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
Premium
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 B: Independence
Independence of the Auditing Accountant§
160.
(a)The auditing accountant shall be independent of the company, whether directly or indirectly.
(b)The Minister may prescribe provisions concerning the independence of an auditing accountant, including provisions concerning the independence of accountants who are partners in a partnership that is the auditing accountant, or concerning the independence of accountants who are shareholders in an accounting firm that is the auditing accountant.
Duty to Perform an Additional Audit§
161.
Where an audit action was performed at a time when a relationship of dependence existed pursuant to the provisions of section 160, an additional audit action shall be performed by another auditing accountant, unless, at the time when the matter became known to the board of directors, five years had elapsed from the time at which the said audit action was performed.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section C: Termination of Office of an Auditor
Termination of Office§
162.
(a)The general meeting may terminate the office of the auditing accountant.
(b)In a public company or in a private company that is a bond company, where the agenda includes the termination of the office of an auditing accountant or the non-renewal of office, the position of the audit committee shall be brought before the general meeting, after the auditing accountant has been given a reasonable opportunity to present his position before it.
Termination of Office Due to Dependence§
163.
(a)Where it becomes known to the board of directors that a relationship of dependence exists pursuant to the provisions of section 160, it shall notify the auditing accountant without delay that he must act to bring the dependence to an immediate end; if the dependence has not ceased, the board of directors shall convene, within a reasonable time, a special meeting whose agenda includes the termination of the office of the auditing accountant.
(b)A general meeting convened as stated in subsection (a) shall resolve to terminate the office of the auditing accountant; however, the general meeting may, after the position of the auditing accountant has been brought before it, resolve not to accept the board of directors' proposal for termination of office, if it finds that the auditing accountant has no dependence on the company.
Position of the Auditing Accountant§
164.
(a)The board of directors shall give the auditing accountant a reasonable opportunity to present his position before a general meeting whose agenda includes the termination of his office or the non-renewal thereof, and shall, inter alia, invite the auditing accountant to participate in the meeting.
(b)Where the auditing accountant has resigned in circumstances that are of interest to the shareholders of the company, he shall notify the board of directors of the company accordingly.
(c)Without derogating from the provisions of any law, the board of directors shall notify the shareholders of the reasons for the auditing accountant's resignation in such detail as it deems appropriate, and may also notify them of its own position on the matter.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section D: Remuneration of an Auditor
Remuneration of the Auditing Accountant§
165.
(a)The remuneration of the auditing accountant for an audit action shall be determined by the general meeting, or by the board of directors if the general meeting has authorised it to do so and in accordance with the terms of the authorisation, or if the matter has been prescribed in the articles of association and in accordance with the provisions thereof.
(b)Where the remuneration for an audit action has been determined by the board of directors, the board of directors shall report to the annual meeting on the remuneration of the auditing accountant.
Prohibition on Conditioning Remuneration or Granting Indemnification§
166.
(a)A company shall not make payment of the fee of an auditing accountant conditional on terms that restrict the manner of performing an audit action or that link the outcome of the audit to the fee.
(b)A company or anyone on its behalf shall not indemnify, whether directly or indirectly, the auditing accountant in respect of a liability imposed on him as a result of a breach of his professional responsibility in the provision of services that are required by law to be provided by an accountant, or as a result of a failure to fulfil any other duty imposed on him by law.
Remuneration for Additional Services§
167.
(a)The remuneration of the auditing accountant for additional services provided to the company that are not an audit action shall be determined by the board of directors; however, it is possible to prescribe in the articles of association that the remuneration for such services shall be determined by the general meeting.
(b)The board of directors shall report to the annual meeting on the terms of engagement of the auditing accountant for additional services, including payments and commitments of the company towards the accountant; for the purposes of this section, "accountant" includes a partner, employee or relative of an accountant and includes a corporation under his control.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Section E: Powers, Duties and Liability of an Auditor
Powers of the Auditing Accountant§
168.
(a)The auditing accountant may at any time inspect the documents of the company required by him for the purpose of fulfilling his function and receive explanations with respect thereto.
(b)The auditing accountant may participate in any general meeting at which financial reports in respect of which he has performed an audit action are to be presented, and also in a meeting of the board of directors discussing the approval of financial reports or in a meeting of the board of directors convened pursuant to section 169; the board of directors shall notify the auditing accountant of the place and time at which the general meeting or the meeting of the board of directors is to be convened.
