Financial Services Supervision Law (Regulated Financial Services), 5776-2016
חוק הפיקוח על שירותים פיננסיים (שירותים פיננסיים מוסדרים), תשע"ו-2016
Published: 2016-08-01Consolidated Hebrew text as of 2026-07-26 · Last amended 2026-07-22✓ Amendment status checked against the Knesset legislation record on 2026-09-17
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
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Chapter IV: Permit for Control of or Holding of Means of Control in a Financial Service Provider
Control of or Holding of Means of Control in a Financial Service Provider§
26.
(a)A person shall not control a financial service provider that is a corporation, except pursuant to a permit granted by the Supervisor and in accordance with the conditions stipulated therein.
(b)A person shall not be an interested party in a financial service provider that is a corporation, except pursuant to a permit granted by the Supervisor and in accordance with the conditions stipulated therein.
(c)In granting a permit under subsection (a) for control of a financial service provider that is an extended licence holder, the considerations set out in sections 16(b), 25f(b), 25m(c) or 25v(b), as the case may be and with the necessary modifications, shall be taken into account, as well as the suitability of the applicant to control the financial service provider, including the applicant's business experience, other occupations and businesses, financial soundness, and integrity and uprightness, including the absence of a conviction or a pending indictment for an offence as referred to in section 15(a)(3), as well as the possible implications of granting the permit on the sphere of financial services.
(d)In granting a permit under subsection (a) for control of a financial service provider that is a basic licence holder, and in granting a permit under subsection (b), only the integrity and uprightness of the permit applicant shall be taken into account, including the absence of a conviction or a pending indictment for an offence as referred to in section 15(a)(3).
(e)A permit granted under this section shall also be valid in respect of every corporation under the control of the permit holder.
(f)The provisions of this section shall not apply to the following:
(1)a person who holds means of control by virtue of a transfer by operation of law;
(2)a corporation that acquired means of control from a person who controls it.
(g)The provisions of this section shall also apply to the holding of means of control in a financial service provider as security for an obligation, except for means of control intended in good faith to serve as security for an obligation in the hands of a banking corporation and whose proportion in a securities account of any customer does not exceed 0.001% of that class of means of control.
Transfer of Means of Control§
27.
A person who holds means of control in a financial service provider shall not transfer them to another, knowing that the transferee requires a permit under section 26 and does not hold that permit.
Revocation or Modification of a Permit§
28.
(a)The Supervisor may revoke or modify a permit granted under section 26 if the Supervisor had reasonable grounds to believe that any one of the following exists:
(1)a material condition of the permit has ceased to be met by the permit holder or the permit holder has breached such a condition;
(2)the conditions and considerations that justified the grant of the permit have ceased to be met by the permit holder;
(3)in respect of a permit holder that is a corporation – a winding-up order has been issued against it or a receiver has been appointed over its assets or over a material asset thereof due to non-payment of a debt; and in respect of a permit holder who is an individual – a receiving order has been issued against the individual in bankruptcy proceedings or the individual has been declared legally incompetent;
(4)there is a real concern of harm to public interest if the permit is not revoked or modified.
(b)The Supervisor shall not revoke or modify a permit as referred to in subsection (a), except after giving the permit holder an opportunity to present the permit holder's arguments before the Supervisor or before a person whom the Supervisor has authorised for that purpose from among the Supervisor's employees, in the manner prescribed, as well as an opportunity to remedy the breach within a period prescribed by the Supervisor or by the person so authorised.
Supervisor's Directions to a Person Who Acted Without a Permit§
29.
(a)If the Supervisor considers that a person acted without a permit under section 26, the Supervisor may direct, after consulting with the Committee and after giving that person an opportunity to present the person's arguments before the Supervisor or before a person whom the Supervisor has authorised for that purpose from among the Supervisor's employees, in the manner prescribed –
(1)that the person cease to hold the means of control held by that person, in whole or in part, in the manner prescribed and within a period to be prescribed, so that the person does not hold means of control of any class in excess of the proportion permissible for holding without a permit under section 26;
(2)that the voting rights or the right to appoint directors of that person shall not be exercised without a permit under section 26;
(3)that a vote by virtue of means of control held by that person without a permit under section 26 shall not be counted in the tally of that vote;
(4)that the appointment of a director made by that person be annulled.
