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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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.
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Chapter IV: The Board of Directors
Section A: Chairperson of the Board of Directors
Election§
24.
(a)The board of directors of a government company shall elect one of its members as Chairperson of the board of directors; the election requires the approval of the Ministers after consultation with the Appointments Examination Committee; however, the Government may appoint the Chairperson of the board of directors from among its members, if it considers it necessary to do so and after consulting with the Appointments Examination Committee.
(b)The Director General of the company shall not be the Chairperson of the board of directors.
(c)A person is eligible to serve as Chairperson of the board of directors of a government company if the provisions of section 16a apply to him or her, provided that the condition in paragraph (1) and at least one of the conditions in paragraph (2) of that section are fulfilled; however, in exceptional cases it is possible to elect a person in whom the condition referred to in paragraph (1) of that section is not fulfilled, if he or she has an aggregate experience of at least twelve years in a position or office as referred to in paragraph (2) of that section, of which at least six years have been in bodies with a scope of activity no less than that of the company in which he or she is a candidate to serve, and the Appointments Examination Committee has confirmed that there are special reasons for such an election.
(d)Where the board of directors of a government company has elected a person to the office of chairperson of the board of directors and the Appointments Examination Committee has decided not to recommend his or her appointment on the ground that the provisions of section 18c(a) apply to him or her, the Minister shall not approve the appointment unless he or she has lodged an objection against the decision that has been approved at a plenary session of the Government; the provisions of section 18(a) shall apply in respect of an objection as aforesaid.
Duty of reporting§
25.
The Chairperson of the board of directors is required, notwithstanding any other law, to submit to the Ministers and the Authority, once every six months and at any time upon the demand of the Ministers or the Authority, a written report on the activities of the company and on the work of the board of directors.
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Contact Us →Section B: Work of the Board of Directors
Times of meetings§
26.
(a)Meetings of the board of directors of a government company shall be held according to the needs of the company and at least once every two months, unless the Ministers, after consultation with the Authority, have prescribed other times according to the nature of the company's business.
(b)The board of directors shall hold a special meeting if the Ministers, the Authority or one of the directors so demands; the meeting shall be held within seven days of the date of the demand, unless it was required to be held within a shorter time; the meeting shall deliberate on the matters specified in the demand and its decisions shall be brought immediately to the attention of the Ministers and the Authority.
Convening of meetings and their agenda§
27.
(a)The Chairperson of the board of directors shall convene the meetings of the board of directors and shall determine their time, place and agenda, subject to the provisions of section 26.
(b)The notice of meetings of the board of directors shall also be given to the Authority, and the Authority is entitled to send to every meeting a representative who shall be entitled to participate in the meeting and whose standing thereat shall be that of a director, except that he or she shall not be counted in the quorum and shall have no right to vote.
Quorum and majority§
28.
The quorum for meetings of the board of directors is a majority of its members including at least one director on behalf of the State; decisions shall be adopted by a majority vote of those participating in the vote; if the votes are equal, the Chairperson shall have the casting vote; and all of the foregoing applies where the constitutional documents of the company do not provide otherwise.
Committees§
29.
(a)The board of directors may establish, from among its members, permanent committees or committees for a particular matter.
(b)The provisions of section 27(b) shall also apply to meetings of a committee.
(c)The conclusions of a committee shall be in the nature of recommendations to the board of directors, which may adopt, amend or reject them.
29a.§
(a)The board of directors shall appoint an audit committee from among its members, the number of whose members shall not be less than three.
(b)Notwithstanding the provisions of section 29(c), the validity of decisions of the audit committee on matters enumerated in Chapter IV-A of the Companies Ordinance [New Version], 5743-1983, shall be in accordance with what is prescribed therein.
Delegation of Powers§
30.
(a)The board of directors may delegate its powers to one, some, or a committee of its members, or to the general manager, except for its powers under section 32 and the power that the Government has decided or that the Ministers have notified the company may not be delegated.
