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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Section I: Audit Committee
Appointment of the committee§
114.
The board of directors of a public company or of a private company that is a bond company shall appoint from among its members an audit committee, and the provisions of Section H shall apply to it, with the necessary modifications.
Members of the committee§
115.
(a)The number of members of the audit committee shall not be fewer than three, all external directors shall be members of it, and a majority of its members shall be independent directors.
(b)
(1)The following shall not be members of the audit committee: the chairperson of the board of directors, and any director employed by the company or employed by a controlling shareholder of the company or by a corporation controlled by such a controlling shareholder, a director who provides services, on a permanent basis, to the company, to a controlling shareholder of the company, or to a corporation controlled by such a controlling shareholder, and also a director whose principal livelihood is derived from the controlling shareholder;
(2)The provisions of paragraph (1) shall not apply to a State employee with respect to membership on the audit committee of a government company or a government subsidiary, provided that the Minister responsible for the affairs of the company is not the Minister responsible for the ministry in which the said State employee is employed.
(c)The controlling shareholder or that person's relative shall not be a member of the audit committee.
(d)The chairperson of the audit committee shall be an external director, or a State employee as referred to in subsection (b)(2) who has not served as chairperson of the committee for more than nine years.
(e)A person who is not entitled to be a member of the audit committee shall not be present at meetings of the committee during deliberation and during the adoption of resolutions, unless the chairperson of the committee has determined that that person's presence is required for the purpose of presenting a particular matter; however —
(1)an employee of the company who is not a controlling shareholder or that person's relative may be present at meetings of the committee during deliberation if the committee so requests, provided that the resolution is adopted without that person's presence;
(2)without derogating from paragraph (1), the legal adviser and the secretary of the company who are not the controlling shareholder or that person's relative may be present during deliberation and during the adoption of resolutions, if the committee so requests.
(g)Notwithstanding the provisions of subsection (e), where the audit committee serves as a committee for the examination of financial statements pursuant to section 171(e), the provisions under that section shall apply during the deliberation on the financial statements.
Notice of meetings§
116.
(a)The internal auditor of the company shall receive notices of the holding of meetings of the audit committee and shall be entitled to participate in them.
(b)The internal auditor may request the chairperson of the audit committee to convene the committee for deliberation on a matter that the internal auditor has specified in the request, and the chairperson of the audit committee shall convene it within a reasonable time from the date of the request, if that chairperson sees reason to do so.
(c)Notice of the holding of a meeting of the audit committee at which a matter relating to the auditing of the financial statements arises shall be provided to the auditing accountant, who shall be entitled to participate in it.
Quorum for the adoption of a resolution in the audit committee§
116a.
The quorum for deliberation and for the adoption of resolutions in the audit committee shall be a majority of the members of the committee, provided that a majority of those present are independent directors and at least one of them is an external director.
Functions of the audit committee§
117.
The following are the functions of the audit committee:
(1)to identify deficiencies in the business management of the company, including, inter alia, through consultation with the internal auditor of the company or with the auditing accountant, and to propose to the board of directors ways to remedy them; where the audit committee has identified a deficiency as aforesaid that is a material deficiency, it shall hold at least one meeting concerning the deficiency in question, in the presence of the internal auditor or the auditing accountant, as the case may be, and without the presence of office holders of the company who are not members of the committee; notwithstanding the foregoing in this section, an office holder may be present for the purpose of presenting a position on a matter within that office holder's areas of responsibility if the committee so requests;
(1a)to decide, on the basis of reasons to be detailed, with respect to acts as referred to in section 255 whether they are material acts or non-material acts, and with respect to transactions as referred to in section 270(1), (4) and (4a) whether they are exceptional transactions or non-exceptional transactions, for the purpose of their approval under this Law, and the audit committee may so decide with respect to a category of acts or transactions, according to criteria that it shall determine once a year in advance;
(1b)to determine, with respect to transactions as referred to in section 270(4) or (4a), even if they are not exceptional transactions, an obligation to conduct a competitive process, under the supervision of the committee or whoever it designates for this purpose and according to criteria that it shall determine, or to determine that other processes shall be conducted as the audit committee shall determine, before entering into such transactions, all in accordance with the type of transaction, and it may determine criteria for this purpose once a year in advance;
(2)to decide whether to approve acts and transactions requiring approval of the audit committee pursuant to sections 255 and 268 to 275;
(2a)to determine the manner of approval of non-negligible transactions, including to determine categories of such transactions that shall require approval of the audit committee; for this purpose, "non-negligible transaction" means a transaction as referred to in the opening part of section 270(4) or the opening part of section 270(4a), in respect of which the audit committee has decided pursuant to the provisions of paragraph (1a) that it is a non-exceptional transaction and has also classified it as a non-negligible transaction, and the audit committee may so decide with respect to a category of transactions, according to criteria that it shall determine once a year in advance;
(3)in a company in which the work plan of the internal auditor is approved by the board of directors pursuant to section 149 — to examine the work plan before its submission for approval by the board of directors and to propose changes thereto;
(4)to examine the internal audit system of the company and the performance of the internal auditor, and also whether the resources and tools necessary for the internal auditor to fulfil that role are at the internal auditor's disposal, having regard, inter alia, to the special needs of the company and its size;
(5)to examine the scope of work of the auditing accountant and that accountant's remuneration, and to bring its recommendations before whoever determines the remuneration pursuant to sections 155 and 165; where the company has appointed a committee for the examination of financial statements pursuant to section 171(e), it may determine that the examination under this paragraph shall be carried out by that committee;
(6)to determine arrangements with respect to the manner of handling complaints by employees of the company in connection with deficiencies in the management of its business and with respect to the protection to be afforded to employees who have made such complaints.
