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Search Fatawaa

Subject : Ruling on not Disclosing Financial Information to New Partner

Fatwa Number : 3326

Date : 08-10-2017

Classified : Partnership in Business

Fatwa Type : Search Fatawaa

Question :

Is it permissible not to disclose the financial situation of a General Partnership Company, which is up to its ears in debt, to a new partner under the pretext of maintaining reputation?

The Answer :

All perfect praise be to Allah, The Lord of The Worlds, and may His blessings and peace be upon our Prophet Mohammad and upon all his family and companions.

In principle, business transactions shouldn`t entail harming others because it was narrated on the authority of Ahmad, may Allah be pleased with him, that the Prophet(PBUH) said, " There should be neither harming nor reciprocating harm.” Therefore, whatever causes harm to others is forbidden.

Since a company rests on a mixture of partners` funds, they should be honest and helpful in order for their business to be protected and blessed by Almighty Allah, but once cheating takes place, Allah`s blessing departs. In this regard, Abu Hurayrah narrated that The Messenger of Allah (PBUH) said: Allah, Most High, says: "I make a third with two partners as long as one of them does not cheat the other, but when he cheats him, I depart from them."{Sunan Abi Dawud}.

Mulla Ali al-Qari commented on this narration by saying, "Allah protects and blesses their business as long as one of them doesn`t cheat the other. He also helps them as long as one of them helps the other, but once one of them cheats, Allah removes the blessing."{Miqaat al-Mafateeh, 5/196}.

In conclusion, the financial situation of a company should be disclosed to the new partner and in detail. It isn`t permissible to hide such information because it leads to cheating that person and subjecting him to risk although Allah, The Almighty, says, " O ye who believe! Be careful of your duty to Allah, and be with the truthful."{At-Tawbah, 119}. And Allah knows best.



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