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]

Chapter X: Miscellaneous

Division A: Arbitration

preamble-17.

Arbitration

Power to Refer to Arbitration

231.

(a)A company may refer to arbitration or agree in writing to refer to arbitration any existing or future dispute between it and any other company or person; the provisions of the Arbitration Law, 5728-1968, shall apply to such arbitration.

(b)Companies that are parties to an arbitration may delegate to the arbitrator the power to make any arrangement or decide any matter that the companies themselves or their directors or other managing body were competent to decide.

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Division C: Actions

preamble-18.

Litigation

Security for Costs

232.

Where the Plaintiff is a limited Company and a judge competent to hear the action has seen grounds to assume, on credible evidence, that the Company will be unable to pay the Defendant's costs if judgment is given in the Defendant's favour, the judge may order the Company to give sufficient security for the payment thereof, and may stay the proceedings until such security is given.

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Division C: Compromise and Arrangement

preamble-19.

or for an arrangement

[1117]

Power to Sanction Compromise

233.

(a)Where a compromise or arrangement is proposed between a Company and its creditors or members, or any class thereof, the Court may, on the application by motion of the Company, a creditor, a member, or a liquidator if the Company is in winding up, order a meeting of those creditors or members, as the case may be, to be convened in such manner as the Court directs.

(b)If a majority in number of the creditors or members or any class thereof, holding together three-quarters in value, present and voting at the meeting in person or by proxy in favour of the compromise or arrangement, and the Court has sanctioned it by Order, it shall be binding on all such creditors or members and on the Company, and if the Company is in winding up, on the liquidator and every contributory.

(c)An Order made under subsection (b) shall have no effect until a certified copy thereof has been filed with the Registrar; a copy of the Order shall be annexed to every copy of the Company's memorandum issued after the making of the Order, and if the Company has no memorandum, to every copy of the document constituting or defining the constitution of the Company issued as aforesaid; a Company that has contravened this provision, and every officer thereof who knowingly and wilfully authorized or permitted the contravention, shall be liable to a Fine for every copy in respect of which the offence was committed.

8 S.H. 5728, p. 184.

809 Book of Laws 37 10th of Elul 5743 19.08.1983

(d)For the purposes of this Section—

"Company" means any Company liable to be wound up under this Ordinance;

"arrangement" includes a reorganization of the share capital of the Company by the consolidation of shares of different classes, or by the division of shares into shares of different classes, or by both those methods.

Reconstruction and Amalgamation

234.

(a)Where an application is made to the Court for the sanctioning of a compromise or arrangement as referred to in Section 233, and it is shown to the Court that the compromise or arrangement has been proposed for the purposes of a scheme for the reconstruction of a Company or the amalgamation of Companies, and that under the scheme the whole or any part of the undertaking or property of one Company (hereinafter in this Division referred to as the transferor Company) is to be transferred to another Company (hereinafter in this Division referred to as the transferee Company), the Court may, by the Order sanctioning the compromise or arrangement or by a subsequent Order, make provision for—

(1)the transfer of the whole or any part of the undertaking, property, or liabilities of the transferor Company to the transferee Company;

(2)the allotment or appropriation by the transferee Company of any shares, debentures, policies, or other like interests in the transferee Company which, under the compromise or arrangement, are to be allotted or appropriated by the transferee Company to or for any person;

(3)the continuation by or against the transferee Company of any legal proceedings pending by or against the transferor Company;

(4)the dissolution of the transferor Company without winding up;

(5)the provision to be made for persons who, within such time and in such manner as the Court directs, dissent from the compromise or arrangement;

(6)such incidental, consequential, and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out.

(b)Where an Order is made for the transfer of property or liabilities, the property shall by virtue of the Order be transferred to and vest in the transferee Company and, if the Order so directs, shall be freed from any charge which has ceased to have effect by virtue of the compromise or arrangement, while the liabilities shall be transferred to the transferee Company and shall become its liabilities.

(c)Where an Order is made under this Section, every Company to which the Order applies shall deliver to the Registrar a certified copy thereof within seven days from the date on which it is made; a Company that has contravened this provision, and every officer thereof who knowingly and wilfully authorized or permitted the contravention, shall be liable to a continuing Fine.

(d)For the purposes of this Section—

"property" includes rights and powers of any description;

"liability" includes duties;

"Company" has the meaning assigned to it in this Ordinance only.

and Amalgamation

[1181]

Reconstruction

235.

(a)Where the affairs of a Company are being conducted in a manner oppressive to part of its members, the Court may, on the application of a member, give such directions as appear to it for the purpose of bringing the oppression to an end, including directions as to the future conduct of the Company's affairs, or for the purchase of shares of the Company by other members of the Company or by the Company itself.