(b)Where the board of directors has delegated a power to a committee, it may direct that section 29(c) shall not apply to that committee.
Determination of Work Procedures§
31.
The Minister of Finance may, on the recommendation of the Authority, prescribe rules for the method of work and the order of proceedings of a board of directors, whether for all government companies or for categories thereof.
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Contact Us →Section C: Functions of the Board of Directors
Mandatory Matters§
32.
(a)The board of directors of a government company is obliged, without derogating from its other functions —
(1)to determine the general policy of the company within the sphere of its objects, and its financial activities;
(2)to determine annually —
(a)the annual budget of the company and the manner of its implementation and the use of the resources available to it;
(b)the plan of action of the company for that year and its long-term plans;
(c)the establishment of company employees and of those employed in its service;
(3)to monitor continuously the implementation of the policy, plans and budgets of the company;
(3a)to determine, subject to rules prescribed by the Minister of Finance on the proposal of the Authority, the manner of selection of the senior officers as defined in paragraph (4) and the conditions of their eligibility, and also to determine the manner of selection of the remaining employees of the company and the conditions of their eligibility, subject to rules prescribed by the Minister of Finance on the proposal of the Authority, insofar as such rules have been prescribed;
(4)to determine, in accordance with the rules prescribed by the Government for that purpose and with its approval, the salary, social benefits, benefits, grants and other conditions of employment of the general manager, the deputy and assistants to the general manager, the heads of divisions, the financial affairs manager, the internal auditor, the company secretary, and holders of other positions designated for this purpose by the Ministers after consultation with the Authority (hereinafter — the senior officers), and of the remaining employees of the company;
(5)to approve, on the recommendation of the general manager, the appointments of the senior officers in accordance with the establishment;
(6)to discuss the draft financial statements of the company and the observations of the auditors in respect thereof, and to discuss, after the approval of the financial statements, every particular in respect of which the auditor has expressed a reservation, made a comment, or abstained from expressing an opinion;
(7)to approve the granting of loans and the deposit of funds that deviate from the ordinary course of the company's business;
(8)to discuss any matter that the Ministers or the Authority have required to be placed on the agenda, or that the general manager has notified under section 41.
(b)The Minister of Finance may, on the recommendation of the Authority, prescribe rules for the preparation of the budgets and plans referred to in subsection (a)(2), whether for all government companies or for categories thereof.
Financial Statements§
33.
(a)The board of directors shall arrange annually for the preparation of the following statements:
(1)a balance sheet;
(2)a profit and loss account, including appropriation of profits;
(3)a statement of resources and their utilisation;
(4)in a company that has a subsidiary — consolidated financial statements, unless in the opinion of the board of directors and the Authority the nature of the operations of the companies or the date of preparation of their financial statements does not permit this.
(a1)The Minister of Finance, in consultation with the Minister of Justice, may determine that government companies which he designates on the proposal of the Authority shall submit to the Authority, in addition to what is required under any law, annual, periodic and immediate reports in accordance with the provisions of the Securities Law, 5728-1968 (hereinafter — the Securities Law), which shall apply on the proposal of the Authority, in whole or in part, all with necessary modifications and having regard to the purpose of reporting under this Law.
(b)The Minister of Finance may require a government company to prepare an additional report and to prescribe a date for its submission.
(c)A decision of the board of directors concerning the appropriation of the profits of the company or concerning a distribution as defined in the Companies Law requires the approval of the Authority; however, if the Authority disputes the decision of the board of directors, the following provisions shall apply:
(1)in a company to which paragraphs (2) or (3) do not apply — the company shall act in accordance with the decision of the Authority as approved by the Government;
(2)in a company under privatisation — the company shall act in accordance with the decision of the Authority as approved by the Minister of Finance;
(3)in a company under section 61(a)(2) that is not a company under privatisation — the dispute shall be brought for determination by the Ministers.
