Companies Law, 5759-1999
חוק החברות, תשנ"ט-1999
Published: 1999-05-27Consolidated Hebrew text as of 2026-03-17 · Last amended 2024-09-15✓ Amendment status checked against the Knesset legislation record on 2026-09-28
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
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Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.
The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.
This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.
Section B: Public Benefit Fund
Public Benefit Fund§
345ah.
(a)A public benefit fund is a public benefit company that the Registrar of Endowments has recognised as a public benefit fund under this Section, and whose articles prescribe only purposes that are one or more of the following:
(1)financing the activities of public benefit companies or public endowments registered with the Registrar of Endowments;
(2)financing the activities of associations whose purposes are exclusively public purposes;
(3)financing the activities of an institution of higher education that is a non-profit institution and is one of the following:
(a)an institution recognised pursuant to section 9 of the Council for Higher Education Law, 5718-1958 (in this section — the Council for Higher Education Law);
(b)an institution that has received a permit or approval pursuant to section 21a of the Council for Higher Education Law;
(c)an institution whose degree it confers has been recognised pursuant to section 28a of the Council for Higher Education Law;
(d)an institution that has received a licence pursuant to sections 25c and 25d of the Council for Higher Education Law or a temporary licence pursuant to section 25i of that Law;
(4)financing the activities of a health fund, a government hospital, a hospital owned by a health fund, a hospital owned by a local authority or any other hospital that is a corporation and is a public institution as defined in section 9(2) of the Income Tax Ordinance; in this paragraph —
"government hospital" includes a health corporation;
"health fund" has the meaning assigned to it in the National Health Insurance Law, 5754-1994;
"health corporation" has the meaning assigned to it in section 21 of the Budget Foundations Law, 5745-1985;
(5)financing the activities of other bodies whose activities are directed towards the promotion or financing of public purposes and in respect of which conditions prescribed by the Minister are met.
(b)In this section, "financing" includes supervision of the use of moneys distributed by the fund pursuant to section 345am and accompaniment of the activity for which the financing was provided.
Recognition of a Public Benefit Fund and Types of Funds§
345ai.
(a)The Registrar of Endowments may recognise a public benefit company as a public benefit fund (in this Section — fund), upon its application, if it has been proved to his satisfaction that at the time of its recognition it will have liquid equity of at least five million New Israeli Shekels, and also that one of the following conditions, according to the type of fund, is fulfilled in it:
(1)in respect of a family public benefit fund (in this Section — family fund) — the total number of donors to the company, from the date of its registration, does not exceed the number of donors prescribed in section 345ak(a);
(2)in respect of a privately managed public benefit fund (in this Section — privately managed fund) — the total number of donors to the company, from the date of its registration, does not exceed the number of donors prescribed in section 345ak(b);
(3)in respect of a publicly managed public benefit fund (in this Section — publicly managed fund) — no person holds control thereof, including by virtue of an agreement with the company.
(b)In this Section, "liquid equity" means monies or securities listed for trading on a stock exchange.
Updating of Amounts§
345aj.
(a)If the rate of change in the index, from the last index published before 1 January of a particular year (in this subsection — the updating date), compared with the index for January 2014 or the index at the time of the last update carried out pursuant to this subsection, whichever is later, is greater than 10 per cent, the Minister may update the amounts specified in sections 345ai and 345am, on the updating date.
(b)The amounts referred to in subsection (a) shall be rounded to the nearest amount that is a multiple of NIS 1,000; notice of the updated amounts shall be published in Reshumot.
Provisions Relating to Donations§
345ak.
(a)The total number of donors to a family fund shall not exceed twenty; in counting the donors as aforesaid, a donor who has died and a person who is a dependant of a donor shall not be included.
(b)The total number of donors to a privately managed fund shall not exceed twenty in any financial year, and it shall not receive from a single donor donations whose value is less than twenty thousand New Israeli Shekels.
(c)The Minister may prescribe provisions regarding the manner of calculating the number of donors of family funds and of privately managed funds, including in respect of calculating the number of donors who are relatives or who are related corporations; such provisions may be prescribed in respect of different types of family funds or of privately managed funds.
Receipt of an Asset as a Donation§
345al.
