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Corporations and Partnerships with Respect to Ribbit: Difference between revisions
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Corporations and Partnerships with Respect to Ribbit (view source)
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# If Jews go into a partnership and both invest in the business, according to Ashkenazim, the business can pay out its investors in any payment structure it likes since it is a partnership and not a investment by one party with another party. According to Sephardim many say that this is an iska and unless the laws of iska are followed it is interest.<ref>Rama 177:3, Shach 177:13. | # If Jews go into a partnership and both invest in the business, according to Ashkenazim, the business can pay out its investors in any payment structure it likes since it is a partnership and not a investment by one party with another party. According to Sephardim many say that this is an iska and unless the laws of iska are followed it is interest.<ref>Rama 177:3, Shach 177:13. | ||
* Rambam Sheluchin Vshutfin 6:1 includes the laws of a Jewish partnership with the laws of an iska. Therefore, in order for a partnership to pay its partners permissibly and avoid interest they would need to follow all of the laws of iska. However, the Smag 82 and Rif (Shaarim Shevuot 8) argue that a partnership is fundamentally different than an iska investment. In an iska there is one investor and one agent and since the agent is also profiting it is considered part loan. If the agent is working on behalf of the investor to invest the money then it is problematic as that work is being done in compensation of the loan granted to him by the investor, thereby being considered interest. On the other hand, a partnership is where each party invests their own money and the business uses that capital. Since there was no loan, it is permissible for the partnership to pay its partners in any fashion. The Gemara Bava Metsia 69a seems to address this situation but can be read by all rishonim. See Bet Yosef 177:3 and Kesef Mishna on Rambam Sheluchin 2 s.v. vim for discussion. Milveh Hashem cites the Rabbenu Yerucham (Netiv 8) on the side of the Rambam and Ritva b"m 69a on the side of the Rif. | * Rambam Sheluchin Vshutfin 6:1 includes the laws of a Jewish partnership with the laws of an iska. Therefore, in order for a partnership to pay its partners permissibly and avoid interest they would need to follow all of the laws of iska. However, the Smag 82 and Rif (Shaarim Shevuot 8) argue that a partnership is fundamentally different than an iska investment. In an iska there is one investor and one agent and since the agent is also profiting it is considered part loan. If the agent is working on behalf of the investor to invest the money then it is problematic as that work is being done in compensation of the loan granted to him by the investor, thereby being considered interest. On the other hand, a partnership is where each party invests their own money and the business uses that capital. Since there was no loan, it is permissible for the partnership to pay its partners in any fashion. The Gemara Bava Metsia 69a seems to address this situation but can be read by all rishonim. See Bet Yosef 177:3 and Kesef Mishna on Rambam Sheluchin 2 s.v. vim for discussion. Milveh Hashem cites the Rabbenu Yerucham (Netiv 8) on the side of the Rambam and Ritva b"m 69a on the side of the Rif. | ||
* Rama 177:3 and Shach 177:13 rule like the Smag and Rif. Chelkat Binyamin 177:56 agrees for Ashkenazim. For Sephardim, Milveh Hashem 2:12:26 rules like the Rambam. He cites the Maharbach 38, Maharikash on | * Rama 177:3 and Shach 177:13 rule like the Smag and Rif. Chelkat Binyamin 177:56 agrees for Ashkenazim. For Sephardim, Milveh Hashem 2:12:26 rules like the Rambam. He cites the Maharbach 38, Maharikash on Shulchan Aruch 177:5, Chida in Shiurei Bracha YD 177:2, and Maharam Galanti 98 who all rule like the Rambam for Sephardim. Shulchan Aruch 177:24 follows the Rambam regarding a partnership as the Chelkat Binyamin 177:206 points out. Nonetheless, Horah Brurah 177:35 is lenient even for Sephardim.</ref> | ||