Duty to Report§
169.
(a)Where the auditing accountant becomes aware, in the course of an audit action, of material deficiencies in the accounting controls of the company, he shall report thereon to the chairperson of the board of directors.
(b)Where the auditing accountant has notified the chairperson of the board of directors of deficiencies as referred to in subsection (a), the chairperson of the board of directors shall convene, without delay, a meeting of the board of directors to discuss the matters brought to his attention.
Liability for the Opinion§
170.
(a)The auditing accountant is liable towards the company and its shareholders for the content of his opinion with respect to the financial reports.
(b)Nothing in the provisions of subsection (a) shall prevent the existence of liability of the auditing accountant under any law.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Chapter VI: Financial Reports
Financial Reports§
171.
(a)A company that is a reporting corporation shall maintain accounts and shall also prepare financial reports pursuant to the Securities Law.
(b)A company that is not a reporting corporation shall maintain accounts and shall also prepare financial reports as provided in this Law.
(c)The financial reports shall be approved by the board of directors, signed in its name, and brought before the annual meeting.
(d)(Repealed)
(e)The Minister may prescribe provisions and conditions with respect to the procedure for approving the financial reports, including with respect to the duty to appoint a board committee to examine the financial reports, the qualifications of the members of that committee, and the degree of their connection to the company or to a controlling shareholder thereof; with respect to a company referred to in subsection (a), the provisions and conditions shall be prescribed after consultation with the Securities Authority.
Preparation of Financial Reports in a Company that is Not a Reporting Corporation§
172.
(a)A company that is not a reporting corporation shall prepare, for each year, financial reports that shall include a balance sheet as at 31 December (hereinafter — the determining date) and a profit and loss account for the period of one year ending on that date, as well as additional financial reports, all in accordance with what is required under generally accepted accounting principles (in this Chapter — the reports); the auditing accountant shall audit the reports.
(b)A company that is not a reporting corporation may prescribe in its articles of association that, notwithstanding the provisions of subsection (a), the reports shall be for a year that does not end on the determining date but on another date to be prescribed in the articles of association (hereinafter — the special date).
(c)The reports of a company that is not a reporting corporation shall be prepared within six months of the determining date or of the special date, as the case may be, or within such other period as has been prescribed in the articles of association, provided that no period exceeding nine months shall be prescribed.
(d)The reports shall be prepared in accordance with generally accepted accounting principles and shall fairly reflect what they are required to reflect in accordance with those principles.
(e)The Minister may prescribe provisions with respect to the identity and number of signatories to the reports; as long as no such provisions have been prescribed, the reports shall be signed by at least one director.
(f)The Minister may prescribe particulars to be included in the reports; if the Minister has prescribed such particulars, they shall apply notwithstanding what is prescribed in generally accepted accounting principles.
(g)An inactive company, as referred to in section 158, may resolve by a resolution adopted at the general meeting to which no shareholders objected as specified in section 158(a), that it is not required to prepare reports pursuant to this Chapter; however, no such resolution shall derogate from the duty imposed by virtue of any law to prepare or submit reports, including audited reports.
Presentation of the Reports to Shareholders§
173.
(a)The board of directors of a company that is not a reporting corporation shall bring before the annual meeting the reports approved by it, and in a company to which the provisions of section 61 apply, shall send the reports to the shareholders.
(b)The board of directors of a company that is not a reporting corporation shall bring before the annual meeting a report that shall include its explanations with respect to the events and changes that have occurred in the state of affairs of the company and that have affected the reports, in such detail as it deems appropriate.
(c)The reports shall be kept at the registered office of the company for at least seven years from the date of their preparation, for inspection by the directors of the company and the shareholders.
(d)A shareholder in a company that is not a reporting corporation is entitled to receive a copy of the reports and of the opinion of the auditing accountant with respect thereto.
(e)Copies of the reports in a private company that is not a reporting corporation shall be sent to all those entitled to receive notice of general meetings, not later than fourteen days before the date set for the holding of the annual meeting, all unless otherwise prescribed in the articles of association.
Declaration of the Board of Directors§
174.
The board of directors shall declare in the annual report, as referred to in section 141, that it has complied with the provisions of section 173(a).
Duty to File Balance Sheets§
175.
