In the Name of Allāh,
the Entirely Merciful, the Especially Merciful
Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.
Resolution No. 148 (6/16) Business Sponsorship
The Council of the International Islamic Fiqh Academy of the Organization of the Islamic Conference, holding its 16th session in Dubai, United Arab Emirates, on 30 Ṣafar – 5 Rabīʿ al-Awwal 1426h (9–14 April 2005),
Having examined the research papers submitted to the Academy concern- ing Business Sponsorship,
Having listened to the discussions on the subject,
Resolves
First: Definition of Business Sponsorship
According to Shariah, guarantee refers to the act of adding the liability of the guarantor to that of the guaranteed party with regard to a claim that pertains to a debt, property or a case of court appearance. Guarantee in this sense is dif- ferent from Business Sponsorship which is intended as an agreement whereby a citizen of a country enables a foreigner to avail a license for practicing a craft, economic activity or establishing a project.
Second: Key Forms of Business Sponsorship
- A citizen, who obtains a license for practicing a business activity agrees with a foreigner so that the latter takes up the business activity for his own and with his own financial and human resources with no financial or human contributions or obligations, whatsoever, from the citizen except his responsibility of pursuing the government-required procedures for the business so that the citizen appears as the owner of the business/project.
- Forming a partnership between the citizen and the foreigner – where laws permit – in which the citizen receives an agreed-on lump sum or periodical payment against providing the license to the joint business activity or project.
Third: Shariah Ruling on Business Sponsorship
- The first form (where the foreigner uses the license) is a new form that neither falls under Guarantee as known in Fiqh, nor resemble the well- known integrity-based personal It is in fact, a transfer to an- other person by the citizen of an abstract right owned by him according to law, either free of charge or against a reward through a sale or lease transaction. Such a transaction is not prohibited in Shariah as long as it does not involve gharar (uncertainty), deceit, or unlawful practice.
- The second form (partnership in using the license) takes place when the citizen makes a financial contribution besides providing the license, or he may provide the license alone after having it customarily valued in terms of the expenses incurred, and the efforts exerted in obtaining it, in order to determine the share of its provider. The share of the other party (the foreigner) includes a financial contribution, in addition to his work so that the percentage of profit distribution is
This practice of business Sponsorship is permissible as per the terms agreed upon for profit sharing, whereas loss has to be borne according to the respective financial shares of the two partners.
Recommendation
Calling upon the Organization of the Islamic Conference, through its economic institutions, to establish the Islamic Common Market, free movement of funds, people and trade among Muslim countries, in order to achieve the goal of the looked-for Islamic unity and provide mutual opportunities for Muslims to pur- sue similar to other international markets.
Indeed, Allāh is All-Knowing.
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