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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

This English text was translated from the official Hebrew using a range of translation tools, and it undergoes ongoing checks and updates. It is not a certified translation.

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 C: Establishment and Registration of a Company

Application for Registration§
8.
(a)A person applying to register a company shall submit to the Registrar an application by way of electronic communication in a form prescribed by the Minister, to which the following shall be attached:
(1)a copy of the articles of association;
(2)a declaration by the first directors of their willingness to serve as directors, as prescribed by the Minister.
(b)Notwithstanding the provisions of subsection (a), the Registrar may permit the submission of an application as referred to in that subsection other than by way of electronic communication if circumstances justifying such a course exist.
Fees§
9.
(a)A person applying to register a company shall pay a fee at the time of submission of the application (hereinafter — registration fee).
(b)A company shall pay an annual fee each year.
(c)In this section, "company" includes a foreign company.
Certificate of Incorporation§
10.
(a)The Registrar shall register a company if satisfied that all the requirements under this Law with respect to registration and any matter that is a condition thereof have been fulfilled.
(b)The Registrar shall assign to each company a registration number, as referred to in section 38(c), and shall state it in the certificate of incorporation.
(c)Upon a company being registered, the Registrar shall deliver to it a certificate of incorporation.
(d)A certificate of incorporation delivered to a company shall serve as conclusive evidence that all the requirements under this Law with respect to registration and any matter that is a condition thereof have been fulfilled.
(e)Nothing in the provision of subsection (d) shall cure a defect in the articles of association or prevent the need to amend them.

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Section D: Purpose of a Company

Purpose of a Company§
11.
(a)The purpose of a company is to operate in accordance with business considerations for the maximisation of its profits, and within the framework of such considerations account may be taken, inter alia, of the interests of its creditors, employees and the public interest; a company may also donate a reasonable amount for a worthy cause, even if the donation is not within the framework of business considerations as aforesaid, if a provision to that effect is set out in the articles of association.
(b)The provision of subsection (a) shall not apply to a public benefit company.

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Section E: Acts Done by a Promoter

Ratification of an Act§
12.
(a)A company may ratify an act of a promoter that was done in its name or on its behalf before its incorporation.
(b)Retrospective ratification has the same effect as prior authorisation, provided that a right acquired by another person (in this Section — a third party) in good faith and for consideration before the ratification shall not be prejudiced.
Status of a Third Party to a Promoter's Act§
13.
(a)Where a third party knew, at the time of an act as referred to in section 12, of the existence of the promoter's act, the third party has the option of treating the promoter as the contracting party or of withdrawing from the act and claiming damages from the promoter, if one of the following has occurred:
(1)the company did not ratify the act within one year from the date on which it was done;
(2)it is apparent from the circumstances that the company is not likely to be incorporated, provided that the third party gave the promoter thirty days' advance notice;
(3)the company did not ratify the act within thirty days from the date on which the third party so demanded of it.
(b)Once the company has ratified the act, the promoter is no longer bound or entitled by reason thereof.
(c)The promoter and the third party may derogate from the provisions of this section.
Lack of Knowledge of the Promoter's Act§
14.

Where the third party did not know of the existence of the promoter's act at the time of the act, the following provisions shall apply:

(1)the promoter's act shall bind or entitle the promoter, as the case may be;
(2)once the company has been incorporated it may ratify the act, provided that the ratification does not contradict the act by reason of its nature, terms or the circumstances of the matter; where the company has ratified the act, the promoter's act shall bind the company and also the promoter, jointly and severally, and shall entitle the company only.

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Chapter II: Articles of Association

Section A: Content of the Articles of Association and Amendment thereof

Articles of Association of the Company§
15.

Every company shall have articles of association as set out in this Section.

Validity of the Articles of Association§
16.

The articles of association of a company, as registered upon its incorporation, are valid from the time of its incorporation.

Articles of Association as a Contract§
17.
(a)The articles of association have the force of a contract between the company and its shareholders and between the shareholders inter se.
(b)Amendment of the articles of association shall be made in the manner prescribed by this Law.
Particulars that Must be Included in the Articles of Association§
18.