(c1)Notwithstanding the provisions of the constitutional documents of the company, a decision of the board of directors concerning the appropriation of the profits of the company or concerning a distribution as defined in the Companies Law, which has been approved in accordance with the provisions of subsection (c) (in this subsection — the approved board decision), shall not require the approval of the general meeting of the company, if the Minister responsible for the implementation of this Law has approved it within 45 days from the date on which the Authority transmitted the approved board decision to him for approval; if 45 days have elapsed and no decision by the responsible Minister has been received as aforesaid, the approved board decision shall not require the approval of the general meeting of the company if it has been approved by the Government.
(d)Nothing in the provisions of this section shall derogate from the provisions of any other law concerning the preparation of financial or other statements.
Provider of an Essential Service to the Public§
33a.
In addition to the provisions of any law, the Minister of Finance, in consultation with the Minister of Justice, and in relation to a public company — in consultation with the Securities Authority, may prescribe, on the proposal of the Authority, rules for the preparation of financial statements of a government company in respect of which he has determined that it provides an essential service to the public, including with regard to the details to be included therein, the accounting principles for their preparation, and the declarations and notes to be attached to them.
Power to Direct the Manner of Presentation of Details on Account of the Existence of a Public Interest§
33b.
(a)Where the Authority considers that a public interest so requires, it may direct a government company as to the manner of presentation of details in financial statements or in any other report that the company is required to submit under any law, provided that instructions in respect of this matter have not been prescribed in rules, in law, or in accepted accounting principles and accepted reporting standards.
(b)Where the Authority disputes the manner of presentation of details in financial statements or in any other report that the government company is required to submit under any law, it may, if it considers that a public interest so requires, direct the company to disclose the position of the Authority and to describe the dispute in the reports, to the satisfaction of the Authority.
Court Order§
33c.
Where a company has not submitted a report in accordance with the provisions of sections 33a or 33b, as the case may be, or has submitted a report not in accordance with the provisions of those sections, or has not corrected a report as aforesaid within the period directed by the Authority or by an employee whom it has authorised for that purpose, or has not provided explanations, details, information or documents in connection with the particulars contained in the reports under section 33b, to the satisfaction of the Authority, the District Court may, on the application of the Authority, order the company and the office holders of the company to submit the report or to correct it within a period to be determined by the court.
Failure to Submit Reports as Required§
33d.
(a)Where a government company has done any of the following, the provisions of subsection (b) shall apply —
(1)it did not submit an account under section 25, or a document from among the documents referred to in section 34(a)(1) and (2), within the periods prescribed for that purpose under the provisions of this Law, or submitted an account or document as aforesaid not in full;
(2)it did not submit a report or notice under section 33b within the period prescribed for that purpose, or submitted a report not in accordance with the provisions of that section and the Authority was satisfied that it deviated in matters of substance;
(3)it did not submit a document from among the documents referred to in section 33 or did not provide information as referred to in section 35, or submitted a document or information as aforesaid not in full.
(b)
(1)Where the chairperson of the board of directors knew that the company acted as described in subsection (a)(1) or (3), or a director knew that the company acted as described in subsection (a)(2) or (3), or they ought to have known thereof and did not take all appropriate measures to prevent it, they shall be regarded, for the purposes of section 22(a)(6), as persons who are not properly fulfilling their functions, and the Authority may, by notice to the company, remove them from office;
(2)Where the general manager of the company knew that the company acted as described in subsection (a)(2), or ought to have known thereof and did not take all appropriate measures to prevent it, the Government or the Authority may remove him from office.
Submission of Documents§
34.
(a)The chairperson of the board of directors is obliged to submit to the Ministers and to the Authority —
(1)the draft budget and plans referred to in section 32(a)(2) and the draft statements referred to in section 33(a) — one month before the date set for their discussion, unless the Ministers, after consultation with the Authority, have prescribed a shorter period for that purpose;
(2)the documents referred to in paragraph (1) — immediately after their approval by the board of directors;
(3)a copy of the minutes of the meetings of the board of directors — within two weeks of each meeting.
