Translation Notice — This is an English translation of a Hebrew law and may contain inaccuracies. In any dispute or legal matter, the original Hebrew text as published in Reshumot (ספר החוקים) is the sole authoritative and legally binding version.
Law
Companies Law, 5759-1999
חוק החברות
Chapter III: The Registrar of Companies
Section A: The Companies Registry
Appointment and Qualifications of the Registrar and Deputy
36.
(a)The Minister shall appoint a State employee who is qualified to serve as a judge of a Magistrate's Court to be the Registrar of Companies, and such person shall head the Companies Registry.
(b)The Minister may appoint a State employee as Deputy Registrar of Companies and vest in such person the powers of the Registrar.
(c)Where the Registrar is prevented from fulfilling his duties, the Minister may vest in an employee of the Ministry of Justice all or any of the powers of the Registrar.
Powers of the Registrar
37.
(a)The Registrar shall determine whether the conditions and requirements prescribed under this Law have been fulfilled with respect to the following matters:
(1)the incorporation of a company;
(2)a change of a company's name;
(3)registration of a document;
(4)a merger.
(b)The Registrar may, in order to verify that a company is complying with its obligations under this Law, direct it to submit for his inspection the registers and books that the company is required to maintain under this Law and that are open to public inspection, or up-to-date copies thereof, within a period of not less than fourteen days from the date of the demand.
(c)Where the Registrar finds that the said registers or books are not up to date, he may direct the company to update them within such period as he shall determine.
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Contact Us →Section B: Maintenance of Registers
Maintenance of Registers and Receipt of Documents
38.
[Amendment: 5782]
(a)The Registrar shall maintain a record with respect to each company and shall receive documents and reports for registration or filing in the company's files, all as determined by the Minister.
(b)The submission of documents and reports, and their registration or filing in the company's files, shall be carried out by means of electronic communication (hereinafter – electronic filing or electronic reporting); however, the Registrar may permit the submission of a document or report other than by electronic reporting if circumstances justifying such exist.
(c)The Registrar shall maintain a companies register in which every company shall be recorded and assigned an identity number, and the Registrar may assign different numbering to different categories of companies, as the Minister shall determine.
Submission of Documents for Registration
39.
[Amendment: 5778]
(a)Every document and every report that must be submitted to the Registrar shall bear the identity number of the company and shall be signed by one of the office holders of the company, with the indication of that person's name and position, as confirmation that the particulars contained therein are correct and complete; for the purpose of this section, "office holder of a company" – includes the company secretary or a person authorized by the company for the purpose of this section.
(b)Notwithstanding the provisions of subsection (a), a document or report submitted by a company that is in receivership or in liquidation or in respect of which an order to commence proceedings has been issued, may be signed by the receiver or the trustee.
(c)The provisions of this section shall apply unless a different provision exists in this regard under any law.
(d)Where the Minister has prescribed provisions regarding electronic reporting, the Minister may determine that the provisions of subsection (a) concerning the signature of an office holder shall not apply to documents and reports submitted in the manner referred to.
Validity Conditional upon Registration
40.
[Amendment: 5767-2]
The following acts of a company shall have no effect unless registered –
(1)A change of company name pursuant to the provisions of Section 31;
(2)A change of company objects;
(3)An amendment to the articles of association as a result of which the company becomes a public benefit company, as provided in Section 345b(c).
Copies as Evidence
41.
[Amendment: 5765]
(a)A copy certified by the Registrar of any document held or registered with the Registrar shall be received in any legal proceeding as an original and shall constitute conclusive evidence that the original document is held at the Companies Registration Office.
(b)Where the Minister has prescribed provisions regarding electronic filing, the provisions of subsection (a) shall apply to output of the said reports; for the purpose of this section, "output" – as defined in the Computer Law, 5755–1995.
No Constructive Notice
42.
The registration or existence of a document in a company or with the Registrar does not, in itself, constitute evidence of knowledge of its contents.
Inspection
43.
[Amendment: 5782]
(a)The registers maintained by the Registrar at the Registration Office shall be open to public inspection, and any person may inspect them and obtain certified copies of what is recorded therein, whether through the Registrar or through others authorized by the Registrar for that purpose, all as determined by the Minister.
(b)Notwithstanding the provisions pursuant to subsection (a), item (2) of the Fourth Schedule shall be open for inspection only by a public body that sends digital messages as defined in the Digital Communication with Public Bodies Law.
Regulations
44.
[Amendment: 5767, 5771-3, 5782, 5784]
The Minister may prescribe the following:
(1)Procedures for registration and filing, as well as the manner of submitting documents and reports for registration and filing as aforesaid;
(2)The manner of maintaining the registers at the Registration Office and public inspection thereof;
(3)Forms that must be used for the purposes of this Law and the particulars to be included therein;
(4)The manner of fulfilling the Registrar's duties under this Law;
(5)Particulars that a company or foreign company is required to provide to the Registrar with respect to each shareholder, or holder of any other right, as well as with respect to a creditor or office holder thereof;
(6)The amounts of a registration fee, an annual fee, and other fees and payments that the Minister has determined are to be paid in respect of acts and services provided by the Registrar under this Law, and that other fees and payments under this paragraph that are not paid on time shall bear, for the period of delay, shekel interest and late payment charges until their payment, and the provisions of the Interest and Indexation Law shall apply, mutatis mutandis, until their payment; and the Minister may prescribe different fee and payment amounts for different companies according to criteria determined by the Minister; the collection of fees and other payments under this paragraph shall be subject to the Tax Ordinance (Collection).
