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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.

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Section C: Registration of a Company as a Defaulting Company

Registration of a Company as a Defaulting Company§
362a.
(a)Without derogating from the provisions of Section B, where the Registrar has reasonable grounds to believe that a company or a foreign company failed to pay a fee or other payments that it is obligated to pay under section 44(6), or that a private company or a foreign company that is not a reporting corporation violated an obligation to submit an annual report pursuant to the provisions of sections 141 or 348, as the case may be, the Registrar may record in the register that the Registrar maintains with respect to that company in accordance with the provisions of this Law, that the company violated such an obligation (in this section — defaulting company).
(b)The Registrar shall record in the register, with respect to a company as referred to in subsection (a), a warning of the Registrar's intention to register it as a defaulting company, and shall specify therein the date of registration; if 30 days have elapsed from the date of registration of the warning and the company has not remedied the violation, it shall be registered in the register as a defaulting company; the Registrar shall send to the address of the registered office of the company a notice of the registration of the warning.
(c)The following provisions shall apply to a defaulting company:
(1)The Registrar may refuse —
(a)to register an action from among the actions listed in section 40, with respect to the defaulting company; the provisions of this sub-paragraph shall not apply in respect of a foreign company;
(b)to register, in accordance with the provisions of the Companies Ordinance [New Version], 5743-1983, a charge over the assets of the defaulting company and a charge in its favour, and also to amend the registration of such a charge or to cancel a charge registered over the assets of the defaulting company; if the Registrar refused to register such a charge, to amend it or to cancel it, as the case may be, the documents submitted for that purpose shall be returned with a statement of the reason for the return;
(c)to register a company in which a shareholder is any of the following:
(1)the defaulting company;
(2)a controlling shareholder of the defaulting company; for this purpose, "controlling shareholder" means a person registered in the register as a holder of fifty per cent or more of the issued share capital of the defaulting company at the time of registration of a warning with respect to it as referred to in subsection (b), and a person so registered in the register at the time of submission of the application for registration of the company;
(3)a director in the defaulting company who has not paid a monetary sanction that the director is required to pay under section 360 for the violation of the obligation for which the company was registered as a defaulting company;
(d)to carry out the actions listed in section 323(3) to (5) if one or more of the merging companies is a defaulting company;
(2)The Registrar of Pledges appointed pursuant to the Pledge Law, 5727-1967, may refuse to register a pledge in favour of the defaulting company and may also refuse to amend the registration of such a pledge.
(d)If a company remedied the violation for which a warning was registered in respect of it or for which it was registered as a defaulting company, pursuant to the provisions of subsection (b), the Registrar shall delete the registration; however, if a company registered as a defaulting company committed additional violations as referred to in subsection (a) in respect of which the Registrar sent it a notice to its registered address before the said remedy, the Registrar shall not delete that registration unless the company has remedied all the said violations.
Regulations§
363.

The Minister may make regulations for the implementation of this Chapter.

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Section D: Imposition of a Monetary Sanction by the Securities Authority

