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From HK$4,000 · structure advisory

Profit & loss sharing, structured right

Partnership and agency finance without riba — we help you choose between Musharakah and Mudarabah, define profit splits, loss rules, and capital contributions, then document the structure for your lawyers.

Discuss your deal

Two paths,
one principle

Islamic PLS replaces interest with shared commercial risk. The contract type determines who contributes capital, who manages, and how losses are borne — getting this wrong can invalidate the entire arrangement.

We advise on Shariah structure. Legal drafting and regulatory compliance remain with your counsel.

Compare structures

Musharakah vs Mudarabah

Side-by-side comparison to guide your choice — every row reflects common fiqh conventions; your specific deal may need custom treatment.

DimensionMusharakah (partnership)Mudarabah (trust financing)

CapitalAll partners may contribute capital, cash, or agreed assetsRabb-ul-mal provides capital; mudarib contributes skill & effort

ManagementAll may manage, or one partner as agent (musharakah mutanaqisah)Mudarib manages day-to-day; rab-ul-mal typically silent

Profit shareAgreed ratio — need not match capital ratio if contractually fixed upfrontAgreed ratio — mudarib's share is profit only, not a wage unless separate ujrah

Loss allocationPro rata to capital contribution — no partner bears another's lossCapital provider bears financial loss; mudarib loses effort/time

Best forJoint ventures, co-investment, shared property developmentInvestor + operator models, fund structures, startup backing

ExitBuy-out, dissolution, or diminishing partnership scheduleTerm end, project completion, or early termination per contract

Musharakah profit split (example)

Partner A: 60% capital · Partner B: 40% capital · Agreed profit share: 50/50

Losses still follow capital ratio (60/40) unless contract specifies otherwise within Shariah limits.

Mudarabah loss rule (example)

Investor loses capital if venture fails. Manager loses time and reputation — not the investor's money beyond agreed negligence thresholds.

Negligence and breach can shift liability — must be defined carefully.

What we do

Advisory scope

Structure selection

Recommend Musharakah, Mudarabah, or hybrid based on your parties, capital, and management involvement.

Profit & loss terms

Define permissible ratios, loss rules, reserve policies, and what happens when one party wants out.

Capital contribution rules

Cash vs in-kind valuation, phased contributions, and dilution mechanics for ongoing partnerships.

What you get

Deliverables

Structure memo, term sheet outline for your lawyers, and key Shariah parameters they must preserve in the final contract.

Structure advisory memo

Recommended Aqad, party roles, profit/loss matrix, and Shariah rationale with AAOIFI references where applicable.

Term sheet outline

Heads of terms your solicitor converts into enforceable agreements — we do not draft legal documents.

Management briefing

Walkthrough for founders and investors on how the structure works in practice, including accounting treatment pointers.

Process

Engagement steps

1 · IntakeParties, capital amounts, who manages, timeline, and existing drafts.

2 · AnalysisCompare Musharakah vs Mudarabah fit; flag Shariah red lines.

3 · MemoStructure recommendation with profit/loss and capital rules.

4 · HandoffTerm sheet to your lawyers; optional contract review add-on.

Can profit share differ from capital contribution?

Yes, if agreed upfront in the contract. Losses generally follow capital ratio in Musharakah. We document the permissible parameters for your deal.

Is a guaranteed return to the investor allowed?

No — that replicates riba. Returns must be linked to actual profit (or loss). We help structure this correctly.

Can we combine PLS with conventional loan elements?

Mixing riba with Islamic structures typically taints the arrangement. We advise clean structures; your lawyers implement.

Do you review the final contract?

Yes — as a separate engagement under Islamic Business Contracts. Many PLS clients add a review after their solicitor drafts.

Important — how we work with businesses

We are an independent Shariah and strategic advisory firm. We are not licensed by the Securities and Futures Commission (SFC) or any financial regulator in Hong Kong or elsewhere.
Our work is advisory only: Shariah structure review, compliance opinions, governance guidance, zakat calculations, and written memos aligned with AAOIFI standards where applicable. We do not deal in, arrange, or advise on regulated securities or collective investment schemes.
We do not provide Hong Kong legal advice, tax filing services, or SFC-regulated investment advice. Legal drafting, regulatory filings, and final business decisions remain with your management, counsel, and compliance function.
Where we refer to certifiers, subsidies, or third parties, engagement and approval rest with those bodies — we guide and prepare; we do not guarantee outcomes.

Structuring a partnership or investment deal?

Profit & loss sharing advisory from HK$4,000 — Musharakah, Mudarabah, documentation, and capital rules.