# According to those who are lenient, it is acceptable even if the partnership is unequal partnership and certain partners invested more than the others.<ref>Chelkat Binyamin 177:56 based on Chachmat Adam</ref> | # According to those who are lenient, it is acceptable even if the partnership is unequal partnership and certain partners invested more than the others.<ref>Chelkat Binyamin 177:56 based on Chachmat Adam</ref> | ||
# According to those who are lenient to consider a partnership unlike an iska, some say that it is nonetheless forbidden for a working partner to accept more of the responsibility of losses and offer the other partners a greater share of the gains. Some are lenient on this.<ref>Chelkat Binyamin 177:57 writes that Chavot Daat forbids while the Shach 177:13 permits. Torat Ribbit 27:3 writes that everyone forbids having a working partner offer the larger investor a greater return than the percent of losses he accepts. He references Radvaz 1:247 Maharashdam YD 61, Tashbetz 2:267, and Darkei Teshuva 177:20 as being strict and Maharam Galanti 98, Maharsham 7:140, Bet Dovid 87, Maharitatz 117, and Minchat Shlomo 1:28 as being more lenient.</ref> Some say that it can be permitted if one gives an iska wage to the working partner, which could even be a [[dinar]], as described below ([[#Wages_for_an_Iska_Worker]]).<ref>Milveh Hashem 2:12:27 based on writes that if the worker partner gives the other investing partner a greater share of the profits then it is considered an iska that needs to be fixed by paying the partner for his work and even a dinar suffices. He writes that he is based on Shiurei Bracha YD 177:2 and Shulchano Shel Avraham 177:9. However, Chelkat Binyamin 177:57 argues that if it isn't equally apportioned it is forbidden according to the Chavot Daat and it can't be fixed by paying a dinar as it is completely ''karov lsachar vrachok mhefsed''.</ref> | # According to those who are lenient to consider a partnership unlike an iska, some say that it is nonetheless forbidden for a working partner to accept more of the responsibility of losses and offer the other partners a greater share of the gains. Some are lenient on this.<ref>Chelkat Binyamin 177:57 writes that Chavot Daat forbids while the Shach 177:13 permits. Torat Ribbit 27:3 writes that everyone forbids having a working partner offer the larger investor a greater return than the percent of losses he accepts. He references Radvaz 1:247 Maharashdam YD 61, Tashbetz 2:267, and Darkei Teshuva 177:20 as being strict and Maharam Galanti 98, Maharsham 7:140, Bet Dovid 87, Maharitatz 117, and Minchat Shlomo 1:28 as being more lenient.</ref> Some say that it can be permitted if one gives an iska wage to the working partner, which could even be a [[dinar]], as described below ([[#Wages_for_an_Iska_Worker]]).<ref>Milveh Hashem 2:12:27 based on writes that if the worker partner gives the other investing partner a greater share of the profits then it is considered an iska that needs to be fixed by paying the partner for his work and even a dinar suffices. He writes that he is based on Shiurei Bracha YD 177:2 and Shulchano Shel Avraham 177:9. However, Chelkat Binyamin 177:57 argues that if it isn't equally apportioned it is forbidden according to the Chavot Daat and it can't be fixed by paying a dinar as it is completely ''karov lsachar vrachok mhefsed''.</ref> | ||
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====All Profits to Investor==== | ====All Profits to Investor==== | ||
# It is permitted for the investor to make all of the profits of an iska if he pays for the wages and additionally pays the agent an extra fixed income to offset the profits he is acquiring from the agent. It is permitted since there is an element of risk as the investor doesn't know how much profit will be made if at all.<ref>Taz 177:12</ref> | # It is permitted for the investor to make all of the profits of an iska if he pays for the wages and additionally pays the agent an extra fixed income to offset the profits he is acquiring from the agent. It is permitted since there is an element of risk as the investor doesn't know how much profit will be made if at all.<ref>Taz 177:12</ref> | ||
# If someone is doing an investment<ref>Chelkat Binyamin 177:19 writes that although the discussion of Rama 177:1 is about property it can also apply to money.</ref> entirely for the benefit of the investor and doesn't take any profits from the investments or has other benefits, he is considered an agent of the investor and not a borrower. In such a case it is permitted even for the agent to accept responsibility for the investment that if it depreciates that he will nonetheless return the capital since he is merely a guard with a lot of responsibility and not a borrower.