Imposition of a Monetary Sanction by the Securities Authority§
363a.
(a)In this Section, "the basic amount" means the following, as the case may be:
(1)in respect of a company — the amount prescribed for it in item 1 of the Sixth Schedule to the Securities Law;
(2)in respect of an individual — the amount prescribed in item 5 of the Sixth Schedule to the Securities Law.
(b)If a person violated a provision of this Law, as specified below, in connection with a company that is a reporting corporation, the Securities Authority may impose on that person a monetary sanction pursuant to the provisions of this Section, in the basic amount:
(1)the company has not prescribed the minimum required number of directors on the board of directors who are required to have accounting and financial expertise, contrary to the provisions of section 92(12);
(2)the company has no chairperson of the board of directors serving, contrary to the provisions of section 94(a), for more than 60 days;
(3)the general manager of the company, a relative of the general manager, or a person directly or indirectly subordinate to the general manager is serving as chairperson of the board of directors, contrary to the provisions of section 95(a);
(4)the chairperson of the board of directors is serving in another position in the company or in a corporation under its control, contrary to the provisions of section 95(b);
(5)no audit committee is serving in the company, contrary to the provisions of sections 114 and 115, for more than 90 days;
(6)no general manager is serving in the company, contrary to the provisions of section 119, for more than 90 days;
(7)no internal auditor is serving in the company, contrary to the provisions of section 146, for more than 90 days;
(8)a director or office holder who was convicted of an offence is serving in the company, contrary to the provisions of section 226 or section 251a; however, no monetary sanction shall be imposed on the appointing party or on the company if the director or office holder did not notify the appointing party or the company, as the case may be, of the conviction;
(9)a director or office holder whose appointment was prohibited by an administrative enforcement committee is serving in the company, contrary to the provisions of section 226a; however, no monetary sanction shall be imposed on the appointing party or the company if the director or office holder did not notify the appointing party or the company, as the case may be, of the prohibition;
(10)at least two external directors are not serving in the company, contrary to the provisions of section 239(a), for more than 90 days, and in respect of first external directors as referred to in section 242 — for more than 90 days from the latest date for convening a general meeting pursuant to that section;
(11)in a company where, at the time of appointment of an external director, all members of its board of directors are of the same sex, an external director of the other sex was not appointed, contrary to the provisions of section 239(d);
(12)an external director with accounting and financial expertise is not serving in the company contrary to the provisions of section 240(a1)(1), for more than 90 days;
(13)in a committee authorised to exercise a power of the board of directors, at least one external director is not serving, contrary to the provisions of section 243.
(c)Notwithstanding the provisions of subsection (b), no monetary sanction shall be imposed for violation of paragraphs (5), (10) and (12) of that subsection if the violation stems from the failure to appoint an external director due to the absence of the majority required for appointment at the general meeting.
(d)In counting the days under this section, the days required for the approval of appointments by the person supervising the company under any law shall not be included.
Continuing Violation and Repeated Violation§
363b.
(a)In the case of a continuing violation, one-fiftieth of the monetary sanction shall be added thereto for each day on which the violation continues.
(b)In the case of a repeated violation, an amount equal to half of the monetary sanction that could have been imposed for it had it been a first violation shall be added to the monetary sanction; for this purpose, "repeated violation" means a violation of a provision from among the provisions specified in section 363a(b), within two years of a previous violation of the same provision for which the Securities Authority imposed a monetary sanction on the violator under this Section.
Application of Provisions from the Securities Law§
363c.

The provisions of sections 52p to 52r, 52t to 52aa and 56h of the Securities Law shall apply to a monetary sanction under this Section, with the necessary modifications.

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Chapter V: A Public Company or a Bond Company whose Shares or Bonds are Traded Outside Israel

Limitation of Application§

364.
(a)The Minister may determine, after consultation with the Securities Authority, that the provisions of this Law applying to public companies or to private companies that are bond companies shall not apply, in whole or in part, to public companies or to private companies as aforesaid, whose shares or bonds, as the case may be, were offered to the public outside Israel only or are listed on a stock exchange outside Israel only, whether generally or according to categories, all as the Minister shall determine.
(b)The Minister may determine, after consultation with the Securities Authority, that the provisions of this Law applying to public companies or to private companies that are bond companies shall not apply, in whole or in part, to public companies or to private companies as aforesaid, whose shares or bonds, as the case may be, are listed on a stock exchange in Israel and on a stock exchange outside Israel, inter alia in order to prevent a conflict between foreign laws or between the rules prescribed by the stock exchange outside Israel and the provisions of this Law.

Reporting Obligations§

365.
(a)A public company or a private company that is a bond company whose shares or bonds, as the case may be, were offered to the public outside Israel only or are listed for trading on a stock exchange outside Israel only shall submit reports to the Registrar of Companies in accordance with the provisions of this Law applying to a company that is not a reporting corporation, with such modifications as the Minister shall determine.
(b)The Minister may, after consultation with the Securities Authority, determine that subsection (a) shall not apply to companies as referred to therein, in whole or according to categories, as the Minister shall determine; if the Minister so determined, the provisions of sections 142 to 145 shall apply to those companies.
(c)(Repealed)

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Chapter V-A: Limitation of Application to Bond Companies

Limitation of Application§

365a.

