Returning capital investment after death of partner
My father set up a business with his partner. 5 investors put in their capital and profits were shared monthly. My father passed away and the business came to an end.
My question is this: should the initial capital be returned to the investors? For example, an investor put in 15 million and he collected profits as per the initial agreement for over one year that amounted to 4 million. So since my father passed away, are we as inherits supposed to return the initial capital or deduct a portion and give?
Answer
Wa’alaykum as Salām wa raḥmatullāhi wa barakātuhu,
The investors will be entitled to their share of the business, even if it is different from the initial capital. For example, if they each put in 3 million and became an owner of one fifth of the business, then if the business was successful and it was sold for 20 million, then they will each get one fifth; which is now 4 million. In contrast, if the business was failing and it was sold 10 million, then each persons share of one fifth will now be 2 million.
The fact that they got profits does not mean that they do not get the value of their share of the business. The profits are different, and the share of the business is different. They are entitled to both.