(b)Where a person holds means of control by virtue of a transfer by operation of law, at a proportion requiring a permit under the provisions of section 26, the Supervisor may, after giving the holder an opportunity to present the holder's arguments before the Supervisor or before a person whom the Supervisor has authorised for that purpose from among the Supervisor's employees, direct the holder to cease holding the said means of control, in whole or in part, within a period and in a manner to be prescribed, so that the holder does not hold means of control of any class in excess of the proportion permissible for holding without a permit under the provisions of that section.
(c)Where the Supervisor has directed, pursuant to the provisions of subsection (b), that the holding of means of control be ceased, the Supervisor may give a direction as referred to in subsection (a)(2) to (4), with the necessary modifications.
(d)If the holder has not sold the means of control in accordance with the Supervisor's direction under subsection (a)(1) or (b), the District Court may, upon the application of the Supervisor, appoint a receiver for the sale of those means of control.
(e)If a financial service provider becomes aware that a person is acting by virtue of means of control held in contravention of the provisions of subsection (b) and section 26, the financial service provider shall report this to the Supervisor.
Reporting on the Holding of Means of Control§
30.
(a)A person who holds more than 5% of a particular class of means of control in a financial service provider that is a corporation shall submit to the service provider, on 1 April of each year and at such other times as the Supervisor may direct, a report on the means of control so held by that person and such other particulars as the Supervisor may direct, including the following particulars:
(1)in respect of a holder that is a corporation – the persons who control it, as well as those who hold 5% or more of a particular class of means of control in it;
(2)the person on whose behalf the holder acts as agent or trustee.
(b)The Supervisor may direct that a holder of means of control who is subject to a reporting obligation under this Section shall submit the report also directly to the Supervisor, and may direct that particulars referred to in subsection (a) shall be submitted to the Supervisor alone, at such times as the Supervisor shall direct.
(c)The provisions of this Section shall also apply to a person who holds means of control in a financial service provider as security for an obligation, except for a holder that is a banking corporation.
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Contact Us →Chapter V: Organs and Other Office Holders in a Financial Service Provider
Qualification for Service as an Office Holder in a Financial Service Provider§
31.
No person shall be appointed as an office holder in a financial service provider, and no person shall serve as such an office holder, unless all of the following conditions are satisfied in respect of that person:
(1)that person is an adult;
(2)that person has not been declared legally incompetent and no receiving order has been made against that person in bankruptcy proceedings;
(3)that person has not been convicted of an offence which, by reason of its nature, gravity or circumstances, renders that person unfit to serve as an office holder in a financial service provider, and each of the offences listed in section 15(a)(3)(a) shall be deemed an offence in respect of which the provisions of this paragraph are satisfied;
(4)that person satisfies additional qualification conditions determined by the Minister; the Minister may determine such qualification conditions generally or for a particular class of financial service providers or office holders therein, including education, professional experience and passing professional examinations;
(5)the financial service provider has given the Supervisor notice of the intention to appoint that person, as referred to in section 32(a), and the Supervisor has not given notice of an objection to the appointment as referred to in section 32(b), or has not directed that the tenure be terminated as referred to in section 32(c).
Objection to the Appointment of an Office Holder or Termination of Tenure§
32.
(a)A financial service provider shall give the Supervisor notice of the intention to appoint an office holder at least 60 days before the commencement of that office holder's tenure.
(b)The Supervisor may, within the period referred to in subsection (a), object to the appointment of an office holder in the financial service provider, provided that the candidate has been given an opportunity to present arguments before the Supervisor or before a person among the Supervisor's employees whom the Supervisor has authorised for that purpose; for this purpose the Supervisor shall take into account the suitability of the candidate for the proposed position, including that person's experience, integrity and probity, as well as that person's connections, of any kind whatsoever, with a financial service provider or with an office holder in a financial service provider.
(c)Where an office holder has been appointed and, after the appointment, additional or new particulars come to light in respect of the considerations referred to in subsection (b), the Supervisor may, after consulting with the Committee and after the office holder has been given an opportunity to present arguments before the Supervisor or before a person among the Supervisor's employees whom the Supervisor has authorised for that purpose, direct the termination of that office holder's tenure, by reason of such additional or new particulars.