The articles of association of the company shall include the following particulars:

(1)the name of the company;
(2)the objects of the company;
(3)particulars concerning the registered share capital as referred to in sections 33 and 34;
(4)particulars concerning the limitation of liability as referred to in section 35.
Particulars that May be Included in the Articles of Association§
19.

A company may include in the articles of association matters pertaining to the company or its shareholders, including:

(1)the rights and duties of shareholders and of the company;
(2)provisions concerning the manner of management of the company and the number of directors;
(2a)corporate governance provisions from the recommended provisions set out in the First Schedule, in whole or in part; the Minister, with the approval of the Constitution, Law and Justice Committee of the Knesset, may amend the First Schedule, provided that an amendment relating to public companies or bond companies shall be made in consultation with the Chairperson of the Securities Authority;
(3)any other matter that the shareholders have seen fit to regulate in the articles of association.
Amendment of Articles of Association§
20.
(a)A company may amend its articles of association by a resolution passed by an ordinary majority at a general meeting of the company, unless the articles of association provide that a different majority is required or unless a resolution as referred to in section 22 has been passed.
(b)Where this Law prescribes a provision that may be derogated from by agreement, or where a provision is prescribed in the articles of association requiring a specified majority for the amendment of all or some of the provisions of the articles of association, the company shall not be entitled to amend the said provision except by a resolution passed at a general meeting by that specified majority or by the proposed majority, whichever is the higher of the two.
(c)Where the shares of the company are divided into classes, no amendment shall be made to the articles of association that would prejudice the rights of a class of shares without the approval of a class meeting of that class, unless otherwise prescribed in the articles of association; for the purposes of passing resolutions at a class meeting, the provisions of subsections (a) and (b) shall apply, with the necessary modifications.
(d)Notwithstanding the provisions of this section, an amendment to the articles of association that would require a shareholder to acquire additional shares or to increase the scope of that shareholder's liability shall not be binding upon the shareholder without that shareholder's consent.
Effect of Amendment and Reporting§
21.
(a)An amendment to the articles of association, other than amendments as referred to in section 40, shall take effect from the date on which the resolution thereon was passed by the company or at a later date as determined by the company in its resolution.
(b)A company that has passed a resolution to amend its articles of association shall deliver to the Registrar the text of the resolution within fourteen days of the date of the resolution.
Restriction on Power to Amend Articles of Association§
22.
(a)A company may restrict, in its articles of association or in another contract, its power to amend the articles of association or any provision thereof, if a resolution to that effect has been passed at a general meeting by the majority required for the amendment of the provisions of the articles of association.
(b)A resolution passed as referred to in subsection (a) shall have the same effect as a resolution to amend the articles of association, and the provisions of this Section shall apply thereto.
Signature of Articles of Association§
23.
(a)The articles of association shall be signed by the first shareholders, and the shares allotted to them shall be specified therein, as well as the name, address and identity number of each shareholder.
(b)A lawyer shall authenticate the identity of the signatories to the articles of association, or it shall be authenticated by electronic means as shall be prescribed by regulations.
Transitional Provisions Regarding Memorandum and Articles of Association§
24.

A company that was incorporated before the commencement of this Law may —

(1)amend the provisions set out in its memorandum in the manner and subject to the conditions prescribed therefor in the Companies Ordinance, as in force on the eve of the commencement of this Law, subject to the provision of paragraph (5); however, notwithstanding the provisions of the Companies Ordinance, a company may amend the provisions set out in its memorandum with respect to capital and with respect to the name of the company, by a majority of seventy-five per cent of those participating in the vote, excluding abstentions; an amendment of the registered capital shall take effect from the date of the passing of the resolution concerning the amendment, and an amendment of the name of the company shall not require the consent of the Minister;
(2)amend its memorandum or cancel it in the manner prescribed pursuant to section 350;
(3)amend the provisions set out in its articles of association by a resolution passed at a general meeting by a majority of seventy-five per cent of those participating in the vote, excluding abstentions, or by a different majority if so prescribed in the memorandum or articles of association of the company;
(4)prescribe in the articles of association, subject to the provision of section 20(b), a provision concerning the majority required for the amendment of the provisions of the articles of association, by a resolution passed at a general meeting by a majority of seventy-five per cent of those participating in the vote, excluding abstentions, and by a greater majority if such majority was prescribed in the memorandum or articles of association of the company; where a new provision has been prescribed as aforesaid, the provisions of section 20(b) shall apply to the amendment thereof;
(5)prescribe in the memorandum, by a resolution passed at a general meeting by a majority of seventy-five per cent of those participating in the vote, excluding abstentions, a provision concerning the amendment of the majority required for the amendment of provisions in the memorandum that the general meeting is competent to amend; the provisions of section 20(b) shall apply for this purpose, with the necessary modifications.

