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 R: [Heading Unclear — Possible Transcription Error]
preamble-3.
For a limited company
Obligation to State "Ltd."
31.
The name of a limited company shall include at its end the designation "בע"מ" — the abbreviation of "בערבון מוגבל" (Limited) — subject to the provisions of this Ordinance.
Exemption from Stating "Ltd."
32.
(a)Where the Minister is satisfied that an association of persons about to be incorporated as a limited company is being formed for the purpose of promoting commerce, art, science, religion, charity or any other useful object, and intends to apply its profits or other income to the promotion of its objects and to prohibit the payment of dividends to its members — he may permit the association of persons to be registered as a limited company without the addition of "בע"מ" to its name, and it shall be so registered.
(b)A Permit / License under this Section may be subject to conditions and to Regulations as the Minister thinks fit; the conditions and Regulations shall be binding on the association of persons, and the Minister may direct that they be included in the memorandum and articles of association of the company.
(c)A company registered under this Section shall have all the privileges of a limited company and shall be subject to all its obligations, except the obligation to use the word "בע"מ" as part of its name, to publish the name, and to send lists of members to the Registrar.
Revocation of Exemption from Stating "Ltd."
33.
The Minister may at any time revoke a Permit / License granted under Section 32, provided that he gives the company written notice of his intention to do so and affords it an opportunity to be heard against the revocation; where the Permit / License has been revoked, the Registrar shall add the word "בע"מ" to the name of the company in the Register of Companies, and the company shall cease to enjoy any exemption or privilege under Section 32.
Revocation of the Exemption
34.
(a)A company shall not be registered under a name that includes the words "Chamber of Commerce" unless it is a company that the Minister has permitted to be registered as a limited company without the addition of the designation "בע"מ" as part of its name, as referred to in Section 32.
(b)Where the Minister has revoked under Section 33 the Permit / License granted to a company as aforesaid, the company shall — within six weeks of the date of revocation, or within such longer period as the Minister has permitted — change its name to a name that does not include the words "Chamber of Commerce"; if it has not done so, it shall be liable to a continuing Fine / Penalty.
(c)A notice by the Minister of his intention to revoke the Permit / License granted shall specify the consequences of revocation as referred to in subsection (b).
Restriction on Use of Certain Expressions
35.
A company shall not be registered under a name that includes any of the following expressions, except with the consent of the Minister:
(1)"Co-operative";
(2)"Royal", "Government" or "Municipal";
(3)A word that, in the opinion of the Registrar, implies or is capable of implying the patronage of the President of the State, of the Government or of a member thereof, or a connection with the State, the Government, any of its ministries, a local authority, or any association or body incorporated under a special law for their establishment.
Restriction on Use of Misleading Names
36.
(a)A company shall not be registered —
(1)Under a name that is, or is so similar as to be misleading to, the name of a body of persons duly registered in Israel;
(2)Under a name that is included in a trade mark within the meaning of the Trade Marks Ordinance [New Version], 5732-1972, or is so similar thereto as to be misleading, if the mark is registered in Israel in respect of goods dealt in for purposes similar to the objects of the company applying for registration;
(3)Under a name that is likely to offend public policy or public sensibilities.
(b)Paragraphs (1) and (2) of subsection (a) shall not apply if the body of persons or the owner
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.
Contact Us →Division: [Heading Unclear — Possible Transcription Error: Text Reads: 'the trade name is about to wind up its business and has agreed that the name be registered']
preamble-4.
(c)Where a company has been registered under a name that may not be registered under subsection (a), the Registrar may require it to change the name; if the company has not changed the name within the time specified in the Registrar's demand, the Attorney General may apply to the court and request that the court Order the company to change the name.
(d)Without derogating from the provisions of subsection (a), the Registrar may refuse to register a company under a name that he considers to involve fraud or unfair competition, or that was chosen for an improper purpose, provided that the Registrar shall not refuse to register a name on grounds of unfair competition if the company applying for registration has proved that it has a prior right to use that name.
(e)The Attorney General, or a person claiming to be aggrieved by a decision of the Registrar under subsections (a) to (d), may Appeal against it to the court.
(f)A company may apply to the court for an Order directing a person, Partnership, association or company that has adopted its name or a name so similar thereto as to be misleading — to refrain from using it, and similarly a person, Partnership or association may apply for a similar Order against a company that has adopted a name as aforesaid, and if the Defendant has not proved that his right to use that name is prior, the court may make an Order in accordance with the application.
