Government Companies Law, 5735-1975
חוק החברות הממשלתיות, תשל"ה-1975
Published: 1975-07-04Consolidated Hebrew text as of 2026-08-02 · Last amended 2026-07-28✓ Amendment status checked against the Knesset legislation record on 2026-09-29
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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 VIII: Subsidiaries, Mixed Companies and Foreign Companies
Application of the Law to Subsidiaries§
57.
This Law shall apply to a government subsidiary in the same way as it applies to a government company, subject to the following provisions:
(1)the Minister responsible for the affairs of the parent company is the Minister responsible for the affairs of its subsidiary;
(2)a decision of a subsidiary requiring Government approval under section 11 shall be brought before the Ministers, for the purpose of obtaining Government approval, through the parent company, and a document that a subsidiary is required to submit to the Ministers, to the Authority or to any other addressee shall be submitted through the parent company;
(3)a director of a subsidiary on behalf of the parent company shall be appointed by the board of directors of the parent company; the appointment requires the approval of the Ministers after consultation with the Appointments Examination Committee; the provisions of sections 16a, 17, 17a, 18a to 18c shall also apply to such a director;
(4)information that a director of a subsidiary is required to provide under section 20 shall also be provided to the chairperson of the board of directors of the parent company;
(5)a letter of resignation of a director of a subsidiary shall also be delivered to the chairperson of the board of directors of the parent company, and the Ministers' notice under section 22(a)(2) to (6) shall also be given to the parent company.
(6)where the Government has sold shares it held in the parent company, or the parent company has sold shares it held in the subsidiary, the directors of the subsidiary appointed on behalf of the parent company shall cease to hold office, all or some of them, if this is required by the sale transaction, from the date notified to the subsidiary by the Authority or the parent company; where the sale transaction requires the termination of office only of some of those directors, the Ministers shall determine, after consultation with the Appointments Examination Committee, which directors' tenure shall be terminated.
Application of the Law to Mixed Companies§
58.
(a)The following provisions shall apply, with the necessary modifications, also to a mixed company:
(1)with respect to the establishment of the company – sections 5 and 6;
(2)with respect to the conversion of a non-government company into a mixed company – section 8;
(3)with respect to the sale of the State's shares in the company – section 14;
(4)with respect to State-appointed directors – Chapter III;
(4a)with respect to meetings of the board of directors and its committees – in a mixed company in which half of the voting power at its general meetings or the right to appoint half of the number of directors is held by the State, alone or together with a government company or a government subsidiary, or in which the State, alone or together with such a company or subsidiary, holds the highest proportion of voting rights at the general meeting or of the right to appoint directors:
(a)an invitation to meetings of the board of directors and its committees as referred to in Sections D and H of Chapter III of Part 3 of the Companies Law shall also be given to the Authority and to the shareholder holding the highest proportion of voting rights at the general meeting or of the right to appoint directors in the company who is not the State, a government company or a government subsidiary, and they shall be entitled to send permanent representatives on their behalf to each meeting, who shall be entitled to be present at and participate in all meetings of the board of directors and its committees, but shall not have a right to vote at the meetings; notice of the replacement of a representative shall be given in writing to the company;
(b)the representatives referred to in sub-paragraph (a) shall not be present at the time of voting by the directors, if the chairperson of the board of directors or two directors have so requested; nothing in this sub-paragraph shall prevent the receipt of the minutes of the meeting or information concerning the manner in which the directors voted at the meeting;
(c)the representatives referred to in sub-paragraph (a) shall be entitled to demand the convening of a board of directors meeting, to request the inclusion of a matter on the agenda of a board of directors meeting, and also to inspect the company's documents, records and assets, and to receive copies under sections 98(b)(2) and (d), 99(3) and 265 of the Companies Law, as applicable.
(5)with respect to State representation at a general meeting of a mixed company – section 50(a) and (c);
(6)with respect to the Authority – sections 54(1), 54(7a) and 56(b); for the purpose of discharging its functions, the Authority may require from a State-appointed director of a mixed company information and material on the affairs of the company.
