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
Section C: Incorporation and Registration of a Company
Application for Registration
8.
[Amendment: 5782]
(a)A person seeking to register a Company shall submit to the Registrar an application by means 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 means of electronic communication, if circumstances justifying such permission exist.
Fees
9.
[Amendment: 5765]
(a)A person seeking to register a Company shall pay a fee upon 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 the Registrar is satisfied that all requirements under this Law with respect to registration, and all matters that are conditions thereof, have been fulfilled.
(b)The Registrar shall assign to each Company a registration number, as referred to in Section 38(c), and shall indicate it in the certificate of incorporation.
(c)Upon registration of a Company, 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 requirements under this Law with respect to registration, and all matters that are conditions thereof, have been fulfilled.
(e)Nothing in the provisions of subsection (d) shall cure any defect in the articles of association, or preclude the need for their amendment.
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Contact Us →Section D: Purpose of the Company
Purpose of the Company
11.
[Amendment: 2007-2]
(a)The purpose of a company is to operate in accordance with business considerations for the maximization of its profits, and within the framework of such considerations it is permissible to take into account, inter alia, the interests of its creditors, employees, and the interests of the public; furthermore, a company may donate a reasonable amount to a worthy cause, even if the donation does not fall within the framework of business considerations as aforesaid, provided that a provision to that effect has been 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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Contact Us →Section E: Actions Taken by a Promoter
Ratification of Action
12.
(a)A company may ratify an action of a promoter taken in its name or on its behalf prior to its incorporation.
(b)Retroactive ratification shall have the same effect as prior authorization, provided that no right acquired by another person (in this Section — a third party) in good faith and for consideration, prior to the ratification, shall be prejudiced.
Status of Third Party to Promotership
13.
(a)If a third party was aware, at the time of an action as referred to in Section 12, of the existence of the promotership, the third party may elect to regard the promoter as the party to the transaction, or to withdraw from the action and claim damages from the promoter, if any one of the following applies:
(1)the company did not ratify the action within one year from the date on which it was taken;
(2)it emerges from the circumstances that the company is not expected to incorporate, provided that the third party gave the promoter thirty days' prior notice to that effect;
(3)the company did not ratify the action within thirty days from the date on which the third party demanded that it do so.
(b)Where the company has ratified the action, the promoter shall no longer be liable or entitled in respect thereof.
(c)The promoter and the third party may derogate from the provisions of this Section.
Unawareness of Promotership
14.
Where the third party was not aware, at the time of the action, of the existence of the promotership, the following provisions shall apply:
(1)the action of the promoter shall bind or entitle the promoter, as the case may be;
(2)once the company has been incorporated, it may ratify the action, provided that the ratification does not conflict with the action by reason of its nature, terms, or the circumstances of the matter; where the company has ratified the action, the action of the promoter shall bind both the company and the promoter, jointly and severally, and shall entitle the company alone.
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Contact Us →Chapter II: The Articles of Association
Section A: Content of the Articles of Association and its Amendment
Articles of Association of a 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, shall be valid from the time of its incorporation.
Articles of Association as a Contract
17.
(a)The articles of association shall have the force of a Contract between the company and its shareholders and between the shareholders themselves.
(b)Amendment of the articles of association shall be made in the manner prescribed by this Law.
Mandatory Particulars in the Articles of Association
18.
The articles of association of a company shall include the following particulars:
(1)the name of the company;
(2)the objects of the company;
(3)particulars regarding the registered share capital as set out in Sections 33 and 34;
(4)particulars regarding the limitation of liability, as set out in Section 35.
Optional Particulars in the Articles of Association
19.
[Amendment: 2005, 2011-3, 2011-4]
A company may include in its articles of association matters relating to the company or to its shareholders, including:
(1)the rights and obligations of the shareholders and of the company;
(2)provisions regarding 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 any amendment relating to public companies or to bond companies shall be determined in consultation with the Chair of the Securities Authority;
(3)any other matter that the shareholders deemed fit to regulate in the articles of association.
Amendment of the Articles of Association
20.