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Contact Us →Section C: Appeal
Section C: Appeal
45.
[Amendment: 2010-3]
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Contact Us →Part 3: Corporate Structure
Chapter I: The Organs of the Company, Their Powers and Liability for Their Actions
Section A: The Organs
The Organs
46.
The organs of the Company are the general meeting, the board of directors, the general manager, and any person whose actions in a particular matter are, by law or under the articles of association, deemed to be the actions of the Company in that matter.
Acts of an Organ as Acts of the Company
47.
The actions and intentions of an organ are the actions and intentions of the Company.
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Contact Us →Section B: Distribution of Powers Among the Principal Organs
Powers of the Organs
48.
(a)The general meeting shall have the powers set out in Section A of Chapter II.
(b)The board of directors shall have the powers set out in Section A of Chapter III.
(c)The general manager shall have the powers set out in Chapter IV.
(d)All organs of the company are vested with all ancillary powers necessary for the exercise of their respective powers.
Residual Power
49.
A power of the company that has not been vested by law or by the articles of association in another organ may be exercised by the board of directors.
Transfer of Powers Among Organs Pursuant to the Articles of Association
50.
[Amendment: 2005, 2011-3]
(a)A company may provide in its articles of association that the general meeting is entitled to assume powers vested in another organ, and also that powers vested in the general manager shall be transferred to the authority of the board of directors, all in respect of a specific matter or for a specific period of time not exceeding the period required by the circumstances of the matter.
(b)Where the general meeting has assumed powers vested under this law in the board of directors, the rights, duties and liabilities applicable to directors with respect to the exercise of those powers shall apply to the shareholders, mutatis mutandis, and these shall include, having regard to their holdings in the company, their participation in the meeting and the manner of their voting, the provisions of Chapters III, IV and V of Part 6.
Assumption of the General Manager's Powers
51.
The board of directors may instruct the general manager on how to act in respect of a specific matter; if the general manager fails to comply with the instruction, the board of directors may exercise the power required to carry out the instruction in the general manager's stead, even if no provision to that effect has been made in the articles of association.
Organ Incapacitated from Fulfilling Its Function
52.
(a)Where the board of directors is incapacitated from exercising its powers and the exercise of any one of its powers is essential for the proper management of the company, the general meeting may exercise such power in its stead, even if no provision to that effect has been made in the articles of association, for as long as it remains so incapacitated, provided that the general meeting has determined that the board of directors is indeed incapacitated from doing so and that the exercise of such power is essential as aforesaid; the provisions of Section 50(b) shall apply to the exercise of the board of directors' powers by the general meeting.
(b)Where the general manager is incapacitated from exercising his or her powers, the board of directors may exercise them in the general manager's stead, even if no provision to that effect has been made in the articles of association.
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Contact Us →Section C: Corporate Liability for Acts of Organs
Tortious Liability of a Company
53.
(a)A company is directly liable in Torts for a tort committed by one of its organs.
(b)Nothing in the provision of subsection (a) shall derogate from the vicarious liability of a company in Torts under any law.
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Contact Us →Section D: Liability of Organ Members
Liability of Organ Members
54.
[Amendment: 2005]
(a)The attribution of an act or intention of an organ to the Company shall not derogate from the personal liability that the members of the organ would have borne but for such attribution.
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Contact Us →Section E: Prevention of Ultra Vires Actions
Action in Excess of Authority
55.
(a)A Company and anyone acting on its behalf shall not perform any action that exceeds the purposes set forth in the articles of association, and shall not perform any action without authorization or any action in excess of the authorization.
(b)Where an action as referred to in subsection (a) has been performed, or where there are grounds to assume that such an action is about to be performed, the Court may, upon application by the Company, a shareholder, or a creditor of the Company whose rights are at risk of being prejudiced, issue an Order to halt or prevent such action.
Action in Excess of Purposes or Without Authorization
56.
[Amendment: 2005]
(a)An action performed on behalf of a Company in excess of the Company's purposes, or performed without authorization or in excess of the authorization, shall have no effect against the Company, unless the Company has ratified the action in the manner prescribed in subsection (b), or unless the party against whom the action was performed did not know and was not required to know of the excess or of the absence of authorization.
(b)Ratification by the Company after the fact of an action performed in excess of the Company's purposes shall be granted by the general meeting by a resolution adopted by the majority required for amendment of the Company's purposes; ratification as aforesaid with respect to an action performed without authorization or in excess of the authorization shall be granted by the organ competent to confer the authorization.
(c)Ratification as referred to in subsection (b) shall not prejudice any right acquired by another person in good faith and for consideration prior to the granting of such ratification.
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Contact Us →Chapter II: The General Meeting
Section A: Powers of the General Meeting
Powers Vested in the General Meeting
57.