(7)with respect to privatisation – Chapter VIII-A, except for sections 59b(a)(4) and 59e.
(b)The Authority shall examine all information and material it has received concerning a mixed company and shall submit its comments to the Ministers and to the State-appointed director.
(c)The provisions of subsection (a)(2) and (3) shall not apply to the purchase and sale of shares on the stock exchange.
Application of Provisions to Foreign Companies§
59.
(a)The following provisions shall apply, with the necessary modifications, also to a company incorporated outside Israel (hereinafter – foreign company):
(1)with respect to the establishment of a foreign company that, had it been established in Israel, would have been a government company or a government subsidiary – sections 5 and 6;
(2)with respect to the conversion of a foreign company into a company that, had it been an Israeli company, would have been a government company or a government subsidiary – section 8;
(3)with respect to directors of a foreign company – sections 17 to 23, to the extent that they are not inconsistent with the constitutional documents of the company or with the laws of the country in which it was incorporated.
(4)notwithstanding the provisions of paragraph (3), with respect to directors of a foreign company that, had it been an Israeli company, would have been a government subsidiary – sections 17, 17a, 18a to 23 and 57(3), to the extent that they are not inconsistent with the constitutional documents of the company or with the laws of the country in which it was incorporated;
(5)notwithstanding the provisions of paragraph (4), with respect to the appointment of a director from among the employees of the parent company and on its behalf in a foreign company that, had it been established in Israel, would have been a competitive-defence government subsidiary, who does not receive additional remuneration in respect of such service, section 57(3) shall apply with the following modification: the power of appointment shall be vested in the board of directors of the parent company after consultation with the Appointments Examination Committee only.
(b)The State representative at the general meeting of a foreign company shall not vote on the matters referred to in section 11(a) or on matters relating to amendments to the articles of association of the company, except in accordance with the instructions of the Ministers; the Ministers shall submit to the Government the proposed decision as referred to in section 11(b), and shall give their instructions in accordance with its determination; the provision of this subsection shall apply, with the necessary modifications, also to a company that, had it been established in Israel, would have been a government subsidiary.
(c)The Government may determine that additional provisions of this Law or made thereunder shall apply to a foreign company, having regard to the provisions of the law under which the company was incorporated.
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Contact Us →Chapter VIII-A: Privatisation
Ministers' Committee§
59a.
(a)The Government shall establish a Ministers' Committee for Privatisation Affairs, whose members shall be the Prime Minister, the Minister of Finance and the Minister of Justice; the Government may add one or two additional members to the Committee.
(b)The quorum at meetings of the Ministers' Committee shall be two members if the Committee consists of three members, and three members if the Committee consists of more than three members.
(c)Decisions of the Ministers' Committee shall be adopted by a majority of its members.
Privatisation Decision§
59b.
(a)The Ministers' Committee may decide on the privatisation of a government company; in such a decision the Ministers' Committee shall determine the methods of privatisation of the company, which shall be one of the following methods or a combination thereof:
(1)sale of the shares of the company pursuant to a prospectus or in any other manner that the Ministers' Committee shall determine;
(2)dilution of the State's holdings in the company by means of an issuance of shares or other equity securities by the company;
(3)issuance of securities by the State, convertible into shares or other equity securities of the company held by the Government;
(3a)allocation of special State shares, as defined in section 46b(b) of the Securities Law, to the State;
(4)sale of a material asset from among the assets of the company or all of its assets, including rights;
(5)alteration of rights attached to shares;
(6)reconstruction, compromise or arrangement as referred to in Chapter III of Part 9 of the Companies Law, merger, receivership, winding-up or cessation of operations, termination of winding-up or receivership proceedings, as well as the establishment of a government company, a government subsidiary or a mixed company, all for the purpose of implementing the privatisation;
(7)any other method that the Ministers' Committee shall determine.
(b)A proposal for a privatisation decision shall be submitted to the Ministers' Committee by the Ministers or one of them, together with the opinion of the Authority; if the Authority is of the view that a decision on the privatisation of a company should be made and none of the Ministers has proposed this to the Government, the Authority shall state its view in a reasoned memorandum to the Ministers and to the Ministers' Committee, and each member of the Ministers' Committee may submit a proposal for a privatisation decision.
