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 II: The Register of Shareholders and the Register of Substantial Shareholders

Section A: The Registers

Register of Shareholders

127.

A company shall maintain a register of shareholders.

Register of Substantial Shareholders

128.

A public company shall maintain a register of substantial shareholders in addition to the register of shareholders.

Inspection of Registers

129.

The register of shareholders and the register of substantial shareholders shall be open for inspection by any person.

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Section B: Register of Shareholders

Contents of Register of Shareholders

130.

[Amendment: 2005, 2016-2]

(a)The following shall be recorded in the register of shareholders —

(1)with respect to all shares —

(a)the name, identity number and address of each shareholder, all as provided to the company;

(b)the quantity and class of shares held by each shareholder, specifying their nominal value, if any, and if any amount of the consideration fixed for the share has not yet been paid — the amount remaining unpaid;

(c)the date of allotment of the shares or the dates of their transfer to the shareholder, as the case may be;

(d)where shares are designated by serial numbers, the company shall note alongside each shareholder's name the numbers of the shares registered in that shareholder's name;

(3)with respect to dormant shares, as defined in Section 308 — also their number and the date on which they became dormant, all as known to the company;

(4)with respect to shares that do not confer voting rights pursuant to Section 309(b) or pursuant to Section 333(b) — also their number and the date on which they became shares that do not confer voting rights, all as known to the company.

(b)A company shall retain all entries recorded in the register of shareholders as referred to in subsection (a) and shall update any changes thereto as soon as practicable from the date on which it became aware of them.

Registration of Trustee in Register of Shareholders

131.

[Amendment: 2005]

(a)A shareholder who is a trustee shall notify the company accordingly, and the company shall register that person in the register of shareholders with a notation of the trust, and such person shall be regarded for the purposes of this Law as a shareholder.

(b)The provision of subsection (a) shall not apply to a shareholder within the meaning of Section 177(1), unless a reporting obligation applies to that person pursuant to other provisions of law.

Registration Company

132.

(a)In a company whose shares are listed for trading on a stock exchange in Israel, a registration company may also be recorded in the register of shareholders, in addition to what is stated in Section 130(a)(1); however, a registration company shall not be considered a shareholder in the company, and the shares registered in its name are owned by those entitled to them as referred to in Section 177(1).

(b)A shareholder by virtue of entitlement as referred to in Section 177(1) is entitled to be registered in the register of shareholders in place of the registration of those shares in the name of the registration company, and the number of shares registered in the name of the registration company shall be amended accordingly.

Register of Shareholders as Evidence

133.

(a)The register of shareholders shall constitute prima facie evidence of the correctness of what is recorded therein.

(b)In the event of a conflict between what is recorded in the register of shareholders and a share certificate, the evidentiary value of the register of shareholders shall prevail over the evidentiary value of the share certificate.

Rectification of Registration

134.

Where a person is registered in the register of shareholders without being entitled thereto, or is not registered in the said register despite being entitled thereto, or where the registration is incomplete or inaccurate, and the company has refused to correct what requires correction, the court may, upon application by the aggrieved party or any shareholder in the company, grant any relief it deems appropriate in the circumstances of the matter, including rectification of the register.

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Section C: Registration of Share Certificate

Section C: Registration of a Share Certificate

135.

[Amendment: 2016-2]

136.

[Amendment: 2016-2]

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Section D: Register of Substantial Shareholders and Additional Share Register Outside Israel

Contents of the Register of Substantial Shareholders

137.

The register of substantial shareholders shall retain the reports received by the Company pursuant to the Securities Law regarding the holdings of substantial shareholders in the shares of the Company.

Additional Share Register

138.

(a)A company may maintain an additional share register outside Israel (hereinafter – the additional register).

(b)A company maintaining an additional register shall indicate in the share register under Section 130 (hereinafter – the principal register) the number of shares registered in the additional share register and their serial numbers, if they are designated by numbers.

Regulations

139.

The Minister may prescribe provisions regarding the maintenance of the additional register as referred to in Section 138, including provisions regarding the updating of the principal register with the particulars of the additional register.

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Chapter III: Reporting

Section A: Reporting by a Company That Is Not a Reporting Corporation

Reporting by a Company That Is Not a Reporting Corporation

140.

