the business value based on the EBITDA multiple according to the market norms and is updated on regular basis.
We have to give a waiver to other pref shares rights as we will become minority shareholders in the company however we still get the fixed 11% return on these pref shares. The return isn’t going to be paid in cash though, it’s automatically converted into ordinary shares at the rate set by the board based on an up to date valuation.
For example, assuming the total pref shares value is £10,000, the return would be £1,100. If the ordinary share value at that time is £11, then we will accumulate 100 ordinary shares automatically. These new 100 ordinary shares will get no dividends and will only be sold at liquidation according to the price agreed with the eventual buyer and based on company profitability.
My question here is, should we consider this structure Halal or not?
Jazakum Allah Khair
Mohamed