JOINT OWNERSHIP (SHIRKAH)
This is when more than one person share in the ownership of property. The ownership of each is such that he owns an undivided portion of it. However, if the property is divided into portions and each is given ownership of specified divided portions, then this is not joint ownership. Joint ownership may be in respect to tangible assets, such as a house or clothes, or it may be in respect to liabilities, such as a debt.
Joint ownership may be formed without choice, such as in inheritance, and sometimes one does have a choice, such as in contractual agreements.
Ruling 494: Contractual joint ownership refers to a mutual agreement on the co-ownership of wealth, but it is usually also based on using the wealth in trading, as companies, to create a profit. Therefore, the parties may have agreed on the particulars of the trade beforehand, so they do not mentioned these details in the contract of joint-ownership; therefore, they must use the property as has been authorized by all parties, and the business will end if one party exits this agreement or dies. Alternatively, the agreement on the particulars of the business may be included within the contract of joint ownership – as is usually the case – so the contract will be referred to and will need to be adhered to; however, there will be no effect on the business if some parties decide to leave the contract.
Ruling 495: It is permissible to buy shares in companies which have structure and rules, and the buyer will be bound to the company’s structure and rules. However, if the business takes earnings from unlawful sources, then one is not permitted to buy the shares in exchange for the illegitimate profits of the company.
Ruling 496: It is necessary in contractual joint ownership that all parties have agreed to it and to the particularities of the apportionments and restrictions, so there is no ambiguity and risk.
Ruling 497: Every party will receive the share of the profit or loss in proportion to the amount of money he has invested, except if there is a clause in the contract which provides otherwise, in which case such a clause will need to be followed.
Ruling 498: A co-owners may make it a condition that he is to receive more than the due profits as remuneration for his work or services.
Ruling 499: If one or more of the co-owners demand the division and distribution, it is obligatory to accept it, except in the following situations:
(1) If this opposes a mandatory term of in the contract of joint ownership or in any other mandatory contract;
(2) If the division will be harmful for the jointly-owned property;
If the division is not proportionally allocated and requires some of the co-owners to pay in order to make up the difference.
Ruling 500: If the co-owners agree on how to divide the property, then they may divide it how they please. But if they disagree on this, the case should be raised to the hakim shar’i.
Ruling 501: A co-owner, who is authorized to use and deal with the property, is not liable for the jointly-owned property in his possession, except if he acts with transgression or negligence, or if there is a term in a mandatory contract which makes him liable.