What is the ruling on Mudarabah (a form of Islamic partnership) stipulated with the division of profit into three thirds (one-third for the Mudarib (entrepreneur), one-third for the رب المال (capital provider), and one-third as a reserve), with daily losses being covered from the reserve until a certain amount is reached, at which point the Mudarabah terminates?

This Mudarabah (definition) (partnership) is impermissible because it involves specifying an unknown duration (the attainment of a specific profit amount). The majority of scholars rule against the permissibility of specifying a duration for Mudarabah in the first place, and those who allow it stipulate that the duration must be known.

Furthermore, profit in Mudarabah is not ascertained until the partnership is liquidated. However, it is permissible to distribute apparent profits in advance on account, with the distributed amount being reviewed after liquidation. If a loss occurs, the capital owner bears it, and the Mudarib bears the loss of his effort. If profit occurs, it is divided according to the agreed-upon ratio. Profit in Mudarabah is held back as a safeguard for the capital and is only confirmed upon actual or constructive liquidation.