(a)Where a fund has received an asset as a donation, the following provisions shall apply to it:
(1)the fund shall sell the asset within two years from the end of the financial year in which the asset was received (in this section — the first period), and until its sale the asset shall not be regarded as part of the value of the fund's assets for the purpose of the minimum distribution under section 345am(a)(1);
(2)
(a)the board of directors of the fund may decide to extend the first period by an additional period not exceeding two years (in this section — the additional period), if it is satisfied that selling the asset during the first period would significantly impair the consideration to be received from its sale; the reasons for the decision shall be set out in the minutes of the deliberation;
(b)where the board of directors has decided to extend the period as aforesaid, for the purpose of calculating the value of the fund's assets for the purpose of the minimum distribution under section 345am(a)(1), the value of the asset during the additional period shall be deemed to be double the amount of the valuation according to the assessment of a competent factor;
(3)the fund may transfer the asset, without consideration, to a body that it is entitled to participate in financing, and the value of the asset, according to the assessment of a competent factor, shall be regarded as part of the minimum distribution under section 345am; however, an assessment by a competent factor shall not be required if the fund would have fulfilled the minimum distribution even without the transfer of the asset, or with the approval of the Registrar of Endowments if he is satisfied that an assessment by a competent factor is not required in the circumstances of the matter.
(b)Assets that were in the possession of a public benefit company before it was first recognised as a fund shall be regarded as assets for the purposes of this section that were donated to the fund at the time of recognition, and the provisions of this section shall apply to them from the time of recognition onwards.
(c)The provisions of this section shall not apply to an asset used by the fund and required by it for the purpose of advancing its objects; however, the value of the asset shall be taken into account for the purpose of calculating the value of the fund's assets for the purpose of the minimum distribution under section 345am(a)(1).
(d)In this section —
"competent factor" means a person whom the board of directors has found to possess the expertise required for the purpose of valuing the asset, and in respect of whom one of the following applies:
(1)in respect of an asset that is not real property — eligibility conditions prescribed by the Minister generally or for types of assets, to the extent prescribed;
(2)in respect of real property — that person is a real property appraiser registered in the register of real property appraisers pursuant to the Real Property Appraisers Law, 5761-2001;
"asset" — excluding monies invested by way of investment in accordance with the provisions of section 345an.
Modes of Funding by a Public Benefit Fund§
345am.
(a)A fund shall grant monetary grants in accordance with the provisions of its articles and in accordance with criteria and benchmarks to be determined by the board of directors from time to time, provided that the total monetary grants distributed in each year shall not fall below the higher of the following (in this section — the minimum distribution):
(1)5 per cent of the value of the fund's assets at the end of the preceding financial year, or NIS 2,000,000, whichever is lower;
(2)an amount equal to double the amount spent by the fund on its management in the preceding financial year, and if it carried out supervision of the use of monies it distributed in the preceding financial year or accompanied the activity referred to above for which the financing was provided — an additional amount equal to the amount spent by the fund for the purpose of such supervision or accompaniment;
(3)in respect of a family fund or a privately managed fund — four hundred thousand New Israeli Shekels, and in respect of a publicly managed fund — two hundred thousand New Israeli Shekels.
(b)The grant of grants by a fund to another fund shall not be regarded as part of the minimum distribution under subsection (a).
(c)The board of directors of a fund may decide to distribute the fund's monies beyond the minimum distribution, in other ways, including by way of granting loans on favourable terms compared with market terms (in this section — loans on favourable terms), and to determine the criteria for such distribution.
(d)Where a loan on favourable terms, in whole or in part, has been recognised as a bad debt pursuant to an audited financial report of an accountant, the bad debt shall be regarded as part of the minimum distribution in the financial year in which it was recognised as a bad debt or in the year in which the financial report was submitted, at the fund's election.
(e)Notwithstanding the provisions of subsection (a), the Minister may prescribe that funds or types of funds may fulfil the minimum distribution also by way of granting loans on favourable terms, as he shall prescribe, provided that the proportion of loans to be included in the minimum distribution shall not exceed 50 per cent of the minimum distribution or such other proportion as the Minister shall prescribe.
(f)The Minister may prescribe, in respect of funds or types of funds —
(1)different types of loans that the fund shall be entitled to grant and conditions for their repayment;
(2)additional conditions for loans recognised as bad debts as referred to in subsection (d) to be regarded as part of the minimum distribution;
(3)provisions in respect of a minimum number of bodies as referred to in section 345ah that a fund is required to participate in financing in a year;
(4)provisions in respect of the fund's participation in the financing of bodies as referred to in section 345ah that are bodies connected to the fund, including in respect of the manner of making decisions regarding such financing and the mechanisms for its approval; for this purpose, "bodies connected to the fund" — including a connection arising from the holding of securities or from membership of an association, or a connection arising from the service of common office holders or their relatives.
Modes of Investing Surplus Monies in a Public Benefit Fund§
345an.
(a)A fund shall invest the monies it has not yet distributed (in this Law — surplus monies), in an efficient and optimal manner for preserving the fund and generating income, in accordance with the modes of investment prescribed in the Third Schedule; however, a family fund may invest its surplus monies in another mode of investment, provided that it is a prudent and equivalent mode, as required by the circumstances of the matter.
(b)The Minister, with the approval of the Constitution, Law and Justice Committee of the Knesset, may, by Order, amend the Third Schedule.