Audit committee in a private company that is not a bond company§
118.
(a)In a private company that is not a bond company, the board of directors may appoint from among its members an audit committee and the provisions of section 115 shall not apply; however, a director employed by the company or providing services to it on a permanent basis shall not serve on it, and the controlling shareholder or that person's relative shall not be the chairperson of the committee; the functions of the audit committee shall be as set out in section 117.
(b)An audit committee shall not be appointed in a private company that is not a bond company, whose function is as referred to in section 117(2), if a majority of its members or their relatives are substantial shareholders.
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Contact Us →Section J: Compensation Committee
Appointment of a compensation committee§
118a.
(a)The board of directors of a public company or of a private company that is a bond company shall appoint from among its members a compensation committee (in this Law — compensation committee).
(b)The number of members of the compensation committee shall not be fewer than three, all external directors shall be members of it and they shall constitute a majority of its members, and the remaining members shall be directors whose terms and conditions of tenure and employment are in accordance with the provisions prescribed pursuant to section 244 and, in a government company — in accordance with the provisions prescribed pursuant to section 19 of the Government Companies Law, 5735-1975, as the case may be; the chairperson of the committee shall be an external director.
(c)The provisions of Section H and of section 115(b) to (e) shall apply to the compensation committee, with the necessary modifications.
(d)An audit committee that satisfies the conditions referred to in subsection (b) may also serve as a compensation committee.
Functions of the Compensation Committee§
118b.
The functions of the Compensation Committee are:
(1)to recommend to the board of directors the compensation policy for office holders, as defined in section 267a(a), and also to recommend to it, once every three years, on the matter of approving the continued validity of a compensation policy that was set for a period exceeding three years, as referred to in section 267a(d);
(2)to recommend to the board of directors the updating, from time to time, of the compensation policy and to examine its implementation;
(3)to decide whether to approve transactions regarding the terms of office and employment of office holders that require the approval of the Compensation Committee pursuant to sections 272, 273 and 275;
(4)to exempt a transaction from the approval of the general meeting, as referred to in section 272(c1)(3).
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Contact Us →Chapter IV: The General Manager
Appointment of the General Manager§
119.
(a)A public company or a private company that is a bond company shall appoint a general manager, and it may appoint more than one general manager.
(b)A private company that is not a bond company may appoint one or more general managers; if no general manager has been appointed, the company shall be managed by the board of directors.
Responsibility of the General Manager§
120.
The general manager is responsible for the day-to-day management of the affairs of the company within the framework of the policy set by the board of directors and is subject to its directions.
Powers of the General Manager§
121.
(a)The general manager shall have all management and executive powers that have not been conferred by this Law or by the articles on another organ of the company, and shall be subject to the supervision of the board of directors.
(b)The general manager may, with the approval of the board of directors, delegate to another person subordinate to him any of his powers.
(c)Notwithstanding the provisions of section 95, the general meeting of a public company may resolve that, for periods each of which shall not exceed three years from the date of the resolution, it is possible to authorise the chairperson of the board of directors or a relative thereof to fulfil the role of general manager or to exercise his powers, and also to authorise the general manager or a relative thereof to fulfil the role of chairperson of the board of directors or to exercise his powers, provided that one of the following is satisfied:
(1)the count of the majority votes at the general meeting shall include at least a majority of the votes of shareholders who are not controlling shareholders of the company and who do not have a personal interest in the approval of the resolution and who participate in the vote; in the count of the votes of the said shareholders, abstentions shall not be taken into account; the provisions of section 276, with the necessary modifications, shall apply to a person who has a personal interest;
(2)the total votes against among the shareholders referred to in paragraph (1) did not exceed two per cent of all voting rights in the company.
