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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

This English text was translated from the official Hebrew using a range of translation tools, and it undergoes ongoing checks and updates. It is not a certified translation.

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 V: The General Manager

Appointment§

37.
(a)The board of directors of a government company shall appoint the general manager; the appointment requires the approval of the Ministers after consultation with the Appointments Examination Committee; however, the Government may appoint the general manager if it sees a need to do so.
(b)A Minister, a deputy minister or a member of the Knesset shall not be general manager of a government company.
(c)A person is eligible to be appointed general manager of a government company if the conditions stated in section 16a are fulfilled in respect of him, provided that the condition in paragraph (1) and also one of the conditions in paragraph (2) of that section are fulfilled in respect of him; however, in exceptional cases it is possible to appoint a person in respect of whom the condition stated in paragraph (1) of that section is not fulfilled, if he has cumulative 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 were in bodies with a scope of activity not less than that of the company in which he is a candidate to serve, and the Appointments Examination Committee has confirmed that special reasons exist for such an appointment, and the conditions stated in section 17(a) paragraphs (1), (3), (5) and (6) are not fulfilled in respect of him.
(d)Where a board of directors of a government company has selected a person for the office of general manager and the Appointments Examination Committee has decided not to recommend his appointment on the ground that the conditions stated in section 18c(a) are fulfilled in respect of him, the Minister shall not approve the appointment unless he has filed an objection against the decision that has been approved by the plenary of the Government; the provisions of section 18(a) shall apply with regard to such an objection.

Property Declaration§

38.

A person appointed as general manager of a government company shall declare, at the time, in the manner and in the form prescribed by Regulations, the assets, liabilities and sources of income of himself, of his spouse living with him and of his dependent children; he shall likewise declare as aforesaid any material changes in those particulars.

Functions§

39.

The general manager is responsible for the day-to-day management of the affairs of the company within the framework of the budget and plans determined under section 32(a)(2) and within the framework of the decisions of the board of directors.

Powers§

40.
(a)The general manager shall have all the powers that may be conferred upon a business manager under the Companies Ordinance and under the constitutional documents of the company, except for the powers vested under this Law in the board of directors or in any other authority.
(b)The general meeting may limit or restrict the powers of the general manager, and the board of directors may do likewise; a decision to that effect shall be submitted to the Registrar of Companies and to the Authority.

Duty of Reporting§

41.
(a)The general manager is obliged to notify the chairperson of the board of directors without delay of any material matter in the company that relates to the functions of the board of directors; if the matter deviates or is likely to deviate from what the board of directors has determined under section 32(a), or if it is one of the matters enumerated in section 35, the chairperson of the board of directors shall without delay convene a meeting of the board of directors and bring the notification before it.
(b)The general manager is obliged to deliver to the board of directors a report on the current activities of the company at the times prescribed by the board of directors for that purpose.

Vacation of Office§

42.
(a)The general manager shall cease to hold office in any of the following circumstances:
(1)he has resigned by delivering a letter of resignation to the chairperson of the board of directors;
(2)the Government has removed him from office;
(3)the board of directors has removed him from office by a decision adopted by a majority of votes of the participants in the vote;
(4)the board of directors has determined, within the first year of his tenure, that he is unsuitable for his functions;
(5)the board of directors has determined that he is permanently incapacitated from fulfilling his functions;
(5a)the Ministers' Committee has determined, on the recommendation of the Minister of Finance and on the basis of the opinion of the Authority, that he is not fulfilling his function in a manner that promotes the implementation of a privatisation decision, or has acted by act or omission in a manner that harms the ability of the company to comply with a direction or requirement lawfully given under sections 59d or 59e;
(6)he has been convicted of an offence that in the opinion of the Attorney General involves moral turpitude or that in his opinion requires the cessation of his tenure;
(7)he has been disqualified from serving under the Companies Ordinance or under any other law;
(8)the company has been wound up.
(b)The tenure of the general manager expires —
(1)upon his resignation — after three months from the date of delivery of the letter of resignation, unless the board of directors has prescribed an earlier date;
(2)under subsection (a)(2) to (5a) — from the date specified in the decision;
(3)under subsection (a)(6) — upon delivery of the notification to the chairperson of the board of directors;
(4)upon the winding-up of the company — upon the commencement of the winding-up.
(c)Upon the expiry of the tenure of the general manager, the board of directors may appoint an acting general manager until a general manager is appointed under section 37; and if the expiry of tenure was under subsection (a)(5a), the appointment of the acting general manager shall require the approval of the Authority.

