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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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Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.

The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.

Chapter III: The Director

Definition§

16.

In this Chapter, "director" means a director on behalf of the State in a government company.

Eligibility to Serve§

16a.

A resident of Israel who has attained at least 25 years of age and in whom one of the following conditions is fulfilled is eligible to serve as a director in a government company:

(1)the person holds an academic degree in one of the following fields: economics, business administration, law, accountancy, public administration, engineering or labour studies, or holds another academic degree or has completed other higher education studies, all in the field of the company's principal activity;
(2)the person has at least five years of experience in one of the following, or has a cumulative experience of at least five years in two or more of the following:
(a)a senior position in the field of business management of a corporation with a significant scope of business;
(b)a senior public office or a senior position in the public service in economic, commercial, managerial or legal matters;
(c)a senior position in the field of the company's principal activities.

Eligibility to Serve for Holders of Advanced Degrees§

16a1.
(a)Notwithstanding the provisions of section 16a, a person who holds a second or third academic degree is also eligible to serve as a director in a government company, even if the condition set out in paragraph (1) of that section is not fulfilled in respect of that person.
(b)In a government company in which the State appoints no more than six directors, the number of directors referred to in subsection (a) shall not exceed one, and in a government company in which the State appoints at least seven directors – two directors, and at least one of them shall hold a third academic degree.

Appointment of a Director with Accounting and Financial Expertise§

16a2.
(a)At least one director who has been found by the Appointments Examination Committee to possess accounting and financial expertise, within the meaning of that term under section 240 of the Companies Law, shall be appointed to every government company.
(b)The Ministers shall be entitled to appoint directors to a government company under this Law even if a director under this section has not yet been appointed to that company, provided that this shall not serve to prevent such appointment.

Disqualifications§

17.
(a)The following are not eligible to be a director:
(1)a Minister, Deputy Minister or member of the Knesset;
(2)an employee of the company and a person employed in its service, except for the Director General and an elected representative of the company's employees; the Chairperson of the board of directors shall not be regarded as an employee of the company for this purpose;
(3)a person from the public whose other occupations are likely to create a conflict of interests with his or her role as a director of that company;
(4)the director of the Authority and its employees, unless the company is in the course of liquidation or winding up of its business.
(5)a person who has been convicted of an offence which, in the opinion of the Attorney General, carries moral turpitude or which requires that he or she not be appointed;
(6)a person who is disqualified from serving as a director in a company under the Companies Ordinance [New Version], 5743-1983, or under any other law.
(b)A person shall not be a director in more than two companies, except in cases prescribed by the Minister of Finance by Regulations after consultation with the Authority and with the approval of the Committee.
(c)The Minister of Finance may, after consultation with the Authority and with the approval of the Committee, prescribe by Regulations –
(1)(Repealed)
(2)(Repealed)
(3)rules according to which an elected representative from among the employees of the company shall be determined as a director, and the categories of companies in which he or she shall serve.
(c1)In a company in which the State appoints all of the directors, except for external directors, or in which it holds such a right, the total number of members of the board of directors of the company, including external directors, shall not exceed 12 members; this provision shall not apply to a company that, prior to the 1st day of Sivan 5763 (1 June 2003), was not a wholly government-owned company and in which the total number of directors exceeded 12 directors.
(d)The number of directors from among State employees shall not exceed two-thirds of all members of the board of directors who were appointed as representatives of the Government.

Disqualification on grounds of economic affiliation§

17a.
(a)Without derogating from the generality of the provisions of section 17(a)(3), a person shall not be appointed as a director, whether from the public or from among State employees, if he or she has an economic affiliation with the company or with a corporation associated with the company, or if he or she has a personal connection with the management of the company or with the management of a corporation associated with the company.
(b)For the purposes of this subsection –

"economic affiliation with the company or with a corporation associated with the company" means holding, directly, one per cent or a significant rate lower than that of the securities of the company or of a corporation associated with the company, or a person who is entitled to appoint a director in the company or in a corporation associated with the company;

"corporation associated with the company" means a corporation that holds fifty per cent or more of the nominal value of the issued share capital of the company or of the voting power therein, or that is entitled to appoint half or more of the directors, or the Director General thereof, and also a corporation in which the company holds such rights;

"personal connection with the management" of the company or of a corporation associated with the company exists, inter alia, in the case of a person who is a family member of a director or of a Director General or of a senior employee of the company or of a corporation associated with the company; for this purpose, "family member" means a spouse, sibling, parent, descendant, descendant of a spouse, or the spouse of any of the foregoing.