(c)Nothing in the provisions of this section shall prevent a fund from holding shares in bodies that it is entitled to participate in financing as referred to in section 345ah, or from being a member thereof.
Indication of PBC and Fund Type alongside the Fund's Name§
345ao.
(a)A fund shall indicate, alongside its name, in every document, signage or publication issued on its behalf, one of the following suffixes, as appropriate and in accordance with the recognition granted to it by the Registrar of Endowments:
(1)"public benefit company — family fund" or "PBC — family fund";
(2)"public benefit company — privately managed fund" or "PBC — privately managed fund";
(3)"public benefit company — publicly managed fund" or "PBC — publicly managed fund".
(b)Notwithstanding the provisions of subsection (a), a privately managed fund may indicate alongside its name the suffix "public benefit company — corporate fund" or "PBC — corporate fund" in place of the suffix referred to in that subsection, provided that all of the following conditions are fulfilled:
(1)the controlling shareholder of the fund or the donor who made the largest donation to the fund is a corporation;
(2)the Registrar of Endowments has approved it, upon its application, to do so.
(c)A company that is not a public benefit fund shall not indicate alongside its name the suffix referred to in subsection (a) or (b), and shall not present itself in any other manner as a fund.
(d)The provisions of section 345d shall not apply to a fund.
Obligation to Appoint an Independent Director§
345ap.
(a)In this section —
"independent director", in a fund — an individual in respect of whom the following conditions are fulfilled:
(1)the audit committee has confirmed that the following eligibility conditions are fulfilled in respect of that person:
(a)that person is not a relative of a shareholder of the fund, of a director or of an office holder therein, and in respect of a publicly managed fund — that person is also not a relative of a donor thereto;
(b)that person, that person's relative, partner, employer, or person to whom that person is subordinate, directly or indirectly, or a corporation in which that person is the controlling shareholder, does not have, at the time of appointment or in the two years preceding the time of appointment, an affiliation with the fund, with a shareholder thereof, with a director or office holder therein, with a relative of a shareholder thereof, of a director or of an office holder therein, or with another corporation, and in respect of a publicly managed fund — there is also no such affiliation with a donor thereto, that person's relative, or a corporation under that person's control;
(c)that person's other functions or occupations do not create, or are not likely to create, a conflict of interests with that person's function as a director, and are not capable of impairing that person's ability to serve as a director;
(d)that person possesses appropriate eligibility or expertise, to the extent prescribed by the Minister;
(2)that person has not served as a director of the company for more than nine consecutive years, and for this purpose a break in service not exceeding two years shall not be regarded as interrupting the continuity of service;
"affiliation" means the existence of employment relations, the existence of business or professional relations on a regular basis, or control, as well as service as an office holder; the Minister may prescribe that certain matters, subject to conditions prescribed by him, shall not constitute an affiliation;
"another corporation" means a corporation whose controlling shareholder, at the time of appointment or in the two years preceding the time of appointment, is the fund, a shareholder thereof, or a director therein;
"donor" means a person who has donated to the fund donations whose cumulative value exceeds NIS 150,000, or such other amount as the Minister shall prescribe, as well as the controlling shareholder of a corporation that has made such a donation.
(b)At least two independent directors shall serve on the board of directors of a privately managed fund.
(c)At least two directors shall serve on the board of directors of a publicly managed fund; all directors of the fund shall be independent directors.
(d)A director of a particular fund shall not be appointed as an independent director of another fund if at that time a director of the other fund is serving as an independent director of the particular fund.
(e)In a fund in which, at the time of appointment of an independent director, all members of the board of directors are of one sex, the independent director to be appointed shall be of the other sex.
Criteria for Distribution of Fund Monies and Functions of the Distribution Committee§
345aq.
(a)The board of directors of a fund shall determine, from time to time, criteria for the distribution of the fund's monies, by way of granting grants and providing loans and in other ways, in accordance with the provisions of section 345am.
(b)The board of directors of a fund shall appoint a distribution committee whose functions are —
(1)to bring before the board of directors its recommendations for determining the criteria for distributing the fund's monies as referred to in subsection (a);
(2)to decide on the manner of distributing the fund's monies in accordance with the criteria determined by the board of directors.
(c)In a privately managed fund and in a publicly managed fund, at least two of the independent directors shall be members of the distribution committee.
Expenses for Managing a Public Benefit Fund§
345ar.
The Minister may prescribe provisions in respect of rates or amounts that a fund is entitled to expend on its management, including on salaries and remuneration, as well as for the purpose of supervising the use of monies it distributed pursuant to section 345am, and accompanying the activity for which the financing was provided; such provisions may be prescribed for types of public benefit funds.
Reporting to the Registrar of Endowments§
345as.
