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.

Ordinance

Companies Ordinance [New Version]

פקודת החברות [נוסח חדש]

Division B: Transfer of Shares

Numbering of Shares

52.

(a)A share and any other interest of a member in a Company are transferable in the manner prescribed by its articles.

(b)Upon the application of a transferor of a share or interest in a Company, and subject to the provisions of this Part, the Company shall enter the name of the transferee in the register of members in the same manner and on the same terms as if the transferee were applying for registration.

(c)Where a member of a Company limited by shares having a share capital has transferred shares to another person, the Company shall, within sixty days from the date on which it entered the transfer in the register of members, deliver to the Registrar a notice of the shares transferred and particulars of the transferor and the transferee.

Transfer of Shares

53.

Notwithstanding anything in its articles, a Company shall not register a transfer of its shares unless a proper instrument of transfer has been delivered to it; nothing in this provision shall derogate from the power of the Company to register as a shareholder a person to whom the right to shares has devolved by operation of law.

No Transfer Except in Writing

54. (a) A transfer of a share or other interest of a deceased member, effected by the administrator of his Estate who is not a member of the Company, shall be as valid as if such administrator had been a member of the Company at the time of execution of the instrument of transfer.

(b)Where a document that constitutes sufficient evidence under the law that a grant of probate of a Will or letters of administration of the Estate of a deceased has been made to a particular person is produced to the Company, the Company shall accept such document as sufficient evidence of the grant or appointment, notwithstanding anything in its articles.

Transfer from an Estate

55.

A transfer of shares for nominal consideration or without consideration, or to a person who does not apparently have the financial capacity to fulfill his obligations as a shareholder, made by a transferor in order to evade liability as a shareholder, shall be deemed a fraudulent transfer, and neither the Company nor the Court shall be bound to recognize it, and subject to an Order of the Court, a liquidator of the Company shall not be bound to recognize it.

Fraudulent Transfer

Part C: Share Warrants

56.

A Company limited by shares may, if authorized to do so by its articles, issue, in respect of a fully paid share and in respect of an amount of stock, a share warrant signed with its seal, and may make provision for the payment of future dividends thereon, whether by coupons or otherwise.

Bearer

Transfer by Delivery

57. A share warrant entitles the bearer thereof to the shares or stock specified therein, and such shares or stock are transferable by delivery of the share warrant.

Share Requiring

Amendment of

Issuance of Share Warrants

58.

(a)Upon the issuance of a share warrant, the Company shall strike from the register of members the name of the member registered therein as the holder of the shares or stock specified in the warrant, as if such person had ceased to be a member, and shall enter in the register the following particulars:

(1)the fact that a share warrant has been issued;

(2)the shares or stock included in the share warrant, with the number of each share specified;

(3)the date of issuance of the warrant.

(b)So long as the share warrant has not been returned to the Company, the particulars referred to in subsection (a) shall be deemed particulars required to be entered pursuant to this Ordinance in the register of members.

[281(4)]

Holder of a Share Warrant

59.

The holder of a share warrant shall, if the articles so provide, be deemed a member of the Company within the meaning of this Ordinance, for all purposes or for such purposes as are defined in the articles; however, the shares or stock specified in the share warrant shall not qualify such holder, where such qualification is required by the articles, to be a director or manager of the Company, unless such holder has deposited and left with the Company share warrants of the required nominal value for that purpose.

[30(2) proviso]

Surrender of a Share Warrant

60.

(a)Subject to the provisions of the articles, the holder of a share warrant shall be entitled, upon returning the warrant to the Company for cancellation, to require the registration of such holder's name in the register of members; the date of return shall be entered in the register.

(b)If the Company enters in the register the name of a holder of a share warrant in respect of the shares or stock specified therein, without the warrant having been returned and cancelled, the Company shall be liable for any loss caused by reason of such registration.

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Division D: Register of Members

preamble-7.

[29(1)1]

Register of Members

61.