(a)A company that is not a reporting corporation shall attach to its annual report the balance sheet included in the reports, if at least one of the following conditions is fulfilled in respect of it:
(1)its articles of association do not restrict the right to transfer its shares;
(2)its articles of association do not prohibit the offering to the public of shares or bonds;
(3)its articles of association do not limit the number of shareholders in the company to fifty, excluding employees of the company or persons who were its employees and who, while being its employees and even after their employment has ceased, continue to be shareholders in the company; for the purposes of this paragraph, two or more persons who together hold a share or shares in the company shall be regarded as one shareholder.
(b)The Minister may prescribe that the provisions of subsection (a) shall not apply generally or to classes of companies that are not reporting corporations.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Part 5: Shareholder
Chapter I: Shareholder and Share Certificate
Shareholder in a Private Company§
176.
A shareholder in a private company is a person who is registered as such in the shareholder register.
Shareholder in a Public Company§
177.
A shareholder in a public company is one of the following:
(1)a person in whose favour a share is registered with a stock exchange member and that share is included among the shares registered in the shareholder register in the name of a registration company;
(2)a person registered as a shareholder in the shareholder register;
(3)(Repealed)
Share Certificate§
178.
(a)A shareholder who is registered in the shareholder register is entitled to receive from the company a certificate attesting to his ownership of the share.
(b)A registration company is entitled to receive from the company a certificate attesting to the number and class of shares registered in its name in the shareholder register.
179.§
(Repealed — תשע״ו־2)
Form of Share Certificate§
180.
The Minister may prescribe provisions concerning the form of a share certificate, its format, the manner of its preparation and its print.
Forfeiture§
181.
(a)A company may prescribe in its articles or in an allotment agreement a provision whereby the board of directors is entitled to forfeit a share allotted by the company and to sell it, if the consideration to which the shareholder undertook (hereinafter — the debtor), in whole or in part, was not given at the time and on the terms prescribed in the agreement or in the articles.
(b)Shares that have been forfeited and have not yet been sold shall be dormant shares, as defined in section 308.
(c)The debtor shall continue to be liable to the company, unless the forfeited shares have been sold and the company has received the full consideration to which it was entitled, plus the expenses incidental to the sale.
(d)If the consideration received for the sale of the forfeited shares exceeded the consideration to which the debtor had undertaken, the debtor shall be entitled to the return of the partial consideration that the debtor gave for them, if any, subject to the provisions of the articles or the allotment agreement, provided that the consideration remaining with the company shall not be less than the full consideration to which the debtor had undertaken, plus the expenses incidental to the sale.
(e)Nothing in the provisions of this section shall derogate from any other remedy of the company against the debtor.
Determining Date for Share Ownership§
182.
(a)The shareholders entitled to a dividend, as referred to in section 306, are the shareholders at the time of the resolution on the dividend or at a later time if another time is prescribed in that resolution.
(b)The shareholders in a public company entitled to participate and vote at a general meeting are the shareholders at the time to be prescribed in the resolution convening the general meeting, provided that such time shall not exceed twenty-one days before the date of convening of the general meeting, and shall not be less than four days before the date of convening.
(c)The Minister may prescribe other provisions regarding the times referred to in subsection (b), if required for the purpose of voting by means of voting instruments, as referred to in section 87.
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Chapter II: Rights and Duties of a Shareholder
Rights and Duties of a Shareholder§
183.
The rights and duties of a shareholder are as prescribed in this Law, in the company's articles and under any law.
Right to Information§
184.
Shareholders have the right to inspect the following documents of the company:
(1)minutes of general meetings, as referred to in section 90;
(2)the register of shareholders and the register of substantial shareholders, as referred to in section 129;
(3)a document in the possession of the company, as referred to in section 185;
(4)the articles and financial statements, as referred to in section 187;
(5)any document that the company is required to file pursuant to this Law and pursuant to any law with the Registrar of Companies or with the Securities Authority, which is open for public inspection at the Registrar of Companies or at the Securities Authority, as the case may be.
Inspection of Company Documents§
185.
(a)A shareholder is entitled to demand from the company, stating the purpose of the demand, to inspect any document in the possession of the company in any of the following cases:
(1)the document relates to an action or transaction requiring approval of the general meeting pursuant to the provisions of sections 255 and 268 to 275;
(2)in a private company — if this is required for the purpose of making a decision on a matter on the agenda of the general meeting of the company.
