Halakhot of Investing in the Stock Market (5)

 

FIFTH INSTALLMENT - A COMPANY WITH SHABBAT OPERATIONS 

I.  PREFACE

 

In the first installment of this shiur, we discussed the GENERAL question of the ownership status of the shareholder.  As we explained, one point of view sees the shareholder as an owner of the company and of its assets - like an ordinary partner.  The other point of view views the shareholder as a kind of creditor - he has made an investment and will receive a return, but the true owner of the company is someone else: a controlling interest, the management, or perhaps even the company itself, recognized as a legal person in halakha as it is in the secular law.

 

We also called attention to the many ways in which a shareholder resembles a silent partner (noten iska), whose halakhic status is well established.

 

We concluded that while many lenient opinions exist, the most prominent contemporary authorities are not willing to create a blanket exemption from halakhic responsibility for the shareholder, but rather view him as a partner to at least some extent.  We also pointed out that the power of the minority shareholder and his SECULAR legal status as owner are rather greater than many people are aware.  However, even the stringent opinions acknowledge the high degree of insulation of the shareholder from company operations and how this insulation may lead to various leniencies which, however, need to be discussed on an individual basis.

 

The second installment focused on problems of forbidden interest between Jews; the third installment discussed chametz on Pesach.  The fourth installment discussed the prohibition of trading in forbidden foodstuffs.

 

This installment will deal with the very complex problem of shares in a business that has forbidden Shabbat operations.  Since the question of Jewish workers makes the question even more complicated, at first we will deal only with the question of non-Jewish workers in the business.

 

 

II.  DEFINITION OF THE PROBLEM - NON-JEWISH PARTNERS OR EMPLOYEES ON SHABBAT

 

The problem of Shabbat operations is much more complex than the other problems we discussed.  We may divide the problem into several issues:

 

A.  WORK OF A GENTILE

 

It is forbidden to ask a non-Jew to do melakha for us on Shabbat ("amira le-nokhri" - SA OC 307).  Even if he does work on our behalf on his own initiative, we must ask him not to do so (MB 276:2).  Even after the work has been done, we are not allowed to benefit from the forbidden labor until Shabbat is over (SA 307:20), leaving enough time so that there is not advantage even AFTER Shabbat from the fact that the work was done ON Shabbat.

 

The basic prohibition of having a non-Jew do our work on Shabbat is learned from the verse (Shemot 12:16) "No work SHALL BE DONE" on Yom Tov - and certainly on Shabbat (Mekhilta deR. Yishmael Parashat Bo).  However, most Rishonim consider this to be a rabbinical prohibition that is strengthened (asmakhta) by its association with a Torah verse.

 

The prohibition of SPEAKING about the work is a Prophetic decree, stemming from the prophet Yeshayahu (58:13) who explains that we should keep the Shabbat holy "mimtzo cheftzekha" - from occupying ourselves in [weekday] matters, "vedaber davar" - and from [weekday] speech.

 

The prohibition to benefit from the work is a rabbinical fine (kenas) meant to deter us from asking in the first place (see MB 276:2).

 

B.  WORK OF A BEAST OR SLAVE

 

There is a Torah commandment to give rest to a beast or slave on Shabbat, since the commandment not to do melakha includes "You and your son and your daughter, your slave and your maid and your beast, and the sojourner in your gates" (Shemot 20:10).  Also, we are bidden to desist from working on Shabbat "so that there may be rest for your ox and your ass, and the maidservants son and the sojourner may rest" (Shemot 23:12).

 

The question of slavery is an interesting one, since there are countries where workers are in a state of near-servitude.  However, the Rambam (Shabbat 20:14) extends this prohibition: learning from the words "and the sojourner," he rules that this prohibition extends even to "le-kito u-sekhiro" - a hired worker.  What does this expression signify?  The Rosh (Yevamot IV:38) uses this expression in the same context to refer specifically to non-Jews who are HOUSEHOLD MEMBERS, like a servant or a hired hand.  However, the Maggid Mishneh there seems to understand that it refers to any non-Jew over whom we have some kind of authority. 

