This is a contract between two persons or more, in which they agree to trade together under a certain name. All its members bind themselves towards the debts of the company with all their wealth, with joint liability, and without any limit. Therefore, no partner of the company can concede his rights in the company to another person without the permission of the remaining partners. The company is dissolved by the death of any of the partners or by his incompetence, bankruptcy or insanity, unless there is an agreement which prevents this. The members of this company are liable jointly towards its commitments to others by fulfilling all the contractual commitments of the company, and their responsibility in this matter is unlimited. Every partner is held accountable to discharge all the debts of the company, not only from the property of the company but if necessary from his own property. He has to pay from his property what is left unpaid of the debts of the company after its property runs out. This company does not allow extension of the project. The company is formed from a few people, who trust each other and know each other well. The main element considered in this company is the personality of the partners, not by being people only but with regard to their standing and influence in the society.

This company structure is invalid, because the stated conditions disagree with the conditions of companies in Islam. For the divine rule (Hukm Shar’i) places no condition upon the partner except that He is allowed to dispose, and the company should have the option of expanding its activities. If the partners agree to expand the company by either increasing their capital or by adding other partners to them, then they are free to do what they like. The partner is also not responsible, personally, in the company except in proportion to his share in it. He has the right also to leave the company at any time He likes without the need for the approval of the other partners. In addition, the company is not dissolved by the death of any of the partners, or due to his incompetence, rather his partnership alone is dissolved, while the partnership of the other partners remains if the company is formed of more than two persons. These are the Shari’ah conditions. The conditions of the joint liability company as stated earlier differ, and even contradict with these divine conditions, thus making it an invalid company and it is not permitted by Shar’a to associate with (or becoming a partner) in it.