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Owning a Business That Operates on Shabbat

Halacha forbids buying or selling on Shabbat. If one did make a transaction on Shabbat, even though the sale is legally binding, one may not derive any benefit from money earned through that transaction. Jewish business owners must therefore close their businesses on Shabbat; it is forbidden to allow the business to continue operating during Shabbat. Even if the person remains at home and performs no Melacha (forbidden activity), he may not allow his business to run during Shabbat.

There are, however, arrangements that could be made to allow a business to run on Shabbat if the Jew co-owns the business with a gentile partner. Namely, as discussed by the Shulchan Aruch and Mishna Berura (commentary to the Shulhan Aruch by Rabbi Yisrael Kagan, Lithuania, 1839-1933) in the Orah Hayyim section (245), a Jew may arrange that his gentile partner receives all profits earned from the business on Shabbat. For example, the partners could agree that the gentile receives all profits earned on Shabbat, and the Jew will receive all profits earned on Tuesday. Once they agree to this arrangement, they may then divide monthly or annual revenues equally, even if the Shabbat profits exceed the Tuesday profits, as the excess revenue received by the Jew is legally considered a gift given to him by his partner.

This provision applies only to gentile partners; if one co-owns a business with another Jew, then the business may not remain open on Shabbat regardless of whether the partner observes Shabbat. Even if the partners arrange that the non-observant Jew will receive all the Shabbat profits, and the observant partner will not work on Shabbat, the business may not remain open on Shabbat.

This prohibition applies to shareholders, as well. If a Jew owns enough shares in a company that he exerts decision-making control over the company's operations, then he is considered a "partner" with respect to the aforementioned Halacha. It is therefore forbidden for a Jew to become a controlling shareholder in a company that runs on Shabbat, unless he can arrange that the gentile partners will receive all profits earned on Shabbat. One may, however, own stock in a company that conducts business on Shabbat if his holdings in the company do not afford him decision-making control in the company's operations.

Of course, in all such situations one is urged to consult with a competent Halachic authority for guidance.

Summary: It is forbidden to conduct business on Shabbat or to derive benefit from profits earned from business conducted on Shabbat; Jewish business owners must therefore close their businesses on Shabbat. If one co-owns a business with a gentile partner, the business may remain open on Shabbat if they arrange that the gentile will receive all profits earned on Shabbat. They may then share all revenue equally, with the understanding that the Jew receives a share of the Shabbat profits only as a gift from his partners. This applies as well if a Jew owns shares in a company that affords him decision-making control; he must arrange that the other controlling shareholders receive all profits from the business' operations on Shabbat.

See the book- "Pure Money" by Dayan Cohen, pages 193-194.