The Company of Equal (Al-Inan) is one of the most common forms of partnerships in Islam.

The Linguistic Meaning of Inan

Al Sarkhasi (May Allah have mercy on him) says in his Mabsut Vol 2..and it is said that it (Inan) is derived from the reins of a riding animal.

Ibn Qudammah (May Allah have mercy on him) in al-Mughni Vol 5 state:The meaning is derived from the example of a man driving two horses when he gives equal rein to both.

Shaikh Taqiuddin an-Nabhani (May Allah have mercy on him) in his book The Economic System in Islam:'Inan means two riders in a race if their horses are equal and their race is equal, so their bridles ('Inan) are equal.

The Meaning(Sharii) of the Company of Equal (Al-'Inan)

Ibn Qudammah in al-Mughni Vol 5 state: The meaning of (inan) partnership is that two persons should participate with their wealth and work on the condition that the generated profits will be shared by them.

Shaikh Taqiuddin an-Nabhani in his book The Economic System in Islam stated that this is two bodies associating with their properties. Namely, two persons associating with their properties and share the work dividing the profit between them.

It is therefore called a company of 'Inan because the partners are equal in their right of disposal.

In this type of company, the capital is represented by money, because money represents the value of the properties and the sales. It is not allowed to enter into partnership over merchandise unless it was evaluated in monetary terms at the time of contract. The value of the merchandise at the time of the evaluation would represent the capital.

An example of the Company of Inan is where person A makes an offer to person B to establish a health and fitness centre by each providing $10,000 in capital and for both to participate in the day to day management and operation of the centre. Person B accepts. They in turn make an offer to another 3 people, who all accept as partners, to also provide capital and share in the work.

Proofs

The evidence for this type of partnership is that it was practised at the time of the Prophet and the Sahabah and allowed.

Al-Kasani (May Allah have mercy on him) states in Badai al Sana'I Vol 7:...the Inan contract is valid by consensus of the jurists of the provinces and the practice of the people (i.e. the Sahabah). ... He (the Prophet [salAllahu alaihi wasallam]) approved their actions insofar as he did not proscribe them or deny it to them, and taqrir (tacit approval) is one form of the Sunnah.

Shaikh Taqiuddin an-Nabhani in his book The Economic System in Islam stated: This form of company is allowed by the Sunnah (of the Prophet) and Ijma'a of the Sahabah (consensus of the Companions). People have entered into this form of partnership since the time of the Prophet (salAllahu alaihi wasallam) and the Sahabah(r.a.a).

Conditions relating to the Capital of the Company

It is a condition that the capital is defined and available for disposal. The partnership cannot be formed over an unknown capital, absent property or a debt.

Shaikh Taqiuddin an-Nabhani in his book The Economic System in Islam states that this is because …the capital has to be referred to at the time of division and because the debt cannot be disposed with immediately and this is the aim of the company.

Al-Kasani states in Badai al Sana'I Vol 7 another reason for why the Capital must be defined and present: Among these conditions is the availability of the wealth in the form of an ayn (present thing). It should neither be a debt (dayn) or an absent wealth. If it is so, the partnership is not permitted as Inan or as mufawadah. The reason is that the purpose of the partnership is profit and this is achievable through transactions in the capital. Such transactions are not possible in a dayn or in wealth that is absent.

It is a condition that the capital of the company is one property of all the partners such that neither partner can differentiate his property from the others.

It is not necessary that the capital should be equal in value. Ibn Qudammah in al-Mughni Vol 5 mentioned: Equality in the amount of wealth is not stipulated, and Al-Marghinani (May Allah have mercy on him) says in al-Hidayah Vol 3: Because equality in wealth is not a condition for it as the word (inan) does not require this.

It is also not necessary that the capital should be of the same kind. However, they must be evaluated by one measure so that both shares become one property. It is, therefore, valid for two people to become partners with, for example, Egyptian Pounds and Pakistani Rupees,US Dollars but these should be evaluated by one value (agreed between the partners) so that there is no difference between them and they become one of the same kind.

It is also conditional that each of the partners has authority over the capital. The Inan (equal) company is based on delegation and trust. The partners trust each other through handing over properties, and by delegating permission to each other to dispose of property. Once the company has been formed it becomes one entity.

Conditions relating to the work and responsibility of the partners

It is obligatory for the partners to start work themselves as the company is established upon their bodies. As such a partner is not allowed to delegate another person to work for the company personally on his behalf. It is also permitted for partners to assign themselves roles such as Operations Director or Head of Finance etc. However, the company as a whole can employ whom it wants and uses the body of whom it likes as its employee to work for the company but not a partner.

Any of the partners can trade in whatever way he feels is beneficial to the company. Each of the partners is also allowed to collect the price and make purchases, to take legal action for and request payment of debt, to pay and accept payment, and to return faulty goods. Each is allowed to hire and lease the capital of the company, as these are benefits to the company and this is similar to selling and buying.

Conditions relating to Profit and Loss

It is not conditional that the partners have equal shares, but it is necessary that they are equal in the right of disposal. With regard to the capital, it is permitted that the partners have different or equal shares, while the profit is divided according to what they agree between themselves. According to what 'Abdurrazzaq narrated in Al-Jami',

'Ali (May Allah be pleased with him) said: 'The profit is according to what they stipulated.'

And al-Sarkhasi mentions in his Mabsut Vol II: …the animal has two reins, one longer than the other and the other one shorter. Thus, it is permitted in this partnership to have equality in capital and profit or inequality. We therefore call it Inan.

With regard to losses in the 'Inan company, it is according to the capital share only. If their shares are of equal value then the loss between them is divided equally, and if the capital is divided in thirds then the loss is divided in thirds. If they agreed on other than that, no value will be given to their stipulations. This is the rule on loss i.e. the loss is based upon the ratio of their capital shares. This is because a company is a form of representation (Wakala). The rule is that the deputy is not held responsible for the loss but the loss is carried upon the property of the deputising person.

Abdurrazzaq narrated in Al-Jami' from 'Ali (May Allah be pleased with him): "The loss (Al-Wadhi'a) is upon the capital and the profit is according to what they stipulated"