Suspension§

43.
(a)The board of directors may suspend the general manager if it finds grounds for suspecting that the general manager has committed a criminal offence that caused damage to the company, and the board of directors is obliged to suspend the general manager if an indictment has been filed against the general manager in respect of an offence that, in the opinion of the Attorney General, justifies suspension.
(b)Where the general manager has been suspended, the board of directors may appoint an acting general manager for the period of the suspension.

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Chapter VI: Holders of Special Positions

Section A: Auditor

Appointment and Remuneration§
44.
(a)The appointment of an auditor to a government company requires the approval of the Authority.
(b)A member of the Knesset shall not serve as auditor of a government company and shall not be a partner in a partnership or a shareholder in a corporation that is the auditor of a government company.
(c)The Minister of Finance together with the Minister of Justice may, with the approval of the Committee, prescribe rules regarding –
(1)the manner of appointment and cancellation of appointment of an auditor to a government company;
(2)conditions and qualifications for appointment;
(3)the distribution of appointments to the various government companies among the qualified auditors;
(4)the length of time that an auditor may serve in a government company;
(5)the remuneration of auditors of government companies.
Duty to Report§
45.

The auditor of a government company is obliged, notwithstanding any other law, to provide the board of directors, the Ministers and the Authority, upon their request, with information on the affairs of the company, to conduct a special audit of the company and to submit to them a report on its results.

Replacement§
46.

A government company shall not cancel the appointment of the auditor during the auditor's term of office except after the Authority has given the auditor an opportunity to be heard before it and has approved the cancellation of the appointment.

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Section B: Legal Adviser

Appointment and Remuneration§
47.
(a)The appointment of a legal adviser to a government company requires the approval of the Authority.
(b)A member of the Knesset shall not serve as legal adviser to a government company and shall not be a partner in a partnership or a shareholder in a corporation that is the legal adviser of a government company.
(c)The Minister of Finance together with the Minister of Justice may, with the approval of the Committee, prescribe rules regarding –
(1)the manner of appointment and cancellation of appointment of a legal adviser to a government company;
(2)conditions and qualifications for appointment;
(3)the distribution of appointments to the various government companies among the qualified lawyers;
(4)the length of time that a lawyer may serve as legal adviser of a government company;
(5)the remuneration of legal advisers of government companies.

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Section C: Internal Auditor

Appointment§
48.

The board of directors of a government company shall appoint an internal auditor for the company, unless the Authority has approved that the scope or nature of the company's activities does not require the appointment of an internal auditor.

Powers and Status§
49.
(a)The board of directors shall determine the duties and powers of the internal auditor.
(b)The internal auditor shall be subordinate to the chairperson of the board of directors and to the general manager, and shall submit reports and proposals to the board of directors.
Priority§
49a.

The provisions of section 96w1 of the Companies Ordinance [New Version], 5743-1983, shall apply to a government company in which the conditions set out in section 96a of the Companies Ordinance are fulfilled, even if it is an audited body.

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Section D: State Representative at the General Meeting

Appointment and Instructions§
50.
(a)The Ministers shall appoint the State representative to participate and vote at the general meeting of a government company by virtue of the shares held by the State therein.
(b)Notice of the date of a general meeting shall be given to the Authority at least two weeks in advance, unless the Authority has agreed to a shorter period.
(c)The Ministers may, after consultation with the Authority, give the said representative instructions regarding the manner of voting at the general meeting.

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Chapter VI-A: Adequate Representation among Employees of Government Companies

Adequate Representation among Employees of Government Companies§

50a.
(a)Among the employees of government companies, across all positions and grades, adequate expression shall be given, in the circumstances of the matter, to the representation of persons who were born in Ethiopia or one of whose parents was born in Ethiopia, or who are members of the Druze community (in this Chapter – adequate representation).
(b)The board of directors shall act to promote adequate representation among the employees of the company in accordance with a target it shall set, and for that purpose shall take such measures as are required in the circumstances of the matter and are capable of enabling and encouraging adequate representation, including the following:
(1)designation of positions in which, as far as possible, only candidates from a group entitled to adequate representation shall be employed;
(2)a provision for giving preference to candidates from a group entitled to adequate representation, where they have qualifications similar to those of other candidates, with respect to a position or group of positions or with respect to a grade or group of grades to be specified in the provision, and for a period to be determined therein.
(c)The provisions of this section shall apply to all methods of recruitment and promotion in the government company.
(d)The provisions of this section shall apply to a government company employing more than 50 employees.

