Dissolving the company and dividing assets

The end of the company

The contract company being revocable for the majority (Hanafis, Shafi'is, Hanbalis, a Maliki minority), each partner may end it; the Hanafis require the partner's notice and cash capital at the moment of ending; the Shafi'is end it at any time without the other's presence; the Hanbalis add the death, madness and interdiction for prodigality of one of the 2.

A partner's death and dissolution of the company

It dissolves the company: the mutual permission dies with the person (Hanafis: notified or not; Shafi'is: the authorization falls). The deceased's share passes to his heirs; Malik forbids the survivor to dispose of the capital without their consent. The capable heir may continue the company by mutual consent: it is a completion, not a new beginning, so that the initial conditions are not rechecked (Hanbalis). A bequest of the deceased's share follows the same rules if the legatee accepts.

Other causes of dissolution

• Complete madness of a partner: dissolution by the scholars' agreement; each withdraws from the other's share.
• Fainting: a Shafi'i text of dissolution; on waking, he chooses between division and resuming the partnership.
• Loss of capital before purchase: all lost, the company dissolves (Hanafis); a share lost before mingling rests on its owner alone (Hanafis, the widespread Maliki view for like goods, Shafi'is); after mingling, on both; the Hanbalis lay the loss on both even before mingling.
• One partner working alone: the profit follows the clause as if both had worked (Hanafis), the absence being excused or not.

The final division of the company's assets

Profit is distributed by the stipulated shares; loss follows the ownership shares (Hanafis, Hanbalis); in the credit company, the Malikis and Shafi'is void the company altogether; the Hanafis make profit follow the proportion of the guarantees, any surplus being invalid, while the Hanbalis accept profit as stipulated; the loss always being shared by ownership.

Practical note on dissolving the company

A partnership agreement plans its own end: withdrawal, death, loss of capital, division rules. What fiqh has framed forever, modern statutes copy.