(c)A proposal for a privatisation decision shall be submitted to the Ministers' Committee after consultation with the board of directors of the company concerned; the position of the board of directors shall be brought before the Ministers' Committee, however if the board of directors has not decided on its position within 21 days from the day on which it was requested to do so, the Ministers' Committee may deliberate on and decide in respect of the proposal submitted to it.
(d)The Ministers' Committee shall give an opportunity to present their positions before it to —
(1)the Minister responsible for the affairs of the company;
(2)the board of directors of the company, through the chairperson of the board of directors or any person authorised by the board of directors for that purpose.
(e)The provisions of section 14 shall not apply to a privatisation decision and the provisions of section 5 shall not apply to a decision to establish a company under subsection (a)(6).
(f)The Ministers' Committee shall be competent to decide, in respect of a company under privatisation, on any matter requiring the approval or decision of the Government under this Law.
(f1)The powers of the Ministers under sections 11(b), 15a(b) and 50 shall vest in the Minister of Finance in respect of a company under privatisation, except for companies in which the Minister responsible for the affairs of the company is the Minister of Defence; provided that with respect to the powers under sections 11(b) and 15a(b), the Government shall give the Minister responsible for the affairs of the company an opportunity to present his position before it.
(g)Notice of a company in respect of which a privatisation decision has been given shall be published in Reshumot (Official Gazette); a copy of the privatisation decision shall be sent to the Committee, to the company and to the Registrar of Companies; the provisions of this subsection shall not apply if the Ministers' Committee has so decided on grounds of State security, foreign relations or international commercial relations.
(h)If the privatisation decision provides that the method of privatisation shall include a sale of the shares of the company as referred to in subsection (a)(1), the method of privatisation shall require the approval of the Committee; in a sale of shares pursuant to a prospectus, the approval shall be given before the date of publication of the prospectus, and in any other sale of shares — before the date for submission of offers to purchase the shares.
(i)The approval of the Committee as referred to in subsection (h) shall also constitute an approval under section 5(d)(2) of the State Property Law, 5711-1951, and no further approval under that section shall be required.
Convening General Meetings for the Implementation of Structural Changes§
59c.
(a)Where a privatisation decision has been adopted and the Authority has determined, after giving notice to the Minister of Finance, by written notice to the company, that for the purpose of its implementation actions or decisions of the general meeting of the company under privatisation are required, including amendment of its constitutional documents, and the board of directors has not convened a general meeting for a date no later than 30 days from the day on which the Authority so requested, the Authority shall be competent to convene general meetings of all shareholders or of classes of shareholders for the purpose of adopting such decisions and to vote thereat by virtue of the shares held by the State in the company under privatisation; the provisions of section 50 shall not apply to such a meeting.
(b)If the company under privatisation is a wholly government-owned company, the Authority shall be competent to convene a general meeting as referred to in subsection (a) with advance notice of at least seven days, notwithstanding any provision of law and the constitutional documents of the company.
(c)Subject to the provisions of subsections (a) and (b), if the implementation of the privatisation decision involves proceedings under the Companies Ordinance or under the constitutional documents of the company, including the convening of meetings, the adoption of decisions by a special majority and the approval of a court, the privatisation decision shall not derogate from the need to take such proceedings.
Preparation and Delivery of Information and Documents§
59d.
The following obligations shall apply to a company under privatisation and to its senior officers, to the extent that the Authority shall require of them in writing from time to time:
(1)to deliver to the Authority and to experts on its behalf, or to make available for their inspection, all information and documents in their possession or which they are able to obtain or prepare by reasonable means (hereinafter — information) to the extent required, in the opinion of the Authority, in order to prepare the company for privatisation, to implement the privatisation decision or to assess the value of the company, its shares or its assets;
(2)to deliver information to a candidate for the acquisition of the shares or assets of the company, whom the Authority has approved for the purposes of this paragraph, or to experts on his behalf, to the extent required in the opinion of the Authority in order to assess the value of the company, its shares or its assets; the delivery of information under this paragraph shall be subject to confidentiality agreements as directed by the Authority, after consultation with the general manager of the company, for the purpose of preventing misuse of the information or harm to its commercial secrets;
(3)to prepare any memorandum or prospectus required for the purpose of a sale offer for the implementation of the privatisation decision; in a company that is not a wholly government-owned company, the Government shall bear the expenses incurred by the company in payments to parties external to the company for the preparation of the said documents, and if the sale offer is combined with an issuance of securities of the company — the Government and the company shall bear such expenses on a proportionate basis.
