Ask The Rabbi

Ask The Rabbi

category:  Other

Earning interest on an investment in a company

I want to invest money in an American private company. The company has offered the investment by way of a convertible loan. It is unable to issue stock certificates now. I’d get a promissory note with an option to convert to shares in the future. The loan pays interest. Am I violating the commandment on interest bearing loans?

If a company is owned by non-Jews, even if some of its partners are Jewish, you are not transgressing the prohibition against charging interest by giving them a loan and earning interest. If it is a corporation, the prohibition against charging interest is rabbinic, and in such a case the interest being paid is considered to be from the non-Jewish members of the company.


It is worth reading up on this in the book Shulchan Menachem, vol. 10, Section 4, Par. 28.

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