Stock Ownership During Passover

Hi Rabbi, I have stocks in companies that sell proper chametz in my portfolio. Am I permitted to keep these stocks during the upcoming Passover?

Thank you for your question.

As we know during Passover, it is prohibited not only to eat or derive benefit from chametz, but also to possess it in any form—even if one does not directly benefit from its ownership.

Regarding the ownership of stocks in companies that deal with chametz during Passover. To address this, it is essential to understand what stock ownership entails. Owning shares in a company does not provide significant control over its daily operations. Being a shareholder typically means you trust the company's management to make operational decisions. If dissatisfied, your recourse is to sell your shares; if satisfied, you might retain them in anticipation of potential profits.

This limited control is crucial as we explore the halachic perspectives on owning shares in a company that sells chametz. According to the Shulchan Aruch (450:1), it is prohibited for a Jew to own chametz during Passover, even if owned jointly with a non-Jew, as it is still considered a Jewish-owned enterprise and thus forbidden during Pesach. The critical issue here is whether owning shares is analogous to this halacha and might similarly be prohibited.

It’s important to note that the Shulchan Aruch refers to an equal partnership, which grants partners direct control and decision-making power. Owning shares does not afford such rights. This distinction has led to significant debate among poskim (halachic authorities) about whether the nature of share ownership affects the halachic status of owning stocks in companies that deal with chametz during Passover.

In "Minchat Yitzchak" Volume III, section 1, suggests that while shareholders are technically the chametz owners, the directors act as agents of the company, serving as custodians. The shareholders do not directly manage the chametz but agree among themselves to share profits without engaging in the physical operations of the business. I would like to quote The Minchat Yitschok;

“In this scenario, the owners of the chametz are the shareholders,….it is actually the opposite that is logical. The directors act as agents of the company and are considered as custodians, while the shareholders, who are also the chametz owners, agreed among themselves not to physically handle or manage the chametz directly. They are involved only in sharing the profits and do not engage in the physical operation of the business”

The analysis of the above responsa reveals that owning shares is not just a limited ownership; it constitutes a collective agreement among the shareholders on how to manage the company. Consequently, this arrangement can be viewed as a genuine partnership, in which shareholders hold true ownership stakes in the company.

However, Rabbi Moshe Feinstein provides another perspective in "Responsa Iggrot Moshe, Even HaEzer Part 1, Siman 7;

“Also, the buyer of shares does not want to be an owner in the business and does not want to buy anything in the business; rather he is merely buying potential profits and losses that may occur in the business according to how much he has purchased”

He argues that owning shares to a level where one does not have a say in the company implies that the shareholder does not seek to be an owner nor intends to buy the business itself; rather, they are merely interested in the potential profits and losses based on their investment. This view suggests that shareholders are more like creditors, participating in profits without actual ownership of the business's assets.

Given the dynamic and varied interpretations of share ownership in halachic terms, it is advisable to include these stocks in the sale of chametz documents for Passover. This precaution ensures that you do not maintain ownership of chametz during the holiday.

Wishing you a kosher and joyous Passover.

1. Shulchan Aruch, Siman 450:
2. Minchat Yitzchak, Volume III, Section 1
3. Responsa Iggrot Moshe, Even HaEzer Part 1, Siman 7 (Rabbi Moshe Feinstein)