Giving of Instructions§
59e.
(a)Where a privatisation decision has been given and the Authority has determined that for the purpose of preparing the company for privatisation or for the purpose of implementing the privatisation decision, the company must perform a certain act, it shall notify the board of directors of the company thereof in writing and request it to decide on the performance of the act within a reasonable period to be determined by the Authority in its notice.
(b)If the board of directors has not decided on the performance of the act within 14 days from the date of the Authority's notice, or has decided to perform it but the company has not performed it within the period determined by the Authority, the following provisions shall apply:
(1)if the company under privatisation is a wholly government-owned company, the Authority shall be competent, with the approval of the Ministers' Committee, to instruct it to perform the act, and the company shall be obliged to comply with the instruction, whether or not the act is in accordance with business considerations by which the company would have been required to act even without the privatisation (hereinafter — business considerations); if the company has not complied with the instruction within the period determined by the Authority, the Authority may perform the instruction itself or through a person appointed by it for that purpose, and the actions of the Authority or of that person shall be deemed to be actions of the company for all purposes;
(2)if the company under privatisation is a company that is not a wholly government-owned company, the Authority shall be competent, after having given the board of directors of the company a proper opportunity to state its position, and with the approval of the Ministers' Committee, to instruct the company to perform the act, and the company shall be obliged to comply with the instruction; however, if the instruction is not in accordance with business considerations, the provisions of sections 4 and 9 shall apply;
(3)if the company has not complied with an instruction of the Authority given under paragraph (2), the Authority may —
(a)apply to the District Court in Jerusalem, and the court shall be entitled to issue an order permitting the Authority to carry out the instruction, itself or through a person appointed by it for that purpose;
(b)convene an extraordinary general meeting of the company, propose decisions thereat and vote thereat by virtue of the shares held by the State in the company on the matter of giving instructions to the board of directors to implement the Authority's instruction by the company or by a person appointed by it for that purpose.
(c)The provisions of subsection (b) shall not apply to a company whose shares, as defined in section 63a, have been offered to the public pursuant to a prospectus and are held by the public.
(d)For the purposes of this section, "act" means an act or omission, including the arrangement and registration of rights, entry into a contract or refraining from entering into a contract, appointment or dismissal, the taking or not taking of legal proceedings and a compromise.
Liability§
59f.
(a)Compliance with an obligation and performance of an act under sections 59d and 59e shall be carried out by the company and by office holders and employees thereof, in a manner that avoids or minimises as far as possible any harm that may be caused to the company or to a third party as a result of its performance.
(b)Notwithstanding any provision of law, compliance with an obligation and performance of an act under sections 59d or 59e by an office holder in a company under privatisation or an employee thereof, or any other action performed by them for the proper implementation of a privatisation decision, shall not constitute a ground for civil proceedings against them, provided that they acted in good faith and in accordance with subsection (a); however, with regard to a claim under the Securities Law, 5728-1968, the provisions of that Law shall apply.
(c)A company under privatisation shall be entitled —
(1)to compensation from the State for harm caused to it directly as a result of compliance with an obligation or performance of an instruction under sections 59d or 59e, provided that the provisions of subsection (a) have been fulfilled; this provision shall not apply to a wholly government-owned company;
(2)to indemnification from the State in respect of a payment to which it has been obligated towards a third party by reason of compliance with an obligation or performance of an act under sections 59d or 59e, pursuant to a final judgment or arbitral award, including reasonable legal costs, provided that the provisions of subsection (a) have been fulfilled and that the State has been given a proper opportunity to join the proceedings for the purpose of defence.
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