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 A: Allotments and Certificates

Issue of Shares at a Discount

129.

A limited company shall not allot any share as a share paid up otherwise than in cash, whether wholly or in part, except pursuant to a contract in writing.

[Issue Not in Cash

193(2)(1)]

Shares Paid Up Otherwise Than in Cash

130.

(a)A limited company shall, within one month after every allotment, deliver to the Registrar the following documents:

(1)a return of allotments specifying the number and nominal amount of the shares comprised in the allotment, the names, identity numbers, addresses, and occupations of the allottees, and the amount paid or due and payable on each share;

(2)a list of shares allotted as fully or partly paid up otherwise than in cash, their number and nominal amount, the extent to which they are treated as paid up, and the consideration for which they have been allotted, together with a duly stamped contract constituting the title of the allottee to the allotted shares, and a duly stamped contract, if any, relating to any sale, service, or other consideration which constituted the basis for the allotment.

(b)Where any document required under this section has not been delivered within one month after the allotment, the company or any person responsible for the default may apply to the court for relief, and if the court is satisfied that the default was accidental or due to inadvertence, or that it is just and equitable to grant relief, it may extend the time for delivery of the document for such period as it thinks fit.

[Shares Allotted

193(1), (3)]]

Lists of Shares

131.

Where any provision of Sections 129 and 130 has not been complied with, every officer of the company who was knowingly a party to the default shall be liable to a continuing Fine.

[193(4)]]

Contravention of Provisions

132.

(a)A company that has allotted any shares or debentures, or to which a duly stamped and otherwise valid transfer of any of its shares or debentures has been lodged — except a transfer which the company is entitled to refuse to register and does not register — shall, within two months after the allotment or the lodging of the transfer, complete

[Share Certificates

and Debenture Certificates

788 Book of Laws 37 10th of Elul 5743 19.08.1983]

and have ready for delivery the share certificates and debentures in respect of the shares or debentures allotted or transferred; unless the conditions of issue of the shares or debentures otherwise provide.

(b)Certificates under this section shall be distinguished by numbers.

(c)Where the company refuses to register a transfer of shares or debentures, it shall, within two months after the lodging of the transfer, send to the transferee notice of the refusal.

(d)Nothing in this section shall require a company to issue more than one certificate in respect of a share or debenture allotted or transferred, and where a certificate is delivered to one of several joint holders it shall be deemed to have been delivered to all of them.

(e)A certificate under this section shall be prima facie evidence that the person named therein is entitled to the shares or debentures comprised therein.

(f)Where any provision of this section has not been complied with, the company and every officer thereof who was knowingly a party to the default shall be liable to a continuing Fine.

(g)Where a company has failed to comply with any provision of subsection (a) and has been required to comply therewith and has failed to do so within ten days from the date it received the requirement, the court may, on the application of the person entitled to receive the certificate, Order the company or any of its officers to comply therewith within such time as the court specifies in the Order, and may Order the company, or the officer responsible for compliance with the provision, to pay the costs incurred in connection with the application.

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.

Division B: Discount and Commission

At a Discount

preamble-11.

At a Discount

Issue of Shares at a Discount

133.

(a)Subject to the provisions hereinafter, a company may issue shares of a class already issued at a discount, provided that all of the following conditions are satisfied:

(1)the issue has been authorised by a resolution of the general meeting of the company and has received the approval of the court;

(2)the resolution specifies the maximum rate of discount at which the shares may be issued;

(3)at least one year has elapsed from the date of the incorporation of the company to the date of the issue;

(4)the shares at a discount were issued within one month from the date on which the court approved the issue, or within such longer period as the court may have approved.

(b)A company that has passed a resolution authorising the issue of shares at a discount may apply to the court to confirm the issue, and the court may confirm it if it thinks fit to do so having regard to the circumstances, and may attach to such confirmation such conditions as it thinks fit.

[195(3), (4)(1)]

Disclosure of the Discount

134.