(a)Without derogating from any other reporting obligations of a fund under this Law, a fund shall submit to the Registrar of Endowments, once a year, all of the following:
(1)a list of the criteria according to which it distributed the fund's monies as referred to in section 345aq;
(2)a list of the bodies to which it distributed monies as aforesaid, stating the reasons for the decision, the amount granted to each body and the conditions under which it was granted;
(3)a report regarding supervision of the use of monies it distributed pursuant to section 345am, and of the accompaniment of the activity for which the financing was provided, if it carried out such supervision and accompaniment.
(b)A privately managed fund and a publicly managed fund shall publish the lists and reports referred to in subsection (a) on their internet websites.
(c)The Minister may prescribe that a fund shall submit to the Registrar of Endowments or publish on its internet website reports or information, in addition to those referred to in subsections (a) and (b).
Publication of Information to the Public§
345at.
A fund shall publish on its internet website, at least once a year, a notice in which it shall detail all of the following:
(1)the ways of contacting the fund;
(2)the manner of submitting applications to receive monies from the fund, in that year, including the forms to be completed and the deadline for submitting applications, which shall be at least 30 days after the date of publication;
(3)the criteria for distributing monies by the fund in that year;
(4)the expected date for distributing the fund's monies in that year.
Obligation to Appoint an Auditing Accountant§
345au.
A fund shall appoint an auditing accountant, and the provisions of sections 154 to 157 and 159 to 175 shall apply for this purpose, with the necessary modifications.
Obligation to Appoint an Internal Auditor§
345av.
The board of directors of a privately managed fund and the board of directors of a publicly managed fund shall appoint, with the consent of the audit committee, an internal auditor, and the provisions of sections 146(b) to 148 and also 150 to 153, and the provisions applicable to an internal auditor in a public benefit company, shall apply for this purpose, with the necessary modifications.
Audit Committee§
345aw.
The audit committee of a privately managed fund and of a publicly managed fund shall comprise at least three members, and the majority of the committee's members shall be eligible to serve as independent directors as referred to in paragraphs (1)(a) to (c) of the definition of "independent director" in section 345ap, as appropriate.
Inspection of Reports of a Family Public Benefit Fund§
345ax.
Documents submitted by a family fund to the Registrar of Endowments pursuant to this Law shall be open for public inspection after the following particulars have been deleted therefrom, unless the fund has requested that they not be deleted, in whole or in part:
(1)the names of the donors, except for donors who are a foreign political entity as defined in section 36a of the Associations Law;
(2)the bodies to which the fund distributed monies pursuant to section 345am.
Conditioning of a Donation§
345ay.
(a)A donor shall not condition the making of a donation to a fund on its return to that person or to another person, in whole or in part, at the time of the company's winding up or at any other time.
(b)Notwithstanding the provisions of subsection (a), a donor may condition the making of that person's donation to a fund on the basis that if the company is wound up, the balance of the donation shall be transferred to another fund or to a body acting for a public purpose to be determined by the donor, provided that the fund is entitled to participate in its financing as referred to in section 345ah.
Merger of Public Benefit Funds§
345az.
(a)The provisions of section 345p shall apply to a fund, however a fund shall be entitled to merge only with another fund.
(b)In a merger between a family fund and a privately managed fund, the target company shall be the privately managed fund; in a merger between a family fund or a privately managed fund and a publicly managed fund, the target company shall be the publicly managed fund.
Change of Status§
345ba.
(a)A fund may apply to the Registrar of Endowments to cancel its recognition or to recognise it as a fund of a different type, and the provisions of section 345ai shall apply to the recognition, as appropriate, with the necessary modifications.
(b)The Registrar of Endowments shall not make a decision as set out below unless he is satisfied that in the circumstances of the matter it is just and correct to do so, having regard to the objects of the fund, its activities prior to the submission of the application referred to in subsection (a), the number of donors thereto and the commitments undertaken by the fund for the purpose of the change in its status:
(1)cancellation of recognition of a fund;
(2)recognition of a publicly managed fund as a family fund;
(3)recognition of a publicly managed fund as a privately managed fund;
(4)recognition of a privately managed fund as a family fund.
(c)The Registrar of Endowments may decide on his own initiative to change the status of a fund as set out below, after notifying the fund of his intention to do so and giving it an opportunity to present its arguments in the matter, if he is satisfied that it received donations in contravention of the provisions of this Section and that in the circumstances of the matter it is just and correct to do so, having regard to the objects of the fund and its activities:
(1)recognition of a family fund as a privately managed fund;
(2)recognition of a privately managed fund as a publicly managed fund.
(d)The cancellation of recognition or the change of status as referred to in this section shall take effect upon receipt of the notice of the Registrar of Endowments or at such other time as the Registrar shall determine.
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