Appointment§

18.
(a)A director shall be appointed by the Ministers after consultation with the Appointments Examination Committee; if the Appointments Examination Committee has decided not to recommend the appointment of a candidate in respect of whom the provisions of section 18c(a) apply, the Minister may lodge an objection against the decision, which shall be deliberated at a plenary session of the Government; the reasons of the Committee shall be brought before the Government through the Attorney General or his or her representative; if the Government does not accept the Minister's objection, the candidate shall not be appointed as a director.
(b)The instrument of appointment shall be delivered to the director by the Ministers after receipt of the opinion of the Appointments Examination Committee, and a copy thereof shall be delivered to the company through the Authority.
(c)The appointment takes effect from the day of delivery of the instrument of appointment to the company, unless another date is specified therein.

Adequate representation of both sexes§

18a.
(a)The composition of the board of directors of a government company shall give adequate expression to the representation of members of both sexes.
(b)Until adequate expression of representation as aforesaid has been achieved, the Ministers shall appoint, to the extent possible in the circumstances of the matter, directors of the sex that is not adequately represented at that time on the board of directors of the company.

Adequate representation of the Arab population§

18a1.
(a)The composition of the board of directors of a government company shall give adequate expression to the representation of the Arab population.
(b)Until adequate expression of representation as aforesaid has been achieved, the Ministers shall appoint, to the extent possible in the circumstances of the matter, directors from among the Arab population.
(c)For the purposes of this section, "the Arab population" includes the Druze and Circassian populations.

Adequate representation of persons with disabilities, of persons who or one of whose parents were born in Ethiopia, of members of the ultra-Orthodox population and of new immigrants§

18a2.

The boards of directors of government companies shall give adequate expression to the representation of persons with disabilities, of persons who or one of whose parents were born in Ethiopia, of members of the ultra-Orthodox population and of new immigrants; for this purpose, "persons with disabilities", "member of the ultra-Orthodox population" and "new immigrant" have the meanings assigned to them in section 15a of the State Service (Appointments) Law, 5719-1959.

The Appointments Examination Committee§

18b.
(a)The Minister of Finance shall appoint a committee to examine the eligibility and suitability of candidates for the office of director, chairperson of the board of directors, or Director General, in a government company, composed as follows:
(1)the Chairperson of the Committee, who shall be a representative designated by the Attorney General who is eligible to serve as a judge of a District Court, and who shall come from among State employees or from among public service employees, and who may be a person who has served as a judge or who has retired from his or her position in the State service or in the public service;
(2)a public figure designated by the Chairperson of the Committee according to the matter, from a list of public figures established by the Minister of Finance and the Minister of Justice for this purpose, who fulfil the eligibility conditions prescribed in this Law for a chairperson of the board of directors and who have no personal, business or political affiliation with any Minister of the Government;
(3)a representative of the Government Companies Authority.
(b)The quorum for meetings of the Committee is the Chairperson and one additional member; if the votes are equal, the vote of the Chairperson of the Committee shall be decisive; the Committee shall determine its own rules of procedure, to the extent that they have not been prescribed under this Law.
(c)The functions of the Committee are as follows:
(1)to examine whether a candidate for the office of director, chairperson of the board of directors or Director General fulfils the eligibility conditions referred to in sections 16a, 24(c) or 37(c), as the case may be, and whether he or she is not disqualified from serving under the provisions of sections 17 and 17a;
(2)to determine whether it is appropriate to appoint him or her in accordance with the provisions of section 18c;
(3)to advise the Ministers as to the degree of suitability of the candidate for the position, having regard, inter alia, to the special needs of the company, its size, and the composition of the board of directors at the time of appointment, and taking into account the ability of the candidate to devote the appropriate time to the position for which he or she is designated;
(4)the Committee shall transmit to the Ministers its opinion on the matters set out in paragraphs (1) to (3), in writing;
(5)for the purpose of carrying out its functions under this Law, the Committee may require particulars in writing concerning the candidate, his or her biography, education and occupations, and may also require any information or opinion from the Authority.

Special eligibility§

18c.
(a)If the Appointments Examination Committee has found that a candidate for the office of director, chairperson of the board of directors or Director General in a government company has a personal, business or political affiliation with any Minister of the Government, it shall not recommend his or her candidacy unless it has found that he or she possesses special qualifications in the fields of activity of the company, or that there exist in his or her regard considerations of other special eligibility in addition to the eligibility conditions required under this Law for that office.
(b)For the purposes of this Law, membership of a political party, in and of itself, shall not be regarded as a personal or political affiliation.
(c)The provisions of section 16a shall not apply to an elected representative from among the employees of the company who is appointed as a director, provided that he or she has reached the age of twenty-five on the day of appointment.