(a)Every annual return under Section 121 and every balance sheet issued by the company after the issue of shares at a discount shall contain particulars with respect to the discount allowed on the issue, or the amount of the discount not yet written off in the books as at the date on which the document was issued.

(b)A company that has contravened any provision of this section, and every officer thereof who knowingly and wilfully authorised or permitted the contravention, shall be liable to a continuing Fine.

[Permitted Commission]

Commission on Subscription

135.

A Company may, if its articles so permit, pay a commission in respect of the subscription or procurement of subscription for its shares, whether subscription is conditional or unconditional; however —

(1)The commission paid or agreed to be paid shall not exceed the amount or rate authorised by the articles and shall not exceed 10% of the price at which the shares are issued;

(2)The amount or rate of the commission and the number of shares agreed to be subscribed for unconditionally in consideration of a commission shall be stated in every Contract or notice, not being a prospectus, if any, inviting the public to subscribe for shares.

Discount and Allowance on Subscription

136.

Save as aforesaid, a Company shall not apply any of its shares or capital money, either directly or indirectly, in payment of any commission, discount, or allowance to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the Company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares of the Company, whether the shares or money be so applied by being added to the purchase price of any property acquired by the Company or to the Contract price of any work to be executed for the Company, or the money be paid out of the nominal purchase or Contract price, or otherwise.

Prohibition of Commission

137.

Nothing in Sections 135 and 136 shall affect the power of a Company to pay ordinary and reasonable brokerage, and a vendor to, promoter of, or other person who receives payment in money or shares from a Company may pay out of such money or shares a commission to which the Company itself would have been entitled to pay directly under the said Sections.

138. (a) A Company which has paid a commission in respect of shares or debentures, or allowed a discount in respect of debentures, shall show in every balance sheet the total amount of commissions paid or discounts allowed in respect of such shares or debentures, so far as the same has not been written off in its balance sheets, until the whole thereof has been written off.

(b)A Company which has contravened a provision of this Section shall be liable, and every officer thereof who knowingly and wilfully approved or permitted the contravention, to a continuing Fine / Penalty.

Commission and Discount to be Shown in Balance Sheet

Company Assisting in Purchase of Its Own Shares

139.

(a)A Company shall not give any person, whether directly or indirectly, financial assistance — by way of loan, guarantee, security or in any other manner — for the purpose of, or in connection with, a purchase of its shares, whether such purchase has been made or is to be made.

(b)Subsection (a) shall not apply to —

(1)the lending of money by a Company where the lending of money forms part of the ordinary business of the Company and the loan is made in the ordinary course of its business;

(2)money provided by the Company to trustees pursuant to a valid scheme for the purpose of purchasing fully paid shares of the Company, to be held by or for the benefit of employees of the Company, including a director employed thereby, or a person acting in a paid capacity;

(3)loans made by the Company to employees thereof to enable them to purchase fully paid shares of the Company and to hold them beneficially for themselves; however, nothing in this provision shall authorise the making of a loan to a director.

(c)The total amount of loans made pursuant to paragraphs (2) and (3) of subsection (b) and not yet repaid shall be shown as a separate item in the balance sheet of the Company.

(d)In this Section, "purchase of shares" includes subscription for shares.

(e)A Company which has contravened a provision of this Section shall be liable, and every officer thereof who knowingly and wilfully approved or permitted the contravention, to a Fine / Penalty.

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.

Division R: Payment of Interest out of Capital

In Certain Cases

preamble-12.

In certain cases

Power of the Company

140.

