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 C: Registration of Charges with the Company

172.

(a)A Company shall keep at its registered office a register of charges, in which it shall enter all charges specifically affecting any asset of the Company and all floating charges on its undertaking and property; such registration shall include a short description of the charged asset, the amount of the charge, and the names of the chargees or those entitled thereunder if it is not to bearer, and the amount of any fee payable to the Registrar and any deferred payment under law.

(b)Every officer of a Company who knowingly and wilfully authorised or permitted the omission of any entry required under this section shall be liable to a Fine.

Register of Charges

173.

(a)A company shall keep at its registered office a copy of every document creating a charge requiring registration with the Registrar under this Ordinance, and a copy of one debenture from each series of uniform debentures; these copies and the register of charges shall be open for inspection free of charge during business hours to any creditor or member of the company, subject to any reasonable restriction imposed thereon by the company in general meeting, provided that inspection shall not be reduced to less than two hours per day; the register of charges shall be open for inspection to any person upon payment of such amount as the company shall have fixed, not exceeding the amount prescribed in the Regulations.

(b)If inspection as aforesaid is refused, the court may make an Order enforcing inspection forthwith, and in addition, any officer of the company who refuses to permit such inspection, and any director or manager of the company who knowingly and wilfully approved or permitted such refusal, shall be liable to a continuing Fine.

Inspection of Documents

174.

(a)Every register of debenture holders of a company shall be open for inspection to every registered holder of a debenture and to every shareholder of the company, subject to any reasonable restriction imposed thereon by the company in general meeting, provided that inspection shall not be reduced to less than two hours per day; this provision shall not apply during certain periods, not exceeding thirty days in aggregate in any year, during which the register is closed pursuant to provisions contained in the articles, the debentures, the stock certificates, the trust deed or any other document containing the security for the debentures; every person entitled to inspect as aforesaid may require a copy of the register or of any part thereof, upon payment of such amount as the company shall have fixed, not exceeding the amount prescribed in the Regulations.

(b)If inspection is refused, the company and every officer thereof who knowingly approved or permitted the refusal shall be liable to a Fine and a continuing Fine, and the court may make an Order enforcing inspection of the register forthwith.

Division D: Re-Issue of Debentures

175.

(a)A company that has redeemed debentures that were issued shall have the power to re-issue them, whether by re-issuing those same debentures or by issuing other debentures in their place, provided that there is no express or implied provision to the contrary in its articles or in any Contract into which it has entered, and provided that the company has not expressed its intention, by a resolution passed in connection therewith or by any other act, that the redeemed debentures shall be cancelled; upon such re-issue (hereinafter in this Division referred to as re-issue), every holder of a debenture shall have the same priority rights as would have been due to that holder had the debenture not been redeemed.

(b)A company that has the power of re-issue shall be required to include in its balance sheet the particulars relating to the debentures available for re-issue.

Power of Re-Issue

176.

A company that has deposited its debentures as security for the receipt of advances on current account or in any other manner shall not be regarded as having redeemed those debentures, even if they continue to be deposited after such account is no longer in debit.

Status of Re-Issue

177.

(a)A re-issue shall not be regarded as a new issue for the purposes of any provision limiting the amount and number of debentures that may be issued.

(b)Every re-issue shall be regarded as a new issue for the purposes of stamp duty; however, a person who lends money on the security of a debenture that has been re-issued pursuant to this Division and which appears to be duly stamped may tender it as evidence in any proceeding to enforce the security, and if it is found not to be duly stamped, that person shall not be liable to pay stamp duty or arrears charges unless that person knew thereof or could have discovered it but for negligence; the obligation to pay the correct stamp duty and arrears charges shall rest upon the company.

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Division E: Registration of Charges with the Registrar

preamble-15.

Registration

(127(1) opening,

condition (c)]]

Charges Requiring Registration

178.

(a)A charge of the kinds listed below, created by a company registered in Israel, shall be void against the liquidator and any creditor of the company, insofar as it imposes a security upon its assets or undertaking, unless the prescribed particulars of the charge and the document creating or evidencing it, if such a document exists, have been delivered to, or received by, the Registrar in the manner and within the time specified in Section 179, for the purpose of registration as required under this Ordinance; the following are the charges:

(1)a charge to secure debentures, including a floating charge or a charge on uncalled share capital, on calls made but not paid, and on goodwill;

(2)a charge on Real Property wherever situated, or on any interest in such property;

(3)a charge on movable property, where such property is not in the possession of the creditor;

(4)a charge on book debts;

(5)a charge on ships or shares therein;

(6)a charge on patents, licences under patents, trade marks, or copyrights.

