Question:
I am a 50% partner in an Israeli company(the other 50% partner is Jewish)and I have taken a private loan from the company.
Prior to me having the Heter Iska or the loan agreement signed the company transferred the funds of the loan to my bank account
No repayments have been made
Does the loan agreement have to refer to the Heter Iskah?
Do I need to backdate the Heter Iska to the date the funds were received or can I and the company simply sign the Heter Iska now with the current date?
Answer:
The idea of a heter iska is a halachic way of changing the nature of the agreement from a loan into a business venture, with the “interest“ serving as the profit to the “partner” who invested his money into the business venture. Since the nature of the transaction is different, it has to be done prior to signing the deal in order for the heter iska to work. This is even though no money or interest was actually paid, because the deal has to be changed. Therefore in order to do it correctly the deal has to be redone, and the contract resigned, together with the heter iska. You wouldn’t have to give the money back, because the partner doesn’t mind that you have the money even before the deal was signed, therefore you would only have to resign a new contract that is subject to the heter iska.
You can download a copy of the heter iska using the following link
Best Wishes