The Minister may prescribe, after consultation with the Securities Authority, that the provisions of this Law applicable to bond companies shall not apply, in whole or in part, to a class of bond companies as the Minister shall prescribe.

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Chapter VI: Regulations

Implementation and Regulations§

366.
(a)The Minister may make regulations for the implementation of this Law.
(b)Regulations under this Law require approval by the Constitution, Law and Justice Committee of the Knesset.

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Part 10: Repeal, Transitional Provisions, Application and Commencement

Repeal of the Companies Ordinance§

367.
(a)The Companies Ordinance is repealed, except for —
(1)sections 164 to 201, 244 to 367, 370 to 382, and also sections 1 and 394 insofar as they relate to secured bonds, charges and winding up, both in respect of companies incorporated before the commencement of this Law and in respect of companies incorporated under this Law;
(2)section 33, which shall continue in force in respect of companies that received an exemption under section 32 before the commencement of this Law;
(3)section 369, which shall continue in force in respect of companies struck off in accordance with section 368 before the commencement of this Law;
(4)the provisions and conditions with respect to the amendment of a memorandum — in respect of a company to which section 24 of this Law applies.
(5)section 115a, which shall apply in respect of resolutions of the general meeting required under the Companies Ordinance.
(b)The provisions listed in subsection (a) shall be interpreted, as far as possible, in light of the provisions of this Law.

Transitional Provision Regarding Application of Provisions in the Table A Articles§

368.
(a)The provisions of sections 23 to 29, 51, 58 and 91 of the Second Schedule to the Companies Ordinance shall be deemed as if included in the articles of association of a company incorporated before the commencement of this Law, if those provisions applied to it on the eve of the commencement of this Law pursuant to the provisions of sections 10 or 11 of the Companies Ordinance, as worded on the eve of the commencement of this Law, and this for as long as the articles of association have not been amended pursuant to section 20.
(b)The articles of association of a company incorporated before the commencement of this Law shall be deemed as if a provision were included therein to the effect that the chairperson of the board of directors shall not have a casting vote, as provided in section 107, unless otherwise prescribed in the articles of association, and this for as long as the articles of association have not been amended pursuant to section 20.

Transitional Provision Regarding Parent Company Shares Held by a Subsidiary§

369.
(a)The provisions of section 309(b) shall not alter the voting rights by virtue of shares in a parent company that were acquired by a subsidiary or by another corporation controlled by the parent company before the commencement of this Law, to the extent that such voting rights were vested in them under law.
(b)Where shares as referred to in subsection (a) were acquired and, after the commencement of this Law, a subsidiary or another corporation controlled by the parent company acquired additional shares of the same class and thereafter some of the shares were sold, then, for the purpose of voting rights by virtue of the remaining shares, the shares acquired after the commencement of this Law shall be deemed to have been sold first.

Application to a Company Limited by Guarantee§

370.

A company that, on the eve of the commencement of this Law, was a company limited by guarantee, as defined in the Companies Ordinance as worded on the eve of the commencement of this Law, and had no share capital, shall be subject to the provisions of this Law and its members shall be deemed to be shareholders in a company having share capital without par value.

Transitional Provision Regarding Internal Auditor§

371.

A person who served as internal auditor in a public company on the eve of the commencement of this Law pursuant to an approval under section 3(b) of the Internal Audit Law, 5752-1992, may continue to serve as internal auditor in that company.

Public Director§

372.

A public director appointed pursuant to the provisions of section 96b of the Companies Ordinance, as worded on the eve of the commencement of this Law, shall be deemed, for the purposes of Chapter I of Part Six, to be an external director; however, for the purposes of the duration of tenure and the renewal of tenure, the provisions of the Companies Ordinance as worded on the eve of the commencement of this Law shall apply.