(b)Where the Court has given directions under subsection (a), the consequential amendments shall be made to the Company's memorandum, articles, and resolutions, and such amendments shall be deemed to have been duly adopted by the Company.

Oppression

810 Book of Laws 37 10th of Elul 5743 19.08.1983

(c)The applicant shall deliver to the Registrar, within fifteen days from the date of filing an application under subsection (a), a copy of the application, and the Company shall deliver to the Registrar, within fifteen days from the date of the Court's decision, a copy of the decision; where the Court has directed amendments to the Company's memorandum, articles, or resolutions, the Company shall also deliver to the Registrar a copy of the memorandum, articles, or resolutions as amended, as the case may be, and the Registrar shall register the amended document and certify its registration by certificate.

Shares of

Dissenting

Shareholders

[1119]

Power to Acquire

236.

(a)Where a scheme or Contract involving the transfer of shares or a class of shares has been offered by the transferee Company, and the holders of not less than nine-tenths in value of the shares whose transfer is involved (other than shares already held at the date of the offer by the transferee Company or a subsidiary thereof or on their behalf) have, within four months after the making of the offer, approved the scheme or Contract, the transferee Company may, even if it is not a Company as defined in this Ordinance for the purposes of this Section, within two months after the expiry of the said four months, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares; and upon giving such notice, it shall be entitled and bound to acquire those shares on the terms on which, under the scheme or Contract, the shares of the approving shareholders are to be transferred, unless the Court thinks fit to order otherwise on application made to it by a dissenting shareholder within one month from the date of such notice.

(b)Where the transferee Company has given notice as referred to in subsection (a) and the Court has not made an order to the contrary on application by a dissenting shareholder, the transferee Company shall, upon the expiry of one month from the date of its notice, or, if an application by a dissenting shareholder was at that time pending before the Court, after the Court has disposed thereof, send a copy of its notice to the transferor Company and transfer to it the consideration for the shares it is entitled to acquire under this Section, and the transferor Company shall register the transferee Company as the holder of those shares.

(c)Any sum received by the transferor Company under this Section shall be paid into a separate bank account, and such sum or any other consideration received by the transferor Company as aforesaid shall be held by it in trust for the persons entitled to the shares in respect of which it was received.

(d)"Dissenting shareholder", for the purposes of this Section, includes a shareholder who has not assented to the scheme or Contract, or who has not transferred or has refused to transfer his shares thereunder to the transferee Company.

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Division D: Transfer of Undertaking of a Foreign Company

preamble-20.

Application for Transfer

237. (a) A foreign company registered in Israel under this Ordinance (in this Division — a foreign company) that has reached an arrangement with a company within the meaning of this Ordinance (in this Division — an Israeli company) for the transfer of its entire undertaking, business, property, and liabilities to the Israeli company — both companies may apply to the Court by motion for an Order sanctioning the arrangement; where the foreign company is in the course of being wound up, the liquidator together with the Israeli company may apply to the Court as aforesaid.

(b)Notice of the filing of an application under subsection (a) and of the date of its hearing shall be published in the Official Gazette and in two daily newspapers as the Court shall determine, one in Israel and one in the country in which the foreign company was incorporated, at such time, in such form, and in such manner as the Court shall determine; the Court shall also determine in the notice the time and manner of the applications referred to in Section 238(a).

(c)The Attorney General shall be a party to every application filed under subsection (a).

811 Book of Laws 37 10th of Elul 5743 19.08.1983

238.

(a)An interested person who contends that the arrangement is not reasonable, or that it is likely to prejudice his rights, may apply to the Court in the manner and at the time it has determined, and the Court shall not make an Order sanctioning the arrangement unless it has given that person an opportunity to be heard.

(b)The Court shall make an Order sanctioning the arrangement if satisfied that—

(1)the property of the foreign company is situated, wholly or for the most part, in Israel;

(2)the Minister has testified, in a certificate signed by him, that the sanctioning of the arrangement is in the public interest;

(3)the arrangement is reasonable and it is just and equitable that the requested Order be made.

(c)The Court may, whether within the Order of sanction or in a separate subsequent Order, give directions with respect to all or any of the following matters:

(1)the protection of the rights of any person who has applied to the Court under subsection (a) on the ground that the arrangement is likely to prejudice his rights;

(2)the allotment or appropriation of shares or debentures of the Israeli company, or other similar interests therein, which the company is required to allot or appropriate to, or for, any person under the arrangement with the foreign company;

(3)the dissolution of the foreign company in Israel, without winding up;

(4)any other matter or thing that appears to the Court to be necessary or expedient for carrying the arrangement into effect.