(a)Where a Company has issued shares for the purpose of raising money to defray the expenses of the construction of any works or buildings or the provision of any plant which cannot be made profitable for a lengthy period, the Company may pay interest on so much of that share capital as is for the time being paid up, and may charge such interest to capital as part of the cost of construction, subject to the following conditions:

(1)No such payment shall be made unless it is authorised by the articles or by a special resolution and is approved in advance by the Minister, who may, before granting such approval, appoint at the Company's expense a person to investigate and report to him on the circumstances of the matter, and require the Company, prior to such appointment, to give security for the payment of the costs of the investigation;

(2)The payment shall be made only for such period as the Minister determines, and such period shall not extend beyond the end of the half-year next following the half-year in which the construction is completed;

(3)The rate of interest shall not exceed four percent per annum or such rate as the Minister may at the time determine.

(b)The payment of interest under this Section shall not operate as a reduction of the amount paid up on the shares in respect of which it is paid.

(c)The accounts of the Company shall show the share capital on which interest has been paid out of capital during the period of the accounts, and the rate of interest.

(d)Where a provision of subsection (c) is contravened, the Company and every officer thereof who knowingly and wilfully approved or permitted the contravention shall be liable to a Fine / Penalty.

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.

Division E: Redeemable Shares

Redeemable Preference Shares

preamble-13.

381(1), (3)

Issue and Redemption

141.

(a)A Company limited by shares may, if authorised by its articles, issue redeemable preference shares, subject to the provisions of this Section.

(b)No redeemable preference share shall be redeemed unless it is fully paid up.

(c)Redeemable preference shares shall not be redeemed except out of profits of the Company which would otherwise be available for dividend, or out of the proceeds of a fresh issue of shares made for the purpose of the redemption.

(d)Where redeemable preference shares are redeemed out of the profits of the Company as provided in subsection (c), a sum equal to the amount required for the redemption shall be transferred out of the profits to a reserve fund — to be called the capital redemption reserve fund; the provisions of this Ordinance relating to the reduction of the share capital of a Company shall apply, subject to the provisions of this Division, to the capital redemption reserve fund as if it were paid-up share capital of the Company.

(e)Where redeemable preference shares are redeemed out of the proceeds of a fresh issue and a premium is payable on redemption, the premium shall be provided out of the profits of the Company before the redemption.

(f)Subject to the provisions of this Ordinance, redeemable preference shares shall be redeemed on such terms and in such manner as may be provided by the articles.

Redemption in Balance Sheet

Disclosure of Redeemable Shares in Balance Sheet

142.

(a)A Company that has issued redeemable preference shares shall show in every balance sheet what part of its issued capital is composed of redeemable preference shares and the date on or before which such shares are to be redeemed or are redeemable at the option of the Company.

(b)A Company which has contravened a provision of subsection (a), and every officer thereof who knowingly and wilfully approved or permitted the contravention, shall be liable to a Fine / Penalty.

Issue of Ordinary Shares in Place of Redeemed Shares

143.

(a)A Company that has redeemed or is about to redeem any preference shares may issue ordinary shares up to the nominal amount of the shares redeemed or to be redeemed as if they had never been issued, and accordingly such issue shall not, for the purposes of any enactment relating to capital duty, be treated as an increase of the share capital of the Company.

(b)Where new shares are issued before the old shares are redeemed, the new shares shall not, for the purposes of capital duty, be deemed to have been issued pursuant to this Section unless the old shares are redeemed within one month after the issue of the new shares.

(c)Where new shares are issued pursuant to this Section, the Company may, notwithstanding anything in this Ordinance, apply the capital redemption reserve fund, up to an amount equal to the nominal value of the shares so issued, in paying up shares to be issued to members of the Company as bonus shares credited as fully paid.

Division F: Alterations of Share Capital and Number of Members

144.

A limited Company having a share capital may by special resolution — if authorised to do so by its articles — alter the conditions of its memorandum as follows:

(1)increase its share capital by new shares of such amount as it thinks expedient;

(2)consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(3)convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination;

(4)subdivide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(5)cancel shares which, at the date of the resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled; the cancellation of shares under this paragraph shall not be deemed a reduction of share capital within the meaning of this Ordinance.

Power to Alter

145.