Change of Name
37.
(a)A company may change its name by special resolution approved by the Registrar and with the written Permit / License of the Minister.
(b)Where a company has changed its name, the Registrar shall register its new name in the Register of Companies in place of the former name and shall issue to it a certificate of incorporation amended in accordance with the circumstances of the matter.
(c)A change of a company's name shall not affect any right or obligation of the company, nor shall it diminish the validity of any legal proceeding instituted by or against it, and any legal proceeding that could have been commenced or continued against it under its former name may be commenced or continued under its new name.
(d)Sections 31, 34, 35 and 36 shall apply, with the necessary modifications, to a change of name.
Use of Designation
38.
A trader or person conducting business under a name and title whose last words are "limited" or any abbreviation or imitation thereof, without having been duly incorporated with limited liability, 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.
Contact Us →Division G: Private Company
preamble-5.
What is
Private Company —
39.
(a)A private Company, for the purposes of this Ordinance, is a Company whose articles —
(1)restrict the right to transfer its shares;
(2)prohibit any invitation to the public to subscribe for shares or debentures of the Company;
(3)limit the number of its members to fifty, excluding employees of the Company or persons who were employees and who, while being employees and after the cessation of their employment, continue to be members of the Company.
(b)Two or more persons who jointly hold a share or shares in the Company shall, for the purposes of this Section, be regarded as a single member.
Breach of Restrictions
40.
(a)Where the articles of a Company contain the provisions referred to in Section 39 but the Company has failed to comply with any one of them, the provisions of this Ordinance shall apply to it as though it were not a private Company, and it shall cease to be entitled to any privilege or exemption conferred on private Companies under this Ordinance.
(b)Where the Court is satisfied that the failure to comply was accidental or due to inadvertence or some other sufficient cause, or that it is just and equitable to grant relief on other grounds, it may, on the application of the Company or any interested person, and on such terms and conditions as appear to it just and expedient, order relief of the Company from the consequences aforesaid.
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.
Contact Us →Division H: Conversion of Type of Corporations
Conversion of Private Company to Public Company
41.
(a)A private Company that has altered its articles so that they no longer include the provisions referred to in Section 39 shall, from the date of the alteration, cease to be a private Company, and within fourteen days shall pay the Registrar the fees prescribed by Regulations, whereupon the Registrar shall publish notice of the alteration of the articles as aforesaid in the Official Gazette.
(b)A Company that has contravened the provisions of subsection (a), and every officer thereof who knowingly and wilfully authorized or permitted the contravention, shall be liable to a Fine / Penalty.
Conversion of a Company
42.
(a)A public Company may be registered as a private Company.
(b)A public Company applying to be registered as a private Company must alter its articles by special resolution so as to bring them into conformity with the provisions of Section 39, and must deliver to the Registrar, together with the application for registration, a printed or typewritten copy of the articles, and pay the prescribed registration and publication fees.
(c)The Registrar shall submit the application to the Minister, and the Minister may, in his absolute discretion, permit or refuse to permit registration as a private Company.
(d)Upon receipt of the Minister's authorization, the Registrar shall close the previous registration of the Company, and may dispense with the delivery of documents already delivered to him in the previous registration.
Conversion of a Company
43.
An unlimited Company may register under this Ordinance as a limited Company, and upon such registration the Registrar shall close the previous registration, and may dispense with the delivery of copies of documents already delivered to him in the previous registration.
Conversion of a Company
44.
(a)The manner of registration of a Company under Sections 42 and 43 and the validity of such registration shall be as if it were an initial registration and as if the Company had not previously been registered under this Ordinance, except that such registration shall not affect the assets, rights, liabilities and legal proceedings of the Company and of each of its members under this Ordinance in respect of any right held by them and any debt, liability or obligation owed by them, or any Contract to which they are bound, prior to such registration, including any debt, liability or obligation payable upon the winding up of the Company.
(b)The provisions of this Ordinance regarding the staying or restraining of legal proceedings during the period between the filing of the application for a winding-up Order and the making of the winding-up Order shall apply, in respect of a Company registered under Section 42, where the application for a stay or restraint is made by a creditor, also to legal proceedings against any contributory of the Company.