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Section B: Name of the Company

Choice of Name§
25.

A company may be registered under any name, subject to the provisions of this Section and to the provisions of any law.

Inclusion of "Ltd" at End of Company Name§
26.

The name of a company whose shareholders' liability is limited, as referred to in section 35, shall include at its end the designation "Limited" or "Ltd".

Misleading Name§
27.
(a)A company shall not be registered under a name that is —
(1)the name of a corporation lawfully registered in Israel, or one so similar thereto as to be misleading;
(2)a registered trade mark in respect of goods or services dealt in for purposes similar to the objects of the company applying for registration, or a name so similar thereto as to be misleading, unless it is proved to the Registrar that the owner of the trade mark has consented thereto in writing; for this purpose, "registered trade mark" has the meaning assigned to it in the Trade Marks Ordinance [New Version], 5732-1972.
(b)Without derogating from the provisions of subsection (a), a company shall not be registered under a name that the Registrar considers to involve deceit or misrepresentation.
Name Contrary to Public Policy§
28.

A company shall not be registered under a name that the Registrar considers likely to offend public policy or public sensibilities.

Power of Registrar to Order Change of Name§
29.
(a)Where a company has been registered under a name that may not be registered pursuant to this Section, the Registrar may require it to change its name.
(b)If the company has not delivered to the Registrar, within four months of the date of the requirement as referred to in subsection (a), a notice of a resolution to change its name, the Registrar may change its name to a name of the Registrar's choosing.
(c)Where the Registrar has decided to change the name of the company, the Registrar shall send the company a certificate of change of name, and the change shall be deemed to have been determined pursuant to a resolution of the company and the Registrar.
(d)The Minister may prescribe provisions concerning the publication of a change of name.
Injunction§
30.

The court may, upon the application of a company, order a person who has taken its name or a name so similar thereto as to be misleading, or, upon the application of a person aggrieved by the registration of a company under a name contrary to the provisions of section 27, order the company, to refrain from using the name, unless the court is satisfied that the defendant's right to use the name precedes the applicant's right.

Change of Name§
31.
(a)A company may, with the approval of the Registrar, change its name, and the provisions of sections 25 to 30 shall apply, with the necessary modifications, to the resolution to change and to the proposed name.
(b)Where the Registrar has approved a company to change its name, the Registrar shall register the new name in place of the former name and shall issue to it a certificate of change of name.

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Section C: Objects of the Company

Statement of Objects of Company in Articles of Association§
32.

A company shall state its objects in its articles of association by prescribing one of the following objects:

(1)to engage in any lawful activity;
(2)to engage in any lawful activity except for the types of activity specified in the articles of association;
(3)to engage in the types of activity specified in the articles of association.

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Section D: Registered Share Capital and its Division

Registered Share Capital§
33.

A company shall prescribe in its articles of association its registered share capital, including the number of shares by class.

Nominal Value of Shares§
34.
(a)The shares of the company may all have a nominal value or all be without a nominal value.
(b)Where the shares of the company are without a nominal value, only their number shall be stated in the articles of association; where the shares of the company have a nominal value, the articles of association shall state, in addition to their number, also the nominal value of each share.
(c)Where the shares of the company are without a nominal value, the provisions of this Law referring to registered or issued share capital shall apply, with the necessary modifications, so that the registered share capital shall be the number of shares prescribed in the articles of association and the issued capital shall be the number of shares allotted by the company.

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Section E: Limitation of Liability

Limitation of Liability§
35.
(a)The liability of shareholders for the debts of the company may be unlimited, and this shall be stated in the articles of association; where the liability of shareholders is limited, the manner of limitation shall be detailed in the articles of association.
(b)Where the shares of the company have a nominal value, shareholders shall be liable for payment of at least the nominal value, unless the provisions of section 304 have been fulfilled.

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