Reporting and Monitoring with respect to Adequate Representation§

50b.
(a)A government company shall submit to the Authority, once a year, a report on the implementation of the provisions of this Chapter, setting out, inter alia, data concerning adequate representation among the employees of the company.
(b)The Authority shall submit, once a year, to the Government, to the Equal Employment Opportunities Commission as defined in the Equal Employment Opportunities Law, 5748-1988, and to the relevant committee, once a year, a report in accordance with the data received in that year under this Chapter concerning adequate representation among the employees of government companies, as detailed below:
(1)to the Knesset Immigration, Absorption and Diaspora Committee – concerning adequate representation of persons who were born in Ethiopia or one of whose parents was born in Ethiopia among the employees of government companies;
(2)to the Constitution, Law and Justice Committee of the Knesset – concerning adequate representation of members of the Druze community among the employees of government companies.

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Chapter VII: Government Companies Authority

Establishment of the Authority§

51.

The Government Companies Authority is hereby established.

Director of the Authority§

52.
(a)The functions of the Authority shall be performed by the Director of the Authority.
(b)The Director of the Authority shall be appointed by the Government on the proposal of the Minister of Finance; notice of the appointment shall be published in Reshumot (Official Gazette); the tender requirement under section 19 of the State Service (Appointments) Law, 5719-1959, shall not apply to the appointment.

Advisory Committee§

53.
(a)The Minister of Finance shall appoint an advisory committee for the Director of the Authority; notice of the committee and its composition shall be published in Reshumot (Official Gazette).
(b)The Director of the Authority shall consult the advisory committee on matters relating to government companies in general or to categories of companies.

Functions of the Authority§

54.

The Authority –

(1)shall advise the Government through the Minister of Finance and shall advise the Ministers on matters relating to government companies;
(2)shall deal, in accordance with Government instructions, with matters common to all government companies or to categories of companies;
(3)shall monitor compliance with the recommendations of the State Comptroller relating to government companies and assist in their implementation;
(4)shall advise and assist government companies in the management of their affairs;
(5)shall continuously monitor the activities of each of the government companies, the fulfilment of its objectives, the conduct of its business, its financial position and its wage policy, and shall report its findings to the Ministers;
(6)shall examine the reports submitted to it by a government company and the material on which they are based, and shall submit its comments thereon to the company and to the Ministers;
(7)shall deal with and assist in the establishment, implementation of liquidation, merger, compromise, arrangement, reorganisation and sale of shares of government companies;
(7a)shall advise the Ministers' Committee on matters relating to privatisation and shall deal with the implementation of privatisation decisions;
(7b)shall act to promote and achieve adequate representation, as defined in section 50a;
(8)shall discharge, in relation to a government company, any function imposed upon it by the Government or the Ministers;
(9)shall discharge any other function assigned to it under this Law.

Obtaining Information§

55.

For the purpose of discharging its functions, the Authority may require from a government company or a mixed company, provided that more than a quarter of the voting power at the general meeting or the right to prevent more than a quarter of the number of its directors is held by the State, as well as from a State-appointed director, from the general manager of a government company, and through the general manager from any person employed by or engaged in the service of the company, information and material on the affairs of the company, and may inspect the records and documents of the company; for this purpose, "the Authority" includes any person authorised by the Authority for this purpose in accordance with rules prescribed by the Minister of Finance on the proposal of the Authority.

Duty to Report§

56.
(a)The Authority shall submit a report on its activities to the Government through the Minister of Finance and to the Committee upon their request and at least once a year.
(b)The Authority shall submit once a year to the Minister of Finance a report on the government companies, setting out with respect to each company the rights of the State therein, its principal objectives, the holders of positions therein and the main points of its latest financial reports; the Minister of Finance shall bring the report before the Committee.

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