Every Company shall maintain, in one or more books, a register of members and shall enter therein the following particulars in respect of each member:

(1)the member's name, identity number and address, and if the Company has a share capital — the member's shares with their numbers specified and the amount paid, or agreed to be considered as paid, on account thereof;

(2)the date on which the person was registered in the register as a member;

(3)the date on which the person ceased to be a member;

(4)the amount of unpaid calls on account of the member's shares.

Prima facie evidence

[34]

The Register — Evidence

62.

The register of members shall be prima facie evidence of any matter which is required or permitted by this Ordinance to be entered therein.

Trusts not to be recognized

[29(2)1]

63. No notice of any trust, express, implied or constructive, shall be entered in the register of members nor shall the Registrar receive, in respect of a Company, any such notice.

[29(3)]

Index to the Register

64.

A Company having more than fifty members whose register of members is not in a form that itself constitutes an index shall maintain an index of the names of its members enabling the account of each member in the register to be readily found, and such index may be in the form of a card index; any alteration in the register shall be made within fourteen days also in the index.

775 Book of Laws 37 10 Elul 5743 19.08.1983

65.

The register of members and the index shall, from the date of incorporation of the Company, be kept at the registered office, and except during such time as they are closed pursuant to the provisions of this Ordinance, shall be open during reasonable business hours for inspection by any member without charge and for inspection by any other person upon payment of a sum fixed by the Company not exceeding the sum prescribed by Regulations, for each inspection.

[29(4)]

Inspection of the Register

66.

Any person may require a copy of the register of members or of any part thereof, upon payment of a sum fixed by the Company not exceeding the sum prescribed by Regulations, and the Company shall send such copy to the person within ten days from the date of receipt of the demand.

[29(5)]

Copy

67.

A Company that has contravened any provision of Sections 61, 64, 65 and 66, and every officer thereof who knowingly authorized or permitted the contravention, shall be liable to a continuing fine.

[29(8)]

Contravention of Provisions

68.

Where inspection of the register of members has been refused to any person, the court may, by Order, compel an immediate inspection of the register or direct that a copy be sent to the person demanding it.

For obtaining a copy

[29(7)]

Order for Inspection or

69.

A Company may, after giving notice thereof by advertisement in a newspaper printed in the language in which the Company ordinarily conducts its business and circulated in the district in which its registered office is situated, close the register of members and the index for such period or periods not exceeding in the aggregate thirty days in any one year.

and the index

[29(6)]

Closure of the Register

70.

(a)If without sufficient cause the name of any person is entered in or omitted from the register of members, or if default is made or unnecessary delay takes place in entering the fact that any person has ceased to be a member, the aggrieved person, or any member, or the Company itself, may apply to the court for rectification of the register.

(b)The court may dismiss an application under this Section or may Order that the register be rectified and that the Company compensate the aggrieved person for any damage suffered; and it may decide any question relating to the entitlement of any party to have such party's name entered in or omitted from the register, whether such question arises between members or persons claiming membership or between members or persons claiming membership and the Company, and generally may decide any question that it is necessary or expedient to decide for the purpose of rectifying the register.

(c)Where a Company is required under this Ordinance to send to the Registrar a list of its members, the court shall, in an Order for rectification of the register, direct that notice of the rectification be sent to the Registrar.

Rectification of the register

Division E: Branch Registers

71.

(a)Where the Minister is satisfied that a particular State is a reciprocating State, the Minister may by Order apply the provisions of this Division to companies incorporated in Israel that wish to maintain in that State a register of their members resident therein (hereinafter — branch registers), and the provisions of Sections 65 to 68 and 70 to companies incorporated in that State that wish to do so in respect of their members resident in Israel, all subject to such modifications and adaptations as may be prescribed in the Order.

(b)A "reciprocating State" for the purposes of this Division is a foreign State under whose laws —

(1)companies incorporated thereunder are permitted to maintain in Israel a branch register of their members resident in Israel;

(2)an instrument of transfer of a share registered in a branch register in Israel is exempt from stamp duty imposed thereon in the foreign State, unless signed within its territory;

(3)the right to inspect a branch register maintained in that State by a company incorporated in Israel and to demand its rectification is granted.

In reciprocating States

776 Book of Laws 37 10 Elul 5743 19.08.1983

Authority to maintain a branch register

Branch Registers

72.