Amendment of the Securities Law — No. 18§

373.

In the Securities Law, 5728-1968 —

(1)in section 36, after subsection (a) the following shall be inserted:

"(a1) The obligation to file reports or notices, as referred to in subsection (a), with the Registrar, shall not apply to a public company as defined in the Companies Law, 5759-1999.";

(2)Chapter IX-1 — is repealed;
(3)In place of section 56(d) the following shall be inserted:

"(d) The Minister of Finance shall prescribe, on the proposal of the Authority, after consultation with the Minister of Justice and with the approval of the Finance Committee of the Knesset, regulations concerning —

(1)a tender offer for securities of a listed company;
(2)the disclosure to be given of the particulars of a private placement of securities in a listed company that were not offered to the public, including the powers of the Authority with respect to such disclosure;
(3)the disclosure to be given of the particulars of an act or transaction of a company requiring approval pursuant to sections 275 or 320(c) of the Companies Law, 5759-1999, including the powers of the Authority with respect to such disclosure."

Amendment of the Securities Law (Amendment No. 11) — No. 5§

374.

In the Securities Law (Amendment No. 11), 5751-1990, in section 14, subsection (d) — is repealed.

Amendment of the Joint Investment Trust Law — No. 6§

375.

In the Joint Investment Trust Law, 5754-1994 —

(1)in section 16 —
(a)in subsection (a), in place of "Section B of Chapter IV of the Companies Ordinance" there shall be inserted "sections 239 to 249 of the Companies Law, 5759-1999, with respect to the appointment of external directors, with the necessary modifications";
(b)after subsection (a) the following shall be inserted:

"(a1) The external directors shall be appointed by the fund manager after the trustee has examined and confirmed that the eligibility conditions prescribed in section 240 of the Companies Law, 5759-1999, are satisfied in relation to them; the trustee shall report to the Registrar and to the Securities Authority, and in the case of a closed-end fund — also to the stock exchange, on the results of its examination.";

(2)in section 41, in place of "Chapter IX-1 of the Securities Law" there shall be inserted "Section B of Chapter III of Part Five of the Companies Law, 5759-1999".

Amendment of the National Insurance Law — No. 35§

376.

In the National Insurance Law [Consolidated Version], 5755-1995, after section 6 the following shall be inserted:

"Insured persons who are members or office holders in a corporation

6a. (a) The Minister, with the approval of the Labour and Welfare Committee, may prescribe by Order that insured persons who are members of a corporation or office holders in a corporation, as defined in the Order, shall be deemed, for the purposes of this Law, to be employees or self-employed persons or persons who are neither employees nor self-employed persons.

(b)An Order under subsection (a) shall be prescribed having regard, inter alia, to the scope of business of the corporation, the identity of the members and office holders therein and their activities in the corporation, and to the other circumstances of the matter.
(c)The provisions of section 6(b) and (c) shall apply to an Order under this section.
(d)In this section —
(1)"members of a corporation" that is a company — shareholders, including a shareholder in a company that has a single shareholder;
(2)the terms used herein shall be interpreted as they are defined under the Companies Law, 5759-1999, or under the law applicable to that corporation, all insofar as they have no meaning under this Law."

Commencement§

377.

This Law shall commence, except for the sections listed below, on the 25th day of Shevat 5760 (1 February 2000):

(1)sections 87 to 89 shall enter into force after the publication of regulations for their implementation, and on the date to be prescribed in those regulations;
(2)sections 143 and 145 shall enter into force upon the expiry of three years from the day of publication of this Law or on an earlier date as the Minister and the Minister of Finance shall prescribe, provided that provisions concerning electronic reporting under the Securities Law have been prescribed; the date of entry into force of sections 143 and 145 shall be published in advance in Reshumot;
(3)section 36(a1) of the Securities Law, as worded in section 373 of this Law, shall enter into force on the date of entry into force of sections 143 and 145 of this Law, as referred to in paragraph (2).

Publication§

378.

This Law shall be published in Reshumot within 45 days of the day of its adoption by the Knesset.

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