The Court

and its Powers

[191a(4)-(6)]

Confirmation

239.

Where the Court has made an Order sanctioning the arrangement, then from the date specified in the Order the Israeli company shall, for all purposes and without interruption, take the place of the foreign company as if the two companies were identical; and without prejudice to the generality of the foregoing—

(1)the entire undertaking, business, property, and liabilities of the foreign company shall pass to and vest in the Israeli company;

(2)all Contracts and engagements, whether or not capable of being transferred, shall remain in full force as if the Israeli company were a party thereto in place of the foreign company;

(3)all legal proceedings pending by or against the foreign company shall be continued by or against the Israeli company;

(4)every Judgment, Order, or decision given against or in favour of the foreign company shall be deemed to have been given against or in favour of the Israeli company;

(5)in every document, Contract, or engagement, whether or not the foreign company is a party thereto, the name of the Israeli company shall be substituted for the name of the foreign company.

Consequences of the Arrangement

240.

The Minister of Finance may, by general or special direction, exempt any transfer of property or liability, any amendment of registration, and any other act done in consequence of an Order sanctioning an arrangement as aforesaid, from any tax, fee, or other payment, in whole or in part, payable to the State or to a local authority.

Exemption from Tax

Power

241.

(a)The Israeli company shall publish the Order sanctioning the arrangement in the Official Gazette and in two daily newspapers as the Court shall determine, one in Israel and one in the country in which the foreign company was incorporated, at such time as the Court shall determine.

(b)Where an Order is made under this Division, the Israeli company shall file with the Registrar a certified copy of

the Arrangement and its Registration

812 Book of Laws 37 10th of Elul 5743 19.08.1983

the Order within seven days from the date on which it is made; if the Company contravenes this provision, the Company and every officer thereof who knowingly permitted the contravention shall be liable to a continuing Fine.

(c)Where the Order directs the dissolution of the foreign company in Israel, the Registrar shall record the dissolution in his registers.

In Israel Only

[191a(13)]

Transfer of Property

242.

Where a foreign company has reached an arrangement with an Israeli company to transfer to the Israeli company its undertaking, business, property, and liabilities situated in Israel only, whether all of them or except for a specified part only, the provisions of this Division shall apply with the following modifications:

(1)paragraph (1) of Section 238(b) shall not apply;

(2)the provisions of Section 239 shall apply with such modifications as the Court determines to be necessitated by the fact that only the undertaking, business, property, and liabilities situated in Israel have been transferred to the Israeli company;

(3)the provisions of Section 239 shall not apply to—

(a)any debt or right of the foreign company under the Income Tax Ordinance,8 the Law for the Encouragement of Capital Investments, 5719-1959,10 and the Law for the Encouragement of Industry (Taxes), 5729-1969,11 except to the extent determined by the Minister of Finance;

(b)any licence, Permit, or privilege granted under the law to the foreign company, if the authority that granted them has given notice to that effect within thirty days after the publication of the notice under Section 237(b).

Interpretation

243.

In this Division—

"property" means any asset, right in possession or in expectancy, benefit, authorization, permission, or power of any description whatsoever, even if not capable of being transferred;

"liability" means any liability, whether present or future, and any duty whatsoever, even if not capable of being transferred.

Chapters XI: Winding Up of a Company and Liability of Contributories

Modes of Winding Up

244.

(Repealed)

Liability of Contributory

245.

(Repealed)

246.

(Repealed)

Limitation on Amount

248.

(Repealed)

Right to Profits

249.

(Repealed)

Preservation of Provision

250.

(Repealed)

Additional Contribution

251.

(Repealed)

Qualifications

252.

(Repealed)

Participation of Shareholders

253.

(Repealed)

Nature of a Contributory's Liability

254.

(Repealed)

Deceased Contributory

255.

(Repealed)

The Competent Court

256.

(Repealed)

Grounds for Winding Up

257.

(Repealed)

Insolvency — Winding Up

258.

(Repealed)

Those Entitled to Petition for Winding Up

259.

(Repealed)

Qualifications for Winding Up Petition

260.

(Repealed)

261.

(Repealed)

Powers of the Attorney General

262.

(Repealed)

Petition for Winding Up Order

263.

(Repealed)

Powers of the Court

264.

(Repealed)

Stay of Proceedings

265.

(Repealed)

Part XX: Winding Up Order and Its Consequences

266.

(Repealed)

Consequences of a Winding Up Order

267.

(Repealed)

Winding Up Order

268.

(Repealed)

Commencement of Winding Up

269.

(Repealed)

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