A Company having a share capital may, if authorized to do so by its articles, maintain a branch register in a reciprocating State in respect of which an Order has been made under Section 71.

Notices to the Registrar

73.

(a)The Company shall notify the Registrar of the address of the office at which the branch register is maintained and of any change in such address, and if the maintenance of the register has been discontinued, shall give notice of the discontinuance; such notice shall be given within one month from the date on which the subject of the notice occurred.

(b)A Company that has contravened the provisions of subsection (a), and every officer thereof who knowingly or wilfully authorized or permitted the contravention, shall be liable to a continuing fine.

Part of the principal register

[35n(1), (2)]

Branch Register —

74.

A branch register shall be deemed to form part of the Company's register of members (hereinafter — the principal register) and shall be maintained in the manner required by this Ordinance for the maintenance of the principal register, except that the notice prior to closure of the register shall be published in a newspaper circulated in the area in which the branch register is maintained.

[35n(3)]

Duplicate

75.

In respect of every entry made in the branch register, the Company shall transmit a copy thereof, as soon as practicable, to its registered office in Israel, where a duplicate of the branch register, duly kept up to date, shall be maintained and shall be deemed for all purposes of this Ordinance to form part of the principal register.

and registration of transactions

[35n(4)]

Distinction Between Shares

76.

Subject to the provisions of Section 75, shares registered in a branch register shall be distinguishable from shares registered in the principal register, and so long as they are so registered, no transaction in respect thereof shall be registered in any other register.

Supplementary Regulations

77.

Subject to the provisions of this Ordinance, a Company may in its articles make such provisions as it thinks fit with respect to the maintenance of branch registers.

[35n(5)]

Discontinuance

78.

A Company may discontinue keeping a branch register, and upon doing so all entries therein shall be transferred to the principal register.

351b<7)]]

Penalties

79.

A Company that has contravened a provision of Sections 74 to 78, and every officer thereof who knowingly or wilfully authorised or permitted the contravention, shall be liable to a continuing Fine / Penalty.

Branch Register

Transfer of Share

80.

An instrument of transfer of a share registered in a branch register shall be deemed a transfer of property situated outside Israel, and if the instrument was not executed in Israel it shall be exempt from stamp duty imposed in Israel.

Chapter D: Directors

Number and Qualification

81.

(a)A public Company shall have at least two directors.

(b)No person shall be qualified to be appointed as a director of a public Company pursuant to its articles, nor shall any person be named as a director or as a candidate for director in a prospectus issued by or on behalf of an existing or prospective Company, or as a candidate for director in a prospectus issued in connection with a prospective Company, unless before the registration of the articles or the publication of the prospectus that person, either personally or through an agent authorised in writing, has done both of the following:

(1)signed and delivered to the Registrar a written consent to act as director;

(2)acquired the qualification shares not less than the number required, whether by signing for them in the memorandum or by taking them from the Company in payment or by agreement to pay, or by signing and delivering to the Registrar a written undertaking to take them and to pay for them, or by filing with the Registrar a declaration that qualification shares of not less than the required number are registered in his name.

(c)A person who has signed and delivered an undertaking as aforesaid shall, in respect of those shares, be treated as if he had signed for them in the memorandum.

(d)The applicant for registration of the memorandum and articles of a public Company is required to deliver to the Registrar a list of the persons — if any — who have consented to be directors of the Company, and if the name of a person who has not so consented appears on the list, the applicant for registration shall be liable to a Fine / Penalty.

(e)The provisions of this Section shall not apply to a prospectus issued by or on behalf of a Company more than one year after the date of its registration, nor to the appointment and qualification of directors of companies that have no share capital.

82.

(a)A director who does not hold the qualification shares required under the Company's Regulations must acquire them within two months of his appointment or within such shorter period as may be prescribed by the Company's Regulations; this provision does not derogate from the restrictions imposed pursuant to Section 81.

(b)A director who has not acquired his qualification shares within the period referred to in subsection (a), or who has ceased to hold them after that period, shall vacate his office and shall not be capable of being re-appointed as a director of the Company until he has become qualified; a person who acts as a director without qualification after the said period shall be liable to a continuing Fine / Penalty.

