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Regulations for Companies in Israel
The regulations governing companies in Israel are primarily outlined in the Companies Law, 5759-1999. This law distinguishes between two main types of companies: Private Companies and Public Companies.
Establishing a Company in Israel
In Israel, establishing a company is generally quicker, simpler, and less expensive compared to countries like Germany. A key advantage is that there is no requirement to deposit any nominal capital into the company's account; the amount only needs to be registered and can be determined at the discretion of the founders. For instance, 100 shares could be issued to the shareholders at a value of 1 NIS each, proportionate to their shareholdings in the company.
To establish a company in Israel, personal appearance before any authority or involvement of a notary public during the proceedings is unnecessary. Both individuals and legal entities can participate in the foundation process, irrespective of their nationality, place of residence, or business location.
The company is officially established upon its registration with the Registry of Companies. The registration requires the affidavit(s) of the first director(s) of the company confirming his (their) willingness to act as director(s). If an existing company takes part in the establishment, the registration additionally requires a notarized copy of its certificate of incorporation. Furthermore a representative’s affidavit is necessary stating the company’s registration with the respective Registry of Companies and the absence of legal restrictions cast upon it.
If a foreign company takes part in the foundation process, an Israeli attorney specialized in the relevant foreign law has to declare in an expert legal opinion the entity’s correct registration with the relevant Registry of Companies. The expert has to specify further who functions as the company’s authorized representative according to the foreign Companies’ Registry’s excerpt.
Key Considerations During Registration
- Company Name: The name of the company must not be misleading or deceptive. It must also not risk being mistaken for an already existing company. When filing the application, three additional alternative names should be proposed. The Registrar of Companies has the sole discretion to accept or reject a suggested name.
- Company Objectives: Generally, it is sufficient to state in the company’s Articles of Association that the company will engage in any legal activity.
Establishing a Company in Israel
The company may also be established by a trustee, such as an Israeli attorney. Simultaneously, the trustee and the future shareholders may agree that the trustee will assign the shares to the new shareholder at a predetermined date. These shares remain with the trustee temporarily and are assigned to the designated shareholders once they wish.
It is essential to register the company with the Companies Registrar. While Hebrew and Arabic are the official languages of Israel, corporate documents in English are generally accepted by the Registrar. However, the Companies Registrar requires that the Articles of Association be translated into Hebrew.
Types of Companies
Most companies limit the personal liability of their members, typically through shares. A company can be registered as either a "Private Company" or a "Public Company" with securities registered on a Stock Exchange.
- Private Company: The company limited by shares is the most common form to establish a private company in Israel. The shareholders of such a company are in general solely liable in the amount of the shares held by them, inasmuch as these have not been paid up until the liquidation of the company. If a shareholder has paid up his shares in full (e.g.
- Public Company: A public company, with a minimum of 7 shareholders, may offer stock or debentures to the public, but only after issuing a prospectus in accordance with the requirements of the ICO (Israel Securities Authority) and the Securities Law.
Foreign Companies
A company incorporated overseas may establish a branch or local office in Israel if it is registered as a foreign company with the Companies Registrar within one month of its establishment. To register, the foreign company must submit all necessary documents to the Companies Registrar.
Partnerships
The Partnership Ordinance defines a partnership as an entity consisting of persons who contract to form a partnership. Unless they are limited partners of limited partnerships, the personal liability of the partners is not limited.
Summary of Key Aspects of Company Regulations in Israel
| Aspect | Description |
|---|---|
| Governing Law | Companies Law, 5759-1999 |
| Company Types | Private and Public |
| Capital Deposit | Not required; amount to be registered is discretionary |
| Registration Requirements | Registration with the Registry of Companies, affidavits of directors, notarized documents for existing companies |
| Language | English documents generally accepted, Articles of Association require Hebrew translation |
| Foreign Companies | Must register with the Companies Registrar within one month of establishment |
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