A Company having a share capital which has made any of the alterations referred to below shall, within one month after making the alteration, give notice to the Registrar specifying the shares or stock affected; the alterations are:

(1)consolidation of share capital and division thereof into shares of larger amount;

(2)conversion of shares into stock;

(3)reconversion of stock into shares;

(4)redemption of redeemable preference shares;

(5)cancellation of shares otherwise than in connection with a reduction of share capital pursuant to Section 151.

Notice to Registrar

146.

Where a Company having a share capital has converted any of its shares into stock and given notice thereof to the Registrar — all the provisions of this Ordinance applicable to shares only shall cease to apply to the shares so converted into stock, and in the register of members, and in the list of members to be sent to the Registrar, there shall be stated the amount of stock held by each member instead of the amount of shares converted and the particulars relating to shares as required by this Ordinance.

Consequences of Conversion of Shares into Stock

147.

(a)A Company having a share capital — whether or not it has converted its shares into stock — which has increased its share capital beyond the registered capital, shall give notice thereof to the Registrar within thirty days after the date of the resolution authorising the increase.

(b)A notice under subsection (a) shall include the prescribed particulars with respect to the classes of shares affected by the resolution and the conditions attaching to the new shares; a printed copy of the resolution authorising the increase shall be annexed to the notice sent to the Registrar.

(c)A Company not having a share capital which has increased the number of its members beyond the registered number shall give notice thereof to the Registrar within thirty days from the date of the resolution authorising the increase or from the date of the actual increase.

(d)Upon submission of a notice of increase of capital or of the number of members — but not later than the expiry of the time prescribed for its submission — the Company shall pay to the Registrar the prescribed fees, insofar as their payment has not been deferred by law.

(e)The Registrar may, on the application of the Company or of any interested person, and on such conditions as appear to him to be appropriate, extend the time for the submission of the notice or the payment of the fees, if satisfied that the delay was due to inadvertence or that there are other grounds for extension; if the Registrar refuses to extend the time, the applicant may Appeal against the Registrar's decision to the Court within fourteen days from the date on which the decision was communicated to him.

(f)If the Company has complied with its obligations under this Section, the Registrar shall register the increase, and his certificate of registration shall be conclusive evidence that the Company has complied with its obligations under this Section.

(g)The increase shall not take effect until the date of registration.

Contravention of Provisions

148.

A Company which has contravened any provision of Sections 145 to 147, and every officer thereof who knowingly and wilfully approved or permitted the contravention, shall be liable to a continuing Fine / Penalty.

Rights of Minority

149.

Where the share capital of a Company is divided into different classes of shares, and the memorandum or articles contain a provision authorising the variation or abrogation (hereinafter — variation) of the rights attached to any class upon the consent of a specified percentage of the holders of shares of that class or upon the passing of a resolution at a separate meeting thereof, and the rights attached to any such class have been varied under such provision — the holders of not less than 15% of the issued shares of that class, who did not consent to the variation or did not vote in favour of the resolution for the variation, may apply to the Court to cancel the variation, and upon such application being made the variation shall not have effect unless and until it is confirmed by the Court.

Procedure

150.

(a)An application for cancellation pursuant to Section 149 shall be made within seven days after the date of the consent or resolution, and may be made on behalf of those entitled to make it by one or more of them appointed in writing for the purpose.

(b)The Court shall hear the applicant and any person who has applied to be heard and whom the Court regards as an interested party, and after being satisfied, having regard to all the circumstances of the case, that the variation would unfairly prejudice the rights of the shareholders represented, may cancel the variation; if not so satisfied — it shall confirm the variation, and the Court's decision shall be final.

(c)The Company shall send to the Registrar a copy of the Court's Order within fifteen days from the date on which it was made; a Company which has contravened this provision, and every officer thereof who knowingly and wilfully approved or permitted the contravention, shall be liable to a continuing Fine / Penalty.

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.

← Prev 1…4 5 6…10 Next →

Page 5 of 10