711]]

Qualification Shares

83.

The acts of a director or manager shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

Validity of Acts.

1721]

Saving of Validity

84.

(a)A person who has been adjudicated Bankrupt is not qualified to act as a director of a Company — including an unregistered company and a foreign company having a fixed place of business in Israel — or to participate directly or indirectly in its management or to be involved therein, except with the leave of the court having jurisdiction in Bankruptcy matters; if at the time of adjudication the person was a director or was participating in or involved in the management, the adjudication immediately disqualifies him from continuing to act as such without the leave of the court that adjudicated him.

(b)Leave for the purposes of this Section shall not be granted unless notice of the intention to apply for it has been given to the trustee in Bankruptcy, and if the trustee considers that the granting of leave is contrary to the public interest, it shall be his duty to appear at the hearing of the application and to oppose it, and leave shall not be granted unless the court is of the opinion that in the circumstances of the case the granting of leave is not contrary to the public interest.

(c)A Bankrupt who has contravened the provisions of this Section shall be liable to two years' Imprisonment.

(d)The discharge of a Bankrupt under the Bankruptcy laws annuls the disqualification under this Section.

Bankruptcy

Disqualification by Reason of

85.

(a)A director is not entitled to remuneration for acting as director unless so provided in the articles and to the extent so provided.

(b)Upon a written request by members entitled together to not less than one-quarter of the total votes of all members of the Company, the directors are required to send to all members, within one month of receipt of the request — unless the Company has resolved within that month that the request shall not be complied with — a written statement certified without or with qualifications by the auditor, showing the total amount received together — whether as remuneration or as a grant — by all the directors, whether for acting as directors or

Directors

778 Book of Laws 37 10th of Elul 5743 19.08.1983

in any other capacity connected with the management of the Company's affairs, in each of the last three years for which accounts of the Company have been prepared; the total amount in the statement shall also include the tax paid by the Company on behalf of the directors in respect of such remuneration or grant.

(c)The total amount shall include what a director received while acting as a director of a Company which, pursuant to Section 207, is a subsidiary of the Company in question, or while acting as a director of another Company by virtue of a direct or indirect appointment on behalf of the Company in question, as remuneration or as a grant to himself, whether for acting as a director of such a Company or in any other capacity connected with the management of its affairs.

(d)"Grant", for the purposes of this Section — fees, percentages and other payments or consideration given directly or indirectly to a director for acting as a director, and the value of allowances or benefits attached to his office.

(e)A director who has contravened a provision of this Section shall be liable to a Fine / Penalty.

Interest in Contracts

Duty to Declare

86.

(Repealed)

Register of

87.

(a)A Company shall maintain at its registered office a register in which the following particulars shall be recorded in respect of every director and manager thereof — including a person in accordance with whose directions or instructions the directors are accustomed to act:

(1)in respect of an individual — the first name, surname, all former first names and former surnames, usual residential address, occupation, and if he has no occupation — any other directorial position held elsewhere and particulars of that position, and if he is a resident of Israel — his identity number;

(2)in respect of a body corporate — the corporate name, its identity number and its registered or principal office.

(b)The Company shall send to the Registrar, within fourteen days from the day on which its first directors were appointed, a report in the prescribed form containing the particulars specified in the register, and if any change thereafter occurs in the personal composition or in any of the particulars in the register, the Company shall send to the Registrar, within fourteen days after the change, notice of the change in the prescribed form.

(c)The register shall be open for inspection, during business hours, to every member of the Company free of charge and to any other person upon payment of such sum as the Company may fix, not exceeding the amount prescribed in the Regulations; inspection shall be subject to reasonable restrictions as the Company may impose in its articles or at a general meeting, provided that the time available for inspection shall not be less than two hours per day.

(d)If a provision of subsections (a) or (b) has not been complied with, or if inspection requested under subsection (c) has not been permitted,

779 Book of Laws 37 10th of Elul 5743 19.08.1983

the Company and every officer thereof who knowingly and wilfully authorised or permitted the contravention shall be liable to a continuing Fine / Penalty, and the court may by Order enforce immediate inspection of the register.