(b)Where a negotiable instrument has been given to a company as security for book debts, and the company has deposited it as security for obtaining a loan, such deposit shall not be regarded as a charge on book debts for the purposes of this Section.

(c)Where a charge is void as provided in subsection (a), this shall not affect the Contract or the obligation to repay the money secured by the charge, and repayment of such money shall become immediately due.

Manner of Registration

179.

(a)The time for delivery or receipt of the particulars and document pursuant to Section 178 is —

(1)in the absence of any other provision — within twenty-one days from the date on which the charge was created;

(2)in the case of a charge on Real Property in Israel — within twenty-one days from the date on which the Real Property Registrar confirmed the transaction for registration, whether it was executed before him or before an advocate;

(3)in the case of a charge created outside Israel on assets situated exclusively outside Israel — within twenty-one days from the date on which the document could have been received in Israel by ordinary post had it been dispatched with sufficient promptness; for the purposes of this paragraph, a copy of the document, certified in the prescribed manner, may be delivered.

(b)In the case of a charge created in Israel which includes assets situated outside Israel, the document under Section 178 may be sent for registration even if additional proceedings are required in order to render the charge effective under the laws of the country in which the assets are situated.

Acquisition of Charged Property

180.

(a)Where a company registered in Israel acquires assets that are subject to a charge which would have required registration under this Division had it been created by the company after the acquisition, the company shall ensure that the particulars required under Section 178 and a copy, certified in the prescribed manner, of the document creating or evidencing the charge, are delivered to the Registrar for registration within twenty-one days after the date on which the acquisition was completed; and if the assets acquired are situated outside Israel and the charge was created outside Israel, the provisions of Section 179(a)(3) shall apply with respect to such time.

(b)If the company is in breach of the provisions of this Section, the company and every officer thereof who knowingly and wilfully approved or permitted the breach shall be liable to a continuing Fine.

Registrar's Register of Charges

181.

The Registrar shall maintain for every company a register of charges, in the prescribed form, of all charges created by it that require registration under this Division (hereinafter — the register of charges), and shall record therein the particulars delivered for registration pursuant to Section 178.

Registers of Charges

182.

The Registrar's registers of charges shall be open for inspection to any person upon payment of the prescribed fee.

Inspection of Registers of Charges

183.

(a)A company that has created a series of debentures containing, either directly or by reference to another document, a charge of pari passu rank in favour of the holders of the debentures of the series, shall be required to ensure that within twenty-one days after the date of execution of the document containing the charge, or after the date of execution of a debenture where there is no such document, the document or one of the debentures in the series, as applicable, together with the following particulars, shall reach the Registrar and shall be registered in the Registrar's register upon payment of the prescribed fee:

(1)the total amount secured by the series;

(2)the dates of the resolutions authorising the issue of the series and the date of the document creating or defining the security, if any;

(3)a general description of the charged assets;

(4)the names of the trustees on behalf of the debenture holders, if any.

(b)Where more than one issue of a series of debentures has been made, the date and amount of each issue shall be sent to the Registrar for registration in the register, but failure to do so shall not affect the validity of the debentures issued.

Registration of a Series of Debentures

184.

(a)Where a company has, directly or indirectly, paid a commission, allowance, or discount in connection with the subscription or procurement of subscriptions for its debentures, or in connection with an agreement to subscribe or to procure subscriptions therefor, whether conditional or unconditional, the particulars to be sent for registration under this Division shall also include particulars of the amount or rate per cent of the commission, allowance, or discount given, but failure to do so shall not affect the validity of the debentures issued.

(b)The deposit of debentures as security for a debt of the company shall not be regarded for the purposes of this Section as an issue of debentures at a discount.

Commission, Allowance, Discount

185.

(a)The Registrar shall issue a certificate signed by him of the registration of every charge, specifying the amount secured thereby; the certificate shall be conclusive evidence that all requirements with respect to registration have been complied with.

(b)A copy of the registration certificate pursuant to this Section shall be endorsed on every debenture, or debenture stock certificate, issued by the company after the creation of the registered charge and the payment of which is secured thereby.