(d)Notwithstanding the provisions of section 95, the board of directors of a private company that is a bond company may resolve that, for periods each of which shall not exceed three years from the date of the resolution, it is possible to authorise the chairperson of the board of directors or a relative thereof to fulfil the role of general manager or to exercise his powers, and also to authorise the general manager or a relative thereof to fulfil the role of chairperson of the board of directors or to exercise his powers, provided that approval therefor has been given by the audit committee.
(e)Notwithstanding the provisions of subsections (c) and (d), the Minister may, in consultation with the Israel Securities Authority, prescribe that a resolution pursuant to those subsections shall be given for periods exceeding three years, for such classes of companies and subject to such conditions as the Minister shall prescribe.
Duty to Report to the Board of Directors§
122.
(a)The general manager shall notify the chairperson of the board of directors of any extraordinary matter that is material to the company; if the company has no chairperson of the board of directors or if the chairperson is prevented from fulfilling his role, the general manager shall give notice as aforesaid to all members of the board of directors.
(b)The general manager shall submit to the board of directors reports on such matters, at such times and to such extent as the board of directors shall determine.
(c)The chairperson of the board of directors may, at any time, on his own initiative or pursuant to a resolution of the board of directors, require reports from the general manager on matters relating to the business of the company.
(d)If a notification or report by the general manager requires action by the board of directors, the chairperson of the board of directors shall convene, without delay, a meeting of the board of directors.
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Contact Us →Part 4: Administration of the Company
Chapter I: Registered Office and Digital Address
The Registered Office§
123.
(a)From the day on which a company is registered, it must maintain a registered office in Israel to which any notice to the company may be directed.
(b)Notice of the address of the registered office shall be delivered to the Registrar together with the application to register the company; notice of a change in the address of the registered office shall be delivered to the Registrar within fourteen days after the change; the Registrar shall register the address of the registered office of the company.
(c)Service of a document on a company shall be effected by leaving it at the registered office of the company as registered with the Registrar at the time of service, or by sending it thereto by post.
(d)Service of a document from the Registrar of Companies on a company, or from the Israel Securities Authority on a company that is a reporting corporation, may, notwithstanding the provisions of subsection (c), be effected by leaving it at a place where the Registrar or the Israel Securities Authority, as the case may be, has been satisfied that the company actually conducts its business, or in another manner prescribed under the Securities Law.
The Digital Address§
123a.
(a)From the day on which a company is registered, it must have a digital address, one of each item listed in the Fourth Schedule.
(b)Notice of a digital address of a company as referred to in subsection (a) shall be delivered to the Registrar together with the application to register the company; notice of a change in the digital address as aforesaid shall be delivered to the Registrar within 14 days after the change.
(c)The Registrar shall register the digital address of which the company has given notice pursuant to the provisions of subsection (b), after the requirements of section 3b(a)(1) and (3) of the Digital Communication with Public Bodies Law have been fulfilled, and after the Registrar has verified that the digital address is valid and active.
(d)The Minister, with the approval of the Constitution, Law and Justice Committee of the Knesset, may, by Order, amend the Fourth Schedule.
Documents to be Kept at the Registered Office§
124.
Without prejudice to the provisions of any law, a company shall keep the following documents at its registered office:
(1)the articles of the company;
(2)minutes of meetings of the general meeting as referred to in section 90;
(3)minutes of meetings of the board of directors and its resolutions as referred to in sections 103 and 108;
(4)minutes of meetings of board committees as referred to in section 111;
(5)copies of the company's notices to its shareholders in the last seven years;
(6)the financial statements of the company as referred to in section 171;
(7)the register of shareholders and, in a public company, also the register of substantial shareholders, as referred to in sections 127 and 128;
(8)the register of directors, as referred to in section 224.
Manner of Keeping Documents§
125.
A company may keep the said documents by electronic means, provided that those entitled to inspect them shall have the ability to receive copies of the documents.
Obtaining Copies§
126.
(a)A person entitled to inspect the documents listed in section 124 is entitled to receive a copy thereof in return for payment not exceeding the company's expenses in respect of providing the copy alone.
(b)The Minister may prescribe maximum amounts of payment.
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