88.

For the purposes of this Ordinance, a person shall not be deemed a person in accordance with whose directions or instructions the directors of the Company are accustomed to act by reason only that the directors act on advice given by him in a professional capacity.

Not Deemed a

Director

|81]]

Professional Adviser

89.

(Repealed)

No Contracting Out of

90.

(Repealed)

Court's Power

91.

(a)No payment shall be made to a director by way of compensation for loss of office or as consideration for or in connection with his retirement from office in consequence of the transfer of the whole or any part of the undertaking or property of the Company, unless particulars of the proposed payment and its amount have been disclosed to the members of the Company and the Company has approved the proposal; if a payment is made to a director unlawfully as aforesaid, the sum received by him shall be deemed to be held by him in Trust for the Company.

(b)Where a payment referred to in subsection (a) is made to a director in connection with a transfer of shares of the Company pursuant to a takeover offer made to all shareholders, the director shall take all reasonable steps to ensure that particulars of the proposed payment and its amount are included in or accompanied by every circular sent to members of the Company in connection with the takeover offer; if a sum is paid to a director without the provisions of this subsection having been complied with, the sum received by him shall be deemed to be held by him in Trust for those who sold their shares pursuant to the takeover offer.

(c)If in connection with such a transfer a retiring director or a director whose office is terminated by reason of the transfer receives as consideration for his shares a price in excess of the price which another shareholder would have received for them at that time, or receives any other valuable consideration, the excess price or the value of that consideration shall, for the purposes of this Section, be deemed to be compensation for loss of office or consideration for or in connection with his retirement from office.

For Loss of

Office

Payment to Director

92.

A director who has not taken the steps referred to in Section 91(b), and any person who received a proper instruction from him to send to the members of the Company the particulars of the proposed payment pursuant to Section 91(b) and failed to do so, shall be liable to a Fine / Penalty.

Penalties

93.

Nothing in Sections 91 and 92 shall derogate from any other law requiring disclosure of particulars relating to payments referred to in those Sections or to payments similar thereto, made or to be made to directors of a Company.

780 Book of Laws 37 10th of Elul 5743 19.08.1983

Transfer of Office

Shall Remain

801)

Saving of Laws

94.

A provision, whether in the Company's articles or in a Contract with it, authorising a director or manager of a Company to transfer his office to another — no transfer made pursuant thereto shall have effect unless approved by a special resolution of the Company, notwithstanding anything stated in such provision.

Of Directors

and Managers pursuant to

the Memorandum

Unlimited Liability

95.

(a)In a limited Company, the liability of the directors or managers or of a managing director may be unlimited, if the memorandum so provides.

(b)In a limited Company in which the liability of a director or manager is unlimited, the directors or managers, and any member who proposes a person for election or appointment to the office of director or to the office of manager, shall be required to add to the proposal a notice that the liability of the person holding that office is unlimited, and the promoters, directors, managers and secretary of the Company, or any one of them, shall be required to give written notice thereof to that person before he accepts the office or begins to act in it.

(c)A person who contravenes a provision of subsection (b) shall be liable to a Fine / Penalty and shall be liable for all damage caused by the contravention to the person elected or appointed, but the contravention shall not derogate from the liability of the person elected or appointed.

Of Directors

and Managers pursuant to

Special Resolution

Unlimited Liability

96.

(a)A limited Company may by special resolution alter its memorandum so as to render unlimited the liability of its directors or managers or managing director; provided that it has been authorised to do so by its articles.

(b)Upon the passing of a special resolution by the Company pursuant to subsection (a), the provisions contained therein shall have the same effect as if they had been originally contained in the memorandum, and a copy thereof shall be included in or annexed to every copy of the memorandum issued after the passing of the resolution.

(c)A Company that has contravened a provision of this Section, and every officer thereof who knowingly and wilfully authorised or permitted the contravention, shall be liable to a Fine / Penalty in respect of every copy in relation to which the provision has been contravened.

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