(a1)The Authority may direct, with regard to a particular government company or categories of government companies, the dates by which the documents referred to in subsection (a)(1) shall be submitted for approval by the board of directors of the government company and the final date for the approval of such documents by the board of directors.
(b)The documents referred to in subsection (a) shall also be submitted to the State Comptroller and shall be submitted to the Committee on its request.
(c)The Ministers may direct, in relation to a particular government company, that a document from among the documents referred to in subsection (a) shall be kept in the manner they direct and shall not be delivered except to those specified in their direction; the Minister of Defence may likewise direct if he considers that reasons of State security so require; nothing in a direction under this subsection shall derogate from subsection (b).
Publication to the Public§
34a.
(a)A government company shall publish to the public —
(1)reports as referred to in section 33(a) and (a1) that the company or an office holder therein is required to submit to the Authority under this Law;
(2)any other document that the company or an office holder therein is required to submit to the Authority under this Law, which the Minister of Finance, with the approval of the Constitution, Law and Justice Committee of the Knesset, has prescribed by Order that it is to be published to the public.
(b)Publication as referred to in subsection (a) shall be effected upon submission of the document to the Authority or shortly thereafter.
(c)Notwithstanding the provisions of subsections (a) and (b), if the Authority has prescribed instructions regarding the publication to the public of documents referred to in subsection (a) by means of the Authority, including instructions regarding the manner and the date of their submission to the Authority for the purpose of their publication to the public by means of it, a government company shall submit those documents to the Authority in accordance with those instructions, for the purpose of their publication to the public by means of the Authority.
(d)Instructions under subsection (c) do not require publication in Reshumot (Official Gazette), however the director of the Authority shall publish in Reshumot (Official Gazette) a notice of the giving of such instructions and of the date of their commencement; the instructions and any amendment thereto shall be published on the website of the Authority.
(e)A government company that is a reporting corporation as defined in the Securities Law shall not be required to publish to the public, under subsections (a) and (b) or (c), documents that it has submitted to the Securities Authority under that Law; for this purpose, reports submitted by such a government company under section 36 of the Securities Law shall be regarded as reports under section 33(a) and (a1).
(f)Notwithstanding the provisions of subsections (a) and (b) or (c), a government company shall not publish to the public under those subsections details that constitute information which a public authority is precluded from disclosing under section 9(a) of the Freedom of Information Law, 5758-1998, and it may also refrain from publishing as aforesaid details that constitute information which a public authority is not obliged to disclose under section 9(b) of that Law.
(g)Where the Authority considers that a government company has not published information as required under the provisions of this section, it may publish that information itself, after having given the company an opportunity to present its arguments in the matter.
Duty of Notification and Restriction on Decisions§
35.
(a)Where the chairperson of the board of directors has become aware of a matter of the company in which there has apparently been revealed a violation of law, a breach of integrity, or a similar defect, he shall bring the matter without delay to the attention of the Ministers, the State Comptroller and the Authority, unless they were notified of that matter under section 20(b), and shall without delay convene a meeting of the board of directors for the purpose of discussion and the determination of a course of action; however, the board of directors shall not make a decision on that matter until the said authorities have been given a period of 14 days to express their opinion.
(b)Nothing in the provisions of this section shall derogate from any duty of notification under any other law.
Obtaining Information§
36.
(a)The board of directors may, at any time it deems necessary —
(1)require from the general manager of a subsidiary of the company information on any matter that in the opinion of the board of directors relates to the affairs of the subsidiary;
(2)require from the auditor and from the internal auditor of a company or of a subsidiary thereof a report in respect of that company.
(b)A copy of a report delivered to the board of directors under subsection (a)(2) shall also be delivered to the general manager and to the Authority.
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