What is the ruling on issuing Mudarabah sukuk for a project whose value is not owned by the issuer, with the condition of 30% for the sukuk holder and 70% for the institution, and the return of the value of the sukuk and profits after one year? Is it permissible to specify a duration for the sukuk? Is it valid for the institution to retain the project after returning the capital and profits? Is it permissible to take a monthly salary for workers or an advance from the project? In case of loss, does the institution bear part of it, or is the loss only from the capital?

The answer addresses the following points:

First: You stipulated a 30% share for the bondholder and 70% for the institution. There is no harm in this if the profit is not guaranteed. Likewise, your statement (provided that the value of the bonds and profits are returned one year after the bond is issued) is not permissible if it is in the form of a capital guarantee. Guaranteeing capital or a fixed profit invalidates the guarantee condition.

Second: Regarding the time limitation of the Mudarabah contract to one or two years: The majority of scholars do not permit this. However, Abu Hanifa and the Hanbalis, in one of their narrations, permitted limiting its duration.

Third: Keeping the project after the term ends, and returning the principal to its owners if it is safe, along with any profits they are entitled to if profit occurred, there is no harm in this. If the term ends and you wish to dissolve the partnership, liquidation (tanḍīḍ) is necessary, by converting the capital into cash.

Fourth: The expenses required for the work, such as salaries or general expenses: All of these are calculated from the Mudarabah capital and are deducted from the profit before distribution if there is a profit. Otherwise, they are deducted from the principal.

Fifth: The company does not bear responsibility for guaranteeing losses unless there is misconduct or negligence.