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Borrowing from Company (Ribbis)

Dear Sir,

If a Jew borrows from a publicly held corporation in which 20% of the shares are owned by a Jew who manages that publicly held company, is a heter iska required?

Thanks!

Answer:

The answer to this question depends on the halachic status of shareholding.

According to the majority of opinions, shareholding alone does not constitute ownership, and therefore there will not be a need for a heter iska.

According to the Iggros Moshe shareholding that goes with power of decision-making can constitute ownership, but in this case this will of course only be a 20% stake in the corporation, and the company will thus remain non-Jewish (see Teshuvos Ve-Hanhagos, Vol. 4, no. 194).

In addition, according to many authorities the prohibition of ribis does not apply to corporations, though other authorities are stringent in this regard.

Because of these reasons, one can be lenient for this matter and take a loan without a heter iska.

Best wishes.

Sources:

For extensive sources on this subject see our article here.

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