(a)A company may amend its articles of association by a resolution passed by an ordinary majority at the 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 stipulated otherwise, or where the articles of association provide that a certain majority is required for the amendment of provisions of the articles of association, in whole or in part, the company shall not be entitled to amend the said provision except by a resolution passed at the general meeting by that certain 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 the meeting of that class, unless otherwise provided in the articles of association; for the purpose of adopting 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 their liability shall not be binding upon the shareholder without their 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 the Power to Amend the Articles of Association
22.
[Amendment: 2005]
(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 force of a resolution to amend the articles of association, and the provisions of this Section shall apply thereto.
Signing of the Articles of Association
23.
[Amendment: 2020-2]
(a)The articles of association shall be signed by the founding shareholders, and the shares allotted to them shall be indicated therein, as well as the name, address and identity number of each shareholder.
(b)An advocate 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.
[Amendment: 2005, 2012-2]
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 under the conditions prescribed therefor in the Companies Ordinance, as worded immediately before 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 company's name, by a majority of seventy-five percent of those participating in the vote, excluding abstentions; an amendment to the registered capital shall take effect from the date of the resolution regarding the amendment, and an amendment to the company's name 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 the general meeting by a majority of seventy-five percent of those participating in the vote, excluding abstentions, or by a different majority if so provided in the company's memorandum or articles of association;
(4)prescribe in the articles of association, subject to the provision of Section 20(b), a provision regarding the majority required for the amendment of the provisions of the articles of association, by a resolution passed at the general meeting by a majority of seventy-five percent of those participating in the vote, excluding abstentions, and by a greater majority if such majority was prescribed in the company's memorandum or articles of association; where a new provision as aforesaid has been prescribed, the provisions of Section 20(b) shall apply to its amendment;
(5)prescribe in the memorandum, by a resolution passed at the general meeting by a majority of seventy-five percent of those participating in the vote, excluding abstentions, a provision regarding 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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Contact Us →Section B: Company Name
Choice of Name
25.
A company may be registered under any name, subject to the provisions of this Section and the provisions of any law.
Inclusion of Ltd. at End of Company Name
26.
The name of a company in which the liability of shareholders is limited, as provided in Section 35, shall include at its end the designation "limited liability" 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 a name so similar thereto as to be misleading;
(2)a registered trademark in respect of goods or services dealt with for purposes similar to the purposes of the company seeking registration, or a name so similar thereto as to be misleading, unless it has been proven to the Registrar that the owner of the trademark has consented thereto in writing; for this purpose, "registered trademark" — as defined 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 fraud or deception.
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.
Registrar's Authority to Order Change of Name
29.
(a)If 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 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)If the Registrar has decided to change the name of the company, the Registrar shall send to the company a certificate of change of name, and the change shall be deemed as if it had been determined pursuant to a resolution of the company and the Registrar.
(d)The Minister may prescribe provisions regarding the publication of a change of name.
Injunction
30.
The court may, upon the application of a company, order any person who has taken its name or a name so similar thereto as to be misleading, or, upon the application of any person harmed by the registration of a company under a name in contravention of 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 that of the applicant.
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)If the Registrar has approved a company's change of name, the Registrar shall register the new name in place of the former name and shall issue to the company a certificate of change of name.
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Contact Us →Section C: Purposes of the Company
Stating the Company's Purposes in the Articles
32.
A company shall state its purposes in its articles of association by specifying one of the following purposes:
(1)to engage in any lawful business;
(2)to engage in any lawful business except for types of business specified in the articles of association;
(3)to engage in types of business specified in the articles of association.
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Contact Us →Section D: Registered Share Capital and Its Distribution
Registered Share Capital
33.
A company shall set out in its articles of association its registered share capital, including the number of shares of each class.
Par Value of Shares
34.
(a)The shares of a company may either all have a par value or all be without par value.
(b)If the shares of a company are without par value, only their number shall be stated in the articles of association; if the shares of a company have a par value, the articles of association shall state, in addition to their number, the par value of each share.
(c)If the shares of a company are without par value, the provisions of this Law relating to registered or issued share capital shall apply, with the necessary modifications, such that the registered share capital shall be the number of shares set out in the articles of association and the issued capital shall be the number of shares allotted by the company.
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Contact Us →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 such limitation shall be set out 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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