 

Although most authorities do not apply this prohibition to regular workers, Rav Lichtenstein has told me on several occasions that Rav [Yosef Dov] Soloveitchik was concerned that this prohibition DOES apply to hired employees.  We will not get into this issue any farther, but merely summarize the issue as follows: According to the view which sees the shareholder as a partner, the employees of the firm are the employees of the shareholder.  According to most authorities, this does not involve a Torah prohibition, and even according to the Rambam, there may be a problem only when there is a personal relationship between the Jewish "master" and the employee as the Rosh suggests.  However, according to the "partnership" approach to shareholding, and according to Rav Soloveitchik's understanding of the Rambam, there is a very severe problem in owning stock of a company with Shabbat operations.

 

C.  "SEKHAR SHABBAT" - SHABBAT HIRE

 

There is a rabbinic prohibition to get pay for work that is specifically for Shabbat, or to hire someone to work specifically on Shabbat, even if the work itself is permissible on Shabbat.  The money so earned is forbidden.

 

D.  APPEARANCE OF WRONG-DOING

 

There is a separate prohibition of giving the impression that one may be transgressing any of the above prohibitions.  This prohibition of  "mar'it ayin" is given some specific definition regarding work done for a Jew on Shabbat (OC 243).

 

 

III.  APPLICATION TO AN INTEREST IN A BUSINESS WHICH WORKS ON SHABBAT

 

Even though we are forbidden to allow a non-Jew to do Shabbat work on our behalf, there is nothing wrong with non-Jews doing work on Shabbat for their own benefit and on their own initiative, and a Jew may benefit from such work even on Shabbat itself.

 

What is the criterion of the non-Jews "benefit and initiative?"  The halakha is very lenient in this respect.  As long as the non-Jew is entitled to even a small share of the profits on the business, he is considered to be working "ada'atei de-nafshei" - on his own initiative - and the Jew may have a share in this business.  (The expression appears in SA OC 252:4.)

 

Thus, the SA rules that a Jew may give his field to a non-Jewish sharecropper who will work on Shabbat (OC 243:1).  And the Rema and the MB (243:10 at the end) confirm that even a small share is sufficient.  One may form a silent partnership with a non-Jew who will trade with the joint assets, even if the non-Jew will certainly trade on Shabbat (OC 245:4), or give him merchandise to sell even if we know that it will be sold on Shabbat (OC 245:5). 

 

The only exception is that if the nature of the business is such that business MUST be done on Shabbat - for example, when that is the weekly trading day (fair) - then such a deal is impermissible.  In this case there is no discretion on the part of the non-Jew (MB 307:15).

 

Since one may even form an ordinary partnership with a non-Jew where the business is open on Shabbat according to the non-Jew's discretion, it follows that even according to the "partnership" approach one may purchase shares of a company which does business on Shabbat.  The non-Jewish partners are working in their own interest and according to their own discretion, and so there is no obstacle to the Jew deriving benefit from this labor via the profits from the business.

 

Rav Moshe Feinstein (Igrot Moshe Even HaEzer I:7) and Rav Yitzchak Weiss (Minchat Yitzchak III:1) both permitted holding even the majority of shares of a company which is open on Shabbat as long as only non-Jews work on Shabbat.

 

Three very important comments need to be made to round out this simple conclusion.

 

1.  The appearance of wrongdoing still needs to be dealt with, and so it is necessary that it is not known to the general public that this is a Jewish company.  This is seldom a problem with a public company; with a small partnership there is also little problem because on the contrary everyone will know that the non-Jew is a partner and not an employee.

 

2.  Siman 245 in the SA OC discusses at length the proper way of establishing a partnership with a non-Jew that will operate on Shabbat.  The SA gives two ways to avoid the problem of Shabbat hire:

 

i.  One may found the partnership on the condition that the entire business on Shabbat belongs to the non-Jewish partner;

 

ii.  One may give all Shabbat profits to the non-Jew.