The Board of Directors§
33.
(a)The board of directors of a financial service provider that is a corporation holding an extended licence, and in respect of the holder of a licence for the provision of deposit and credit services – also a holder of a basic licence, shall have at least three members.
(b)The Supervisor may issue directives on the matters listed below, generally or for a class of financial service providers as referred to in subsection (a):
(1)the composition of the board of directors, as well as the appointment of board committees, the number of members thereon and their composition;
(2)qualification conditions for a director and for a member of a board committee, and the Minister may determine additional qualification conditions, including accounting and financial expertise, required of an external director and of certain members of such a committee; nothing in directives under this paragraph shall derogate from the provisions under section 31(4);
(3)restrictions in respect of the appointment of a director or a member of a board committee, including restrictions by reason of their other occupations;
(4)the manner of appointment of a director, terms of tenure and provisions in respect of the termination or expiry of tenure, provided that in an association holding a licence for the provision of deposit and credit services, the appointment of the director shall be by the members of the association;
(5)the quorum at meetings of the board of directors and at meetings of board committees;
(6)matters to be deliberated upon and decisions to be made by the board of directors or by any of its committees, and such decisions to be made by a special procedure or by a special majority as shall be determined.
(c)The Supervisor's powers in respect of board committees under subsection (b) shall apply, with the necessary modifications, also in respect of an audit committee that is not a board committee.
The General Manager§
33a.
A financial service provider that is a corporation holding an extended licence, and in respect of the holder of a licence for the provision of deposit and credit services – also a holder of a basic licence, shall appoint a general manager who shall be vested with all the powers necessary for the day-to-day management of the affairs of the financial service provider within the framework of the policy determined by the board of directors and subject to its guidelines.
Auditor§
34.
(a)A financial service provider holding an extended licence, and in respect of the holder of a licence for the provision of deposit and credit services – also a holder of a basic licence, shall appoint an auditor, and the provisions of sections 154 to 157 and 159 to 170 of the Companies Law, 5759-1999 shall apply to that provider as if it were a public company, subject to the provisions of this Section and with the necessary modifications.
(a1)A financial service provider that is required to appoint an auditor under subsection (a) shall give the Supervisor notice of the intention to appoint an auditor at least 60 days before the commencement of that auditor's tenure, and the provisions of section 32(b) and (c) shall apply, with the necessary modifications, in respect of the appointment and termination of tenure of the auditor.
(b)If the auditor becomes aware, in the course of performing his duties, of a material breach of any provision under this Law or of an administrative directive issued thereunder, the auditor shall give written notice thereof to the general manager and shall request the general manager's response within the period specified in the notice; if the general manager's response is not received within the period so specified, or if the auditor is not satisfied, after examining the general manager's response, that the breach is not a material breach, the auditor shall give the Supervisor, notwithstanding any provision of any law or agreement, notice of the breach together with the general manager's response, to the extent that it was received; for this purpose, any breach listed in section 72(c) and any other breach in respect of which the Supervisor has so directed shall be deemed a material breach.
Conflict of Interests§
35.
(a)No person whose other functions or occupations create or are liable to create a conflict of interests with the said function, or which are capable of impairing that person's ability to serve in that function, shall be appointed as, or serve as, an office holder or other function holder in a financial service provider.
(b)The Minister may prescribe provisions designed to prevent a possible conflict of interests of an office holder and of another function holder in a financial service provider, including provisions in respect of other occupations in which they shall not be permitted to engage or actions which they shall not be permitted to perform, as well as declarations and reports that shall be required of them.
Liability of a General Manager and a Partner§
36.
(a)The general manager of a financial service provider that is a corporation, as well as a partner in a corporation that is a partnership, other than a limited partner, are required to supervise and to take all reasonable measures in the circumstances of the matter to prevent a breach of any provision under this Law by the corporation or the partnership, as the case may be, or by any of their employees, as set out below:
(1)to establish rules and procedures for the prevention of a breach of the provisions under this Law;
(2)to appoint a person responsible for the inculcation of the rules and procedures established as referred to in paragraph (1) and for supervising compliance therewith.
(b)In this Section, "partnership" and "limited partner" – as defined in the Partnerships Ordinance [New Version], 5735-1975.
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