Q&A: How to Define Ownership Under Modern Laws
How to Define Ownership Under Modern Laws
Question
Hello Rabbi!
I saw online that some claim (regarding leavened food after Passover) that certain companies belong to multinational corporations owned by non-Jews, and therefore there is no prohibition of leavened food that remained after Passover involved here (in a case where no sale of leavened food was carried out, or for someone who does not want to rely on that).
My question is: how can ownership of such companies really be defined in cases where they operate as franchises? Is that considered to belong to the parent brand, which merely grants permission to use its name? And even if it is not a franchise arrangement but actual ownership, doesn’t the Israeli branch itself have some share in that ownership, with the parent company merely functioning as an administrator? (It is important to emphasize that regarding leavened food there is also a prohibition when it is deposited with a Jew, so even if there is no ownership, perhaps it is considered a deposit and is prohibited.)
Another question on this topic concerns Jewish shareholders: can that be considered ownership?
(And more generally, in this whole topic, I know that many are skeptical because today it is very hard to define ownership in a corporation or any limited company—who exactly is the owner? The chairman of the board? Even in a nonprofit this is complicated according to the formal legal registration. So how should these questions be viewed from a halakhic perspective?)
Thank you very much for all your blessed work!
Answer
You asked a very complicated question. I do not have enough information to answer it, and there is a whole collection here of many different cases and situations. I will answer in general terms.
As a rule, shareholders who do not have control are not considered owners according to quite a few opinions (certainly in a public company whose shares were bought on the stock exchange). Since this is a rabbinic prohibition, there is room to be lenient.
Beyond that, this is a partnership between a Jew and a non-Jew, and one can view it as divided along a timeline: during Passover the leavened food belongs to the non-Jew, and afterward to the Jew. In simple terms, however, this was said only about a usage-partnership (such as a courtyard), so I am not sure about relying on this leniency here.
Franchising does not seem relevant to me here at all. The question is about the local company and its own assets. Why should I care about its name and brand?
Discussion on Answer
More power to you for the response.
One thing that caught my attention was the leniency you mentioned about dividing the partnership along a timeline—where do you get that trick from?
As far as I remember, even if it works, it has to be arranged by prior agreement, which was not done here in all these large companies.
Oren, that is exactly what I wrote.
Elazar Menachem, it is the Ran at the beginning of the chapter “Ha-Shutafin” in tractate Nedarim, at great length (the question is whether it depends on the law of retroactive clarification). In simple terms, there is no agreement here about dividing ownership but about dividing use. Regarding leavened food, by its nature the Jew will not use it during Passover, so there is an implicit division along the timeline. But as I said, it is forced when we are not dealing with a usage-partnership.
I also meant in a situation where the shareholders do have control.
That is already more far-fetched. If you have control, it is not reasonable that this should be less than guarding a deposit of leavened food.
But what about the corporate veil, which acts as a barrier between you and the leavened food?
The veil is relevant to the question of ownership. That is why I spoke about comparing control to guarding. Even if it is not yours, it is in your possession.
One could perhaps argue that the control too belongs to the group, and the individual person is only one part of it. But that is strained. Legally too, controlling shareholders do bear liability.
But the fact is that under the law, if the group goes bankrupt, they do not touch the assets of the controlling shareholders. So in practice, the controlling shareholders do not bear liability for damage caused by the group.
In cases of negligence, yes—like a custodian. The question is whether he is an unpaid custodian or a paid custodian (with negligence treated like theft and loss), because regarding leavened food only a paid custodian is liable.
It is possible that even if all the owners are Jews, since they are all organized behind the “corporate veil,” there is a new legal entity here that has neither the status of a Jew nor the status of a non-Jew, and therefore the rabbinic decree concerning leavened food that remained after Passover does not apply to it.