Registration of a Charge

186.

The duty to send to the Registrar the particulars requiring registration under this Division in respect of every charge and every issue of debentures rests upon the company, but registration of a charge may be effected upon the application of any person interested therein, and if that person has duly paid fees to the Registrar in connection therewith, that person may recover the amount thereof from the company.

Application to Foreign Companies

187.

This Division shall apply to a company incorporated outside Israel that has a place of business in Israel, in respect of charges on assets in Israel created by it after the 5th day of Iyyar 5689 (15 May 1929) and in respect of charges on assets acquired by it in Israel after that date.

Transmission of Copy

188.

(a)A copy of a trust deed securing an issue of debentures, of a document creating a charge, and of a debenture required to be registered, shall be sent by the Company to the Registrar within twenty-one days from the date of their execution if executed in Israel, and if executed outside Israel — within twenty-one days after the day on which they could have been received in Israel in the ordinary course of post if dispatched with reasonable promptness; in a series of debentures, a copy of one debenture from the series shall suffice.

(b)If any provision of this Section is contravened, the Company and every officer thereof who knowingly and wilfully authorised or permitted the contravention shall be liable to a continuing Fine.

Chronological Register

189. The Registrar shall keep a chronological register, in such form and containing such particulars as may be prescribed, of charges registered with him under this Ordinance.

Memorandum of Satisfaction

190.

Where evidence is produced to the satisfaction of the Registrar that a debt secured by a registered charge has been satisfied, the Registrar may direct that a memorandum of satisfaction be entered in the register and shall send to the company, upon its request, a copy of that memorandum.

Rectification of Register of Charges

191.

Where the Registrar is satisfied that the omission to register a charge within the required time, or the omission or misstatement of any particular with respect to a charge or memorandum of satisfaction, was due to accident, inadvertence, or other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders, or that there are other grounds on which it is just and equitable to grant relief — the Registrar may, on the application of the company or any interested person, extend the time for registration or rectify the registration, on such terms as the Registrar considers just and beneficial; if the Registrar rejects the application, the applicant may Appeal against that decision to the court within fourteen days from the date on which the decision was served upon the applicant.

Removal of Restrictions

192.

(a)A company that has failed to send for registration the particulars of a charge, or the particulars of an issue of a series of debentures, requiring registration under this Ordinance, and every officer thereof who knowingly participated in the default, shall be liable to a continuing Fine, unless the registration was effected upon the application of another person.

(b)Subject to the provisions of subsection (a), a company that has failed to comply with any requirement of this Ordinance regarding registration with the Registrar of a charge created by it, and every officer thereof who knowingly and wilfully approved or permitted the breach, shall be liable to a Fine, without prejudice to any other liability.

(c)Any person who knowingly and wilfully approved or permitted the delivery to any person of a debenture or debenture stock certificate requiring registration with the Registrar on which a copy of the registration certificate has not been endorsed shall be liable to a Fine, without prejudice to any other liability.

Registration of a Fee Whose Payment Has Been Deferred (Section 133a)

193.

Where the payment of a fee payable to the Registrar has been deferred by law, the Registrar shall record in the Register of Charges the amount of the deferred fee, and after it has been paid, in whole or in part, the matter shall be recorded in the Register upon application by the Company.

Division VI: Enforcement of Rights — Court Permission Required

194.

Where debentures are secured by a floating charge, a charge on uncalled capital, unpaid calls, or goodwill, the rights of the debenture holders in respect of the charge may not be enforced except by leave of the Court; and if an application for enforcement is brought before the Court, the Court may grant any relief that may be obtained upon such an application in the courts of England, including the appointment of a receiver and the making of an Order for the sale and distribution of the assets.

Priority in Enforcement of a Floating Charge

195.

(Repealed)

Registration of Appointment of Receiver, Liquidator or Manager — Debts with Priority

196.

(Repealed)

Publication of Appointment in Company Documents

197.

(Repealed)

Rules Governing Appointment of a Receiver

198.

(Repealed)

Receiver and Manager — Submission of Accounts

199.

(Repealed)

Court Supervision of Receiver and Manager Where Company Is in Winding Up

200.

(Repealed)

Duties of Receiver and Manager — Accounts and Remuneration

201.

(Repealed)

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