Fixing of timetables for the appointment of a director from among the employees§

18d.
(a)Where elections have been held to determine an elected representative, the representative trade union shall transmit the final election results to the Ministers and to the Authority; after the results have been transmitted as aforesaid, the Ministers and the Authority shall receive the required information.
(b)Once all the required information has been received, the Ministers shall, within 60 days of the date of receipt thereof, submit to the Appointments Examination Committee for its consideration the matter of one or more elected representatives who are candidates for the office of director from among the employees of the company (in this section – candidate).
(c)If the Appointments Examination Committee has approved the candidacy under subsection (b), the Ministers shall make a decision under section 18 within 30 days of the date of approval, unless they have found, within that 30-day period, that the candidate should not be appointed; however, if further examination of the candidate is required as a result of the Appointments Examination Committee's consideration or as a result of information received by the Ministers or the Authority after the Ministers submitted the matter of an elected representative to the Appointments Examination Committee, the said period shall be counted from the date of receipt of the required information.
(d)If the Appointments Examination Committee has not approved the candidacy as aforesaid, or if the Ministers have found that the candidate should not be appointed for another reason, the Ministers shall bring before the Appointments Examination Committee the matter of another candidate within 30 days of the date of the Committee's decision or the Ministers' decision, as the case may be.
(e)In this section –

"representative trade union" means the organisation with which the largest number of organised employees of the company are affiliated;

"required information" means all information required, from the elected representatives, from the company or from the representative trade union, or from any other entity, for the purpose of submitting the matter of a candidate to the Appointments Examination Committee for its consideration or for the purpose of completing the appointment under section 18, as the case may be;

"elected representative" means a representative elected from among the employees of the company who is proposed for appointment as a director, in accordance with the provisions under section 17(c)(3).

Remuneration and expenses§

19.

The Minister of Finance, after consultation with the Authority and with the approval of the Committee, may make Regulations regarding the remuneration and expenses to be paid to a director.

Duty to provide information§

20.
(a)A director is required, notwithstanding any other law, to provide the Ministers and the Authority, upon their demand, with information concerning the affairs of the company and his or her actions therein.
(b)If a director becomes aware of a matter concerning the company in which an apparent infringement of the law or of integrity has been revealed, he or she must bring the matter without delay to the attention of the Chairperson of the board of directors, the Ministers, the Authority and the State Comptroller.

Term of office§

21.

A director shall be appointed for a period of not more than three years from the commencement of the validity of his or her appointment; a director who has ceased to serve may be reappointed.

Vacation of office§

22.
(a)A director shall cease to serve before the end of the period for which he or she was appointed in any of the following cases:
(1)he or she resigned by delivering a letter of resignation to the Ministers; the Ministers may defer the effect of the resignation for not more than one month;
(2)he or she was absent from four consecutive meetings of the board of directors or from six meetings within a year, unless the Ministers, after consultation with the Authority, determined, in a notice to the company, that there was a justified reason for the absence;
(3)he or she was prevented from fulfilling his or her role and the Ministers, after consultation with the Authority, notified the company accordingly;
(4)he or she was convicted of an offence which, in the opinion of the Attorney General, carries moral turpitude or which, in his or her opinion, requires the termination of his or her service;
(5)one of the circumstances disqualifying a person from being a director has arisen in relation to him or her;
(6)the Authority, or the Ministers after consultation with the Authority, considered that he or she is not properly fulfilling his or her role and removed him or her, in a notice to the company, from office.
(7)the Authority determined that he or she is not fulfilling his or her role in a manner that promotes the implementation of a privatisation decision, or acted by act or omission in a manner that prejudices the ability of the company to comply with an instruction or requirement lawfully given under sections 59d or 59e; the Authority shall notify the Minister of Finance and the company accordingly.
(b)A director who was appointed while a State employee or an employee of another government company, and who has ceased to be such an employee, shall cease to serve from the day on which the Authority notified the company accordingly; however, the Ministers may, after consultation with the Authority, renew his or her appointment.
(c)Where the Government has sold shares it held in a government company, the directors, all or some of them, shall cease to serve if this is required by the sale transaction, from the day notified by the Authority to the company; if the sale transaction requires the termination of service of only some of the directors, the Ministers shall determine, after consultation with the Appointments Examination Committee, which directors' service shall be terminated.

Suspension§

23.

If a director is suspected of an offence which, in the opinion of the Attorney General, carries moral turpitude, the Ministers may suspend him or her by notice to the company, and may appoint a substitute for the period of his or her suspension.

Completion of quorum§

23a.

If the number of members of the board of directors who are entitled to participate in its meetings falls below the quorum for its meetings and this situation continues for more than 30 days, or if the number of members falls below the minimum number prescribed in the constitutional documents of the company and this situation continues for more than 60 days, the Government may, after consultation with the Appointments Examination Committee, appoint a director or directors in the number required to complete the quorum.

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