 

Obviously, both paths are impractical in the case of a shareholder.  Doesn't this present a problem?

 

A careful look at the siman in the SA reveals that these rectifications are necessary only when the nature of the business is that the active work of the business is incumbent on both partners.  In this case, if the partnership is started in the regular way and afterwards the non-Jew agrees to work on Saturday and the Jew on Sunday, the Jew is in effect hiring the non-Jewish partner to do his share of the work on Shabbat, repaying him with work on Sunday.

 

However, a silent partner such as a shareholder, who is not required to do ANY work, does not have this problem.  Therefore, there is no need to forego Shabbat earnings in such a case.  (See Divrei Chaim I:6 and Igrot Moshe OC I:90 who emphasize this distinction.)

 

3.  All this is very well when all workers are also shareholders.  This will obviously not be the case in a company of any size.  The manager, who almost always is either a shareholder or gets an incentive package, is working according to his own discretion, but he turns around and hires other workers who have NO discretion!   These workers are being hired by the non-Jewish manager on behalf of the shareholders - including the Jew!  Even if we are not concerned that the employee is like a "slave," this is at the very least a case of ordering a non-Jew to do work on Shabbat, and benefiting from this labor.  It is certainly no better than the case of a Saturday market day.

 

Rav Chaim of Tzantz (Divrei Chaim I(OC):6) discusses the case of a distillery opened with a token partnership with a non-Jew.  The distillery runs on Shabbat.  The questioner, a local Rav who himself had to rule on the case, was inclined to forbid this because the Jew had not stipulated that the entire business belonged to the non-Jew on Shabbat.  The Divrei Chaim explained, as we have just mentioned, that since the Jew is not obligated to work, such a stipulation is unnecessary. IF the Jew is initially required to work equally with the non-Jew, and subsequently agrees to work Sunday while the non-Jew will work Saturday, then the Jew is effectively hiring his non-Jewish partner to work on Saturday for him, the payment being work on Sunday. But if the Jew is a silent partner with no work obligation whatever, then we are not concerned that the non-Jewish partner is working for the Jew; we say that he is working for himself.

 

However, afterwards Rav Chaim deals with the problem - more difficult from his point of view - that the distillery has non-Jewish WAGE laborers who work on Shabbat.  As we pointed out, a wage laborer is certainly NOT working for himself. Rav Chaim Tzanzer was concerned that this non-Jewish worker is de facto working for the Jewish partner.

 

At first the Divrei Chaim suggests that in the case where there are many employers, the worker is considered to be working for the majority.  This is an adequate solution for most publicly-traded companies outside of Israel, but not for the case of the Divrei Chaim where almost the entire business was Jewish-owned.  Rav Chaim finally concludes that the worker is considered to be working for his immediate supervisor. 

 

The key insight here is that the problem of non-Jewish labor is not because the Jew is the "owner" of the labor (as it is with a slave or a beast) but because the Jew is directing the labor, and this is absent as long as no Jew works on Shabbat.  The result is that the lenient ruling of Rav Moshe and the Minchat Yitzchak is not vitiated by the presence of wage laborers who have no discretion.

 

Of course, if the business does do forbidden labor with beasts than there is certainly a problem according to the approach which views shareholding as partnership, and this is emphasized by Rav Weiss (Minchat Yitzchak III:1).

 

CONCLUSION

 

Our simple conclusion, while it has been made less simple by our various reservations, remains valid: Even according to the approach which views a shareholder as a partner, holding shares in a company which does business on Shabbat is permissible.  Three conditions are necessary:

 

1.  Only non-Jews work on Shabbat, and these non-Jews must have some interest in the profits or be under the direction of other non-Jews who do;

 

2.  The business should not be publicly known as a "Jewish" company;

 

3.  The company should not employ (do work with) animals on Shabbat.

 

Once Jews are involved in Shabbat operations matters become considerably more complex, and that is the subject of the next shiur, IYH.