[Amendment: 2018]
Company resolutions on the following matters shall be adopted at the general meeting:
(1)Amendments to the articles of association as set forth in Section 20;
(2)Exercise of the powers of the board of directors in accordance with the provisions of Section 52(a);
(3)Appointment of the Company's auditor, the terms of his engagement, and the termination of his engagement in accordance with the provisions of Sections 154 to 167;
(4)Appointment of external directors in accordance with the provisions of Section 239;
(5)Approval of actions and transactions requiring general meeting approval pursuant to the provisions of Sections 255 and 268 to 275;
(6)Increase and reduction of the registered share capital in accordance with the provisions of Sections 286 and 287;
(7)Merger as set forth in Section 320(a);
(8)Winding up of the Company by the court pursuant to Section 342f(1), voluntary winding up pursuant to Section 342x, or voluntary winding up by expedited proceeding pursuant to Section 342mb.
Prohibition on Derogation
58.
(a)A company may not derogate from the provisions of Section 57.
(b)A company may add to its articles of association matters in respect of which resolutions shall be adopted at the general meeting; however, the transfer of powers in the articles of association to the general meeting, in matters where such power has been conferred by this Law upon another organ without the possibility of derogating therefrom in the articles of association, shall be effected in accordance with the provisions of Section 50.
Appointment of Directors
59.
The annual general meeting shall appoint the directors, unless otherwise provided in the articles of association.
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Contact Us →Section B: Annual General Meeting and Special General Meeting
Convening an Annual General Meeting
60.
[Amendment: 2005]
(a)A company shall hold an annual general meeting each year, and no later than fifteen months after the last annual general meeting.
(b)The agenda of the annual general meeting shall include a discussion of the financial statements and the board of directors' report; the agenda may also include the appointment of directors, the appointment of an auditor, as well as any matter prescribed in the articles of association to be discussed at the annual general meeting, or any other matter placed on the agenda as set forth in Section 66.
Non-Convening of an Annual General Meeting
61.
(a)A private company may prescribe in its articles of association a provision whereby it is not required to hold an annual general meeting as referred to in Section 60, except insofar as necessary for the appointment of an auditor; where such a provision has been prescribed, the company may refrain from holding an annual general meeting unless one of the shareholders or directors has demanded that the company convene one.
(b)Where an annual general meeting has not been held, the company shall send to the shareholders registered in the shareholders register, once a year, financial statements as referred to in Section 172, no later than the last date by which it would have been required to hold an annual general meeting had it not prescribed a provision in its articles of association as referred to in subsection (a).
Convening an Annual General Meeting by the Court
62.
(a)Where an annual general meeting has not been held as referred to in Section 60, or following a demand for its convening as referred to in Section 61, the court may, upon the application of a shareholder or director of the company, order its convening.
(b)Where the court has so ordered, the company shall bear the reasonable expenses incurred by the applicant in the court proceedings, as determined by the court, and the directors responsible for the failure to convene it shall be liable to reimburse such expenses to the company.
Convening a Special General Meeting
63.
(a)The board of directors of a private company shall convene a special general meeting pursuant to its own resolution and also upon the demand of any one of the following:
(1)one director;
(2)one or more shareholders holding at least ten percent of the issued capital and at least one percent of the voting rights in the company, or one or more shareholders holding at least ten percent of the voting rights in the company.
(b)The board of directors of a public company shall convene a special general meeting pursuant to its own resolution, and also upon the demand of any one of the following:
(1)two directors or one quarter of the serving directors;
(2)one or more shareholders holding at least five percent of the issued capital and at least one percent of the voting rights in the company, or one or more shareholders holding at least five percent of the voting rights in the company.
(c)A board of directors that has been required to convene a special general meeting shall convene it within twenty-one days from the date the demand was submitted to it, for a date to be set in the notice pursuant to Section 67 or in the notification pursuant to Section 69, provided that with respect to a public company, the date of convening shall be no later than thirty-five days from the date of publication of the notice, unless otherwise prescribed with respect to a meeting to which Section G applies, and with respect to a private company, the provisions of Section 67 shall apply.
Convening a Meeting by Shareholders
64.
(a)Where the board of directors has not convened a special general meeting that was demanded pursuant to Section 63, the demanding party, and where the demanding parties are shareholders — also a portion thereof holding more than half of their voting rights, may convene the meeting themselves, provided that it shall not be held after the expiration of three months from the date on which the demand was submitted as aforesaid, and it shall be convened, as far as possible, in the same manner in which meetings are convened by the board of directors.
(b)Where a general meeting has been convened as referred to in subsection (a), the company shall cover the reasonable expenses incurred by the demanding party, and the directors responsible for the failure to convene it shall be liable to reimburse such expenses to the company.
Application to the Court
65.
(a)Where the board of directors has not convened a special general meeting that was demanded pursuant to Section 63, the court may, upon the application of the demanding party, order its convening.
(b)Where the court has so ordered, the company shall bear the reasonable expenses incurred by the applicant in the court proceedings, as determined by the court, and the directors responsible for the failure to convene it shall be liable to reimburse such expenses to the company.
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