[Amendment: 2005, 2011-4, 2018, 2022]

A company that is not a reporting corporation shall submit to the Registrar of Companies an annual report, as set out in Section 141, and shall also report to the Registrar as detailed in this Law and with respect to the following matters:

(1)Amendments to the articles of association as referred to in Section 21, including a resolution to change the company's name as referred to in Section 31, and an increase or reduction of the registered share capital as referred to in Sections 286 and 287;

(2)A change in the address of the registered office as referred to in Section 123;

(2a)A change in the digital address as referred to in Section 123a;

(3)A notice pursuant to Section 159 that the company has no auditing accountant;

(4)Appointments to the board of directors and changes in its composition, as referred to in Section 223;

(5)Allotment of shares as referred to in Section 292;

(6)Transfer of shares as referred to in Section 299, within fourteen days from the date of the transfer;

(7)Merger as referred to in Section 317;

(8)A change in the type of the company, as referred to in Section 343;

(10)The issuance of a winding-up order in respect of it, or the adoption of a resolution for voluntary winding-up pursuant to Part 8A.

Annual Report of a Company That Is Not a Reporting Corporation

141.

[Amendment: 2005, 2011-4]

(a)A company that is not a reporting corporation shall prepare and submit to the Registrar, once a year, an annual report as the Minister shall prescribe, within fourteen days after the annual general meeting.

(b)A company that is not a reporting corporation that does not hold an annual general meeting, as referred to in Section 61, shall submit the annual report once a year, no later than fourteen days after the dispatch of the financial statements to the shareholders; and with respect to an inactive company that does not prepare financial statements pursuant to the provision of Section 172(g) — once a year.

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Section B: Reporting by a Company that is a Reporting Corporation

Reporting by a Company that is a Reporting Corporation

142.

[Amendment: 2005, 2011-4]

(b)A company that is a reporting corporation shall report to the Securities Authority, to the stock exchange on which the company's securities are listed for trading, and to the Registrar of Companies, as required under this Law, under the Securities Law, or under any other law.

Inspection at the Securities Authority

143.

[Amendment: Official Gazette 2004, 2005]

(a)Reports submitted to the Securities Authority as referred to in Section 142 shall be open for public inspection at the Securities Authority, and any person may inspect them and obtain certified copies of what is recorded therein, either through the Securities Authority or through others authorized by the Authority for that purpose, unless inspection thereof has been restricted pursuant to any law.

(b)A certified copy as referred to in subsection (a) shall be admissible in any legal proceeding as an original and shall constitute conclusive evidence that the original document is held by the Securities Authority.

(c)Where provisions regarding electronic filing or electronic reporting have been established pursuant to the Securities Law, the provisions of subsection (b) shall apply with respect to output of said reports; for the purposes of this section, "output" — as defined in the Computer Law, 5755–1995.

144.

[Amendment: 2003, Official Gazette 2004-2]

Reporting by a Company that is a Reporting Corporation to the Registrar

145.

[Amendment: Official Gazette 2004, 2005, 2011-4, 2018, 2022]

Without derogating from the provisions of any law, a company that is a reporting corporation shall report to the Registrar under this Law with respect to the following matters only:

(1)A resolution to change its name as referred to in Section 31;

(2)A change in the address of the registered office as referred to in Section 123;

(2a)A change in the digital address as referred to in Section 123a;

(3)A merger as referred to in Section 317;

(4)A change in the type of company, as referred to in Section 343;

(5)The issuance of a winding-up order against it or the adoption of a resolution for voluntary winding-up pursuant to Part Eight A.

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Chapter IV: Internal Auditor in a Public Company and in a Private Company that is a Bond Company

Obligation to Appoint an Internal Auditor

146.

[Amendment: 2011-4]

(a)The board of directors of a public company or of a private company that is a bond company shall appoint an internal auditor; the internal auditor shall be appointed upon the recommendation of the audit committee.

(b)A person shall not serve as internal auditor of a company if that person is an interested party in the company, an office holder in the company, a relative of any of the foregoing, or the auditing accountant or anyone acting on the auditing accountant's behalf.

147.

The provisions of Sections 3(a), 4(b), 8 through 10, and 14(b) and (c) of the Internal Audit Law, 5752–1992, shall apply to the internal auditor, subject to the remaining provisions of this Chapter and with the necessary modifications.

Organizational Superior of the Internal Auditor

148.

The organizational superior of the internal auditor shall be the chairperson of the board of directors or the general manager, as shall be determined in the articles of association, or in the absence of a provision in the articles of association, as shall be determined by the board of directors.

Work Plan

149.

The internal auditor shall submit for approval to the board of directors or to the audit committee, as shall be determined in the articles of association, or in the absence of a provision in the articles of association, as shall be determined by the board of directors, a proposed annual or periodic work plan, and the board of directors or the audit committee, as the case may be, shall approve it with such modifications as they deem appropriate.