Consequences of Registration
45.
(a)A registered cooperative society (hereinafter in this Section — a society) may be registered as a Company.
(b)A society applying to be registered as a Company shall prepare a plan for its organization as a Company and submit it for the approval of the Registrar of Cooperative Societies, who may, in his absolute discretion and without obligation to give reasons, refuse to grant such approval.
(c)The Minister may make Regulations prescribing the conditions under which the Registrar of Cooperative Societies may approve a plan submitted to him pursuant to the provisions of subsection (b).
(d)Where the Registrar has approved the plan, it shall be brought before a general meeting of the society of which due notice has been given twenty-one days in advance, setting out the intention to propose the plan; and if the plan is adopted by a majority of at least three-quarters of the members entitled to vote and who voted in person or by proxy, a memorandum, and also articles if the members so wish, shall be prepared in accordance with this Chapter, and upon submission of the application for registration a printed or typewritten copy thereof shall be delivered to the Registrar of Companies and the prescribed registration and publication fees shall be paid.
(e)The Registrar of Companies shall submit the application to the Minister, and the Minister may, in his absolute discretion, permit or refuse to permit registration of the society as a Company.
(f)Where the Minister has authorized registration, the Registrar of Companies shall notify the Registrar of Cooperative Societies accordingly, and the latter shall cancel the registration of the society as a cooperative society and publish notice thereof in the Official Gazette; after the cancellation the Registrar of Companies shall register the society as a Company and shall publish in the Official Gazette, at the expense of the Company, the memorandum of the Company or a summary thereof; and if the society held a license under the Banking (Licensing) Law, 5741-1981, or was registered under Sections 56(4) and 62 of the Cooperative Societies Ordinance, the Registrar of Companies shall cancel the license or close the registration.
(g)Upon registration of the society as a Company, the Registrar of Cooperative Societies shall transfer to the Registrar of Companies a transcript of all registrations in his register of charges relating to charges created by the society prior to its registration as a Company and existing at the time of registration, and of all documents in his possession creating or evidencing such charges, and the Registrar of Companies shall register, without fee, in his register of charges the particulars in the transcript relating to each charge.
(h)All assets, rights, debts and obligations of the society on the day of its registration as a Company shall, upon registration, vest in the Company, and all pending legal proceedings instituted by or against the society or any officer or member thereof may be continued as if no registration had taken place; such registration shall not affect any debt, liability or obligation owed by the Company or any of its members, or any Contract to which they are bound, prior to registration, including any debt, liability or obligation payable upon the winding up of the Company.
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.
Contact Us →Chapter C: Members and Register of Members
Division A: Members and Shares
preamble-6.
The Company
Who is a Member
46.
(a)A member of a Company is a person who has agreed to be a member thereof and whose name is entered in the register of members of the Company (hereinafter — the register of members).
(b)A person who has signed the memorandum of the Company shall be deemed to have agreed to be a member thereof, and upon registration of the Company shall be entered in the register of members.
Right of Shareholders to Profits
47.
Subject to the provisions of the memorandum or articles, all shares of a Company shall carry the right to participate in equal proportion in the profits available for distribution; however, a Company having a share capital may by its memorandum or articles divide its capital into shares of different classes and attach to different classes different rights as to dividends and participation in surplus assets on winding up.
Right to Profits in a Company Limited by Guarantee
48.
A Company limited by guarantee that has no share capital shall not entitle any person to a share in its profits available for distribution otherwise than as a member thereof, and any provision in the memorandum, articles or resolutions of the Company contrary to this provision shall be void.
Differences in Payments and Dividends on Account of Shares
49.
A Company authorized to do so by its articles may —
(1)differentiate, at the time of issuing shares, between shareholders as to the amounts and times of payment of calls on their shares;
(2)accept from a member who consents thereto any amount paid on account of any of his shares not yet fully paid up, even though no call has been made in respect of that amount;
(3)pay a dividend on a share in proportion to the amount paid up thereon if more has been paid up thereon than on other shares.
Differences in Payments and Dividends on Account of Shares
50.
A Company authorized to do so by its articles may forfeit shares for non-payment of a call made in accordance with the provisions of its articles.
Forfeiture of Shares
51.
Every Company having a share capital shall distinguish each share by an appropriate number.
Numbering of Shares
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.
Contact Us →