<ref>Sh"t Ran 73 cites the Chachmei Lunil who said that if an investor has an agent invest his money and all the profits go to the investor, then the agent isn't considered a borrower. If so, he can take responsibility for the capital. He quotes that originally the Raavad argued with this leniency but seems to have retracted later. In the Ran himself he says that the agent can even be paid for his work. The Rama 177:1 cites this leniency as the halacha. Based on the Yerushalmi b"m 5:3 the Gra 177:5 supports this Rama but limits it to where the investor doesn't benefit. Chelkat Binyamin 177:16 writes that we are only lenient with this leniency if the borrower gains no benefit from the investment. That is, he isn't gaining a better reputation or is interested in getting another investment in the future with which he can make profits for himself. If he is gaining then he isn't an agent but rather a borrower since he is doing it for himself partially. In the Biurim he cites the Tiferet Lmoshe 170:2 who holds that even if there's any tangential benefit that the agent gains it is forbidden as we see from the case of a guarantor who doesn't personally gain from the loan but may not pay interest ( | # If someone is doing an investment<ref>Chelkat Binyamin 177:19 writes that although the discussion of Rama 177:1 is about property it can also apply to money.</ref> entirely for the benefit of the investor and doesn't take any profits from the investments or has other benefits, he is considered an agent of the investor and not a borrower. In such a case it is permitted even for the agent to accept responsibility for the investment that if it depreciates that he will nonetheless return the capital since he is merely a guard with a lot of responsibility and not a borrower.<ref>Sh"t Ran 73 cites the Chachmei Lunil who said that if an investor has an agent invest his money and all the profits go to the investor, then the agent isn't considered a borrower. If so, he can take responsibility for the capital. He quotes that originally the Raavad argued with this leniency but seems to have retracted later. In the Ran himself he says that the agent can even be paid for his work. The Rama 177:1 cites this leniency as the halacha. Based on the Yerushalmi b"m 5:3 the Gra 177:5 supports this Rama but limits it to where the investor doesn't benefit. Chelkat Binyamin 177:16 writes that we are only lenient with this leniency if the borrower gains no benefit from the investment. That is, he isn't gaining a better reputation or is interested in getting another investment in the future with which he can make profits for himself. If he is gaining then he isn't an agent but rather a borrower since he is doing it for himself partially. In the Biurim he cites the Tiferet Lmoshe 170:2 who holds that even if there's any tangential benefit that the agent gains it is forbidden as we see from the case of a guarantor who doesn't personally gain from the loan but may not pay interest (Shulchan Aruch CM 170:1). Chelkat Binyamin disagrees.</ref> | ||
====Iska for Commodities==== | ====Iska for Commodities==== | ||
# If someone takes a job to improve and sell the merchandise or livestock of someone else and he accepts all responsibility of its losses and also agrees to pay its original price if it is destroyed or dies that is forbidden as interest. Even though the worker gains from a percent of the profits of the merchandise or livestock the deal is considered to have more potential for the owner to gain than lose (''karov lsachar vrachok mhefsed''). The only reason that the worker would accept such a deal is because the owner is extending him a loan, the commodity, through which the worker can gain.<ref>Gemara Bava Metsia 68a, 70b, Rashi 68a s.v. ein, Shulchan Aruch Y.D. 177:1</ref> | # If someone takes a job to improve and sell the merchandise or livestock of someone else and he accepts all responsibility of its losses and also agrees to pay its original price if it is destroyed or dies that is forbidden as interest. Even though the worker gains from a percent of the profits of the merchandise or livestock the deal is considered to have more potential for the owner to gain than lose (''karov lsachar vrachok mhefsed''). The only reason that the worker would accept such a deal is because the owner is extending him a loan, the commodity, through which the worker can gain.<ref>Gemara Bava Metsia 68a, 70b, Rashi 68a s.v. ein, Shulchan Aruch Y.D. 177:1</ref> | ||