Urgent Examination

150.

The chairperson of the board of directors or the chairperson of the audit committee may assign the internal auditor to conduct an internal audit, in addition to the work plan, in matters where a need for urgent examination arises.

Role of the Internal Auditor

151.

The internal auditor shall examine, inter alia, the regularity of the company's activities from the standpoint of compliance with the law and proper business conduct.

Submission of Report

152.

The internal auditor shall submit a report on findings to the chairperson of the board of directors, the general manager, and the chairperson of the audit committee; a report concerning matters examined pursuant to Section 150 shall be delivered to the person who assigned the internal auditor to conduct the audit.

Termination of Office

153.

(a)The tenure of the internal auditor shall not be terminated without the internal auditor's consent, and the internal auditor shall not be suspended from office, unless the board of directors has so resolved after receiving the position of the audit committee, and after the internal auditor has been given a reasonable opportunity to present the internal auditor's position before the board of directors and before the audit committee.

(b)For the purposes of subsection (a), the quorum required to open a meeting of the board of directors shall not be less, notwithstanding the provisions of the concluding part of Section 104, than a majority of the members of the board of directors.

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Chapter V: Auditor

Section A: Appointment of Auditor

Obligation to Appoint an Auditor

154.

(a)A company shall appoint an auditor who shall audit its annual financial statements and express an opinion thereon (hereinafter – audit activity); the Minister may determine that certain additional activities performed by an auditor pursuant to law shall also constitute audit activity for the purposes of this Chapter.

(b)An auditor shall be appointed at each annual general meeting and shall serve in that capacity until the conclusion of the following annual general meeting; however, a general meeting may, if so provided in the articles of association, appoint an auditor to serve for a longer period, provided that such period shall not extend beyond the conclusion of the third annual general meeting following the one at which the auditor was appointed.

(c)In a private company in which the provisions of Section 61 apply, it is possible to appoint an auditor to serve until the completion of one audit activity or, if so provided in the articles of association, until the completion of three audit activities.

Appointment of First Auditor

155.

(a)The board of directors may, at any time prior to the first annual general meeting, appoint the company's first auditor and determine the auditor's remuneration; the first auditor so appointed shall serve until the conclusion of the first annual general meeting.

(b)In a private company in which the provisions of Section 61 apply, with respect to the expiry of the term of office of an auditor appointed by the board of directors, the provisions of Section 154(c) shall apply.

Joint Auditors

156.

A company may appoint several auditors who shall jointly perform the audit activity.

Appointment by Special Meeting

157.

If the position of an auditor has become vacant and the company has no other auditor, the board of directors of the company shall convene a special meeting, at the earliest possible date, with the appointment of an auditor on its agenda.

Inactive Companies

158.

[Amendment: 2005, 2007-2, 2011-4, 2024-2, [Official Gazette Notices]]

(a)Notwithstanding the provisions of Section 154, a private company whose annual turnover does not exceed 500,000 New Israeli Shekels, or a private company that is a public benefit company whose annual turnover does not exceed the amount referred to in Section 19(c) of the Associations Law (in this Law – an inactive company), may resolve at a general meeting that no auditor shall be appointed, unless shareholders holding 10 percent or more of the company's issued capital have objected thereto; the amount referred to in this subsection shall be linked to the index and rounded to the nearest sum that is a multiple of ten New Israeli Shekels; once a year, at the beginning of the month of February, the Minister shall publish in the Official Gazette the said amount as updated for that year; in this subsection –

Appointment by the Registrar

159.

(a)If an auditor has ceased to serve in a company and no other person has been appointed in the auditor's place as provided in Section 157, the company shall notify the Registrar thereof within ninety days from the date on which the auditor ceased to serve as aforesaid; however, the giving of notice to the Registrar shall not derogate from the company's obligation to appoint an auditor, for as long as an auditor has not been appointed pursuant to subsection (b); if the company appoints an auditor after delivering notice to the Registrar, it shall notify the Registrar thereof within fourteen days.

(b)Upon the Registrar's receipt of notice of the cessation of an auditor's term of office, as referred to in subsection (a), and for as long as the Registrar has not received notice of the appointment of a new auditor, the Registrar may appoint an auditor to serve until the conclusion of the next annual general meeting, and may determine the remuneration to be paid to such auditor by the company.

(c)The Minister may prescribe provisions and conditions for the appointment of an auditor appointed by the Registrar, the commencement of such auditor's term of office, and the auditor's remuneration.

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