(b)The company may refuse a shareholder's request if in its opinion the request was submitted in bad faith, or if the documents requested contain a trade secret or patent, or if disclosure of the documents may otherwise harm the interests of the company.
Information on Remuneration of Directors§
186.
(a)The board of directors of a company that is not a reporting corporation and that is required to appoint an auditor is obliged, upon the demand of one or more shareholders holding at least ten per cent of the voting power in the company, to furnish to that shareholder a notice certified by the company's auditor, setting out full particulars of all payments made by the company to each of the directors and of undertakings to make payments that it has assumed, including in respect of retirement terms, in each of the last three years for which financial statements of the company have been prepared; the amount shall also include payments received by a director while serving as an office holder in a subsidiary of the company.
(b)If the board of directors finds that the demand is submitted in bad faith, it may refuse it.
Right to Receive Articles and Financial Statements§
187.
(a)Every shareholder is entitled to receive from the company, upon request, a copy of the articles, and also, in a company that is not a reporting corporation, to receive a copy of the financial statements, as referred to in section 173(d).
(b)A shareholder in a company that is a reporting corporation is entitled to receive from the company a copy of the financial statements, if the statements have not been published in accordance with the provisions pursuant to Chapter 7a of the Securities Law.
Right to Vote§
188.
Every shareholder is entitled to participate in the general meeting and to vote thereat, subject to the provisions of the articles with respect to the voting rights attached to each share.
Authorisation to Enter into Agreements§
189.
Shareholders may enter into voting agreements among themselves, subject to the duties imposed on them pursuant to this Law.
Right to Dividend§
190.
Every shareholder is entitled to receive a dividend, in accordance with the rights attached to each share, if a resolution has been passed to distribute a dividend as referred to in section 306.
Right in Case of Oppression§
191.
(a)If the affairs of a company have been conducted in a manner that constitutes oppression of all or some of its shareholders, or if there is a substantial concern that they will be so conducted, the court may, upon the application of a shareholder, give such directions as appear to it to be necessary for the removal or prevention of the oppression, including directions as to the future conduct of the company's affairs, or directions to the shareholders of the company to purchase, or for the company to purchase subject to the provisions of section 301, shares of the company.
(b)Where the court has given directions as referred to in subsection (a), the consequent amendments to the company's articles and resolutions shall be made as the court shall determine, and such amendments shall be deemed to have been duly adopted by the company; a copy of the decision shall be sent to the Registrar of Companies, and if the company is a public company — to the Securities Authority.
Duties of Shareholders§
192.
(a)A shareholder shall act in good faith and in an acceptable manner in exercising that person's rights and in fulfilling that person's duties towards the company and towards the other shareholders, and shall refrain from abusing that person's power in the company, including, inter alia, in voting at the general meeting and at class meetings, on the following matters:
(1)amendment of the articles;
(2)increase of the registered share capital;
(3)merger;
(4)approval of actions and transactions requiring approval of the general meeting pursuant to the provisions of sections 255 and 268 to 275.
(b)A shareholder shall refrain from oppressing other shareholders.
(c)The laws applicable to breach of contract shall apply, mutatis mutandis, to a breach of the provisions of subsections (a) and (b), and to a breach of the provision of subsection (b), the provisions of section 191 shall also apply, mutatis mutandis.
Duty of Controlling Shareholder and Holder of Decisive Power to Act Fairly§
193.
(a)The duty to act fairly towards the company is imposed on the following:
(1)the controlling shareholder of the company;
(2)a shareholder who knows that the manner in which that person votes will be decisive in respect of a resolution of a general meeting or a class meeting of the company;
(3)a shareholder who, pursuant to the provisions of the articles, has the power to appoint or prevent the appointment of an office holder in the company or other power in relation to the company.
(b)The laws applicable to breach of contract shall apply, mutatis mutandis, to a breach of the duty of fairness, having regard to the position in the company of those listed in subsection (a).
Need to cite this law in a foreign court?
Eli Shimony Israeli Attorneys-at-Law provides certified Expert Legal Opinions on Israeli law within 24–48 hours, accepted by courts worldwide.
Contact Us →Read the entire law on one page — continuous text, no page breaks, plus PDF downloads.