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Investment Advice, Investment Marketing and Investment Portfolio Management Law, 5755-1995

חוק הסדרת העיסוק בייעוץ השקעות, בשיווק השקעות ובניהול תיקי השקעות, תשנ"ה-1995

Published: 1995-08-10Consolidated Hebrew text as of 2026-07-19 · Last amended 2026-03-31✓ 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 IV: Special Rules for the Modes of Operation of a Portfolio Manager

Separate Holding and Management of Client Assets§

22.

A portfolio manager –

(1)shall hold securities and financial assets of clients separately from those of the portfolio manager;
(2)shall hold the securities and financial assets of each client separately, shall make a decision to execute a transaction in respect of each client separately, and shall maintain records in respect of the moneys, securities and financial assets of each client separately; however, a portfolio manager may execute transactions on behalf of clients by a bundled order;
(3)shall maintain for a client a monetary account, a securities account and a financial assets account with a banking corporation, a bank outside Israel, an exchange member, or with a person who is entitled under the law of the state in which that person operates to maintain for a client a monetary account, a securities account or a financial assets account;
(4)shall execute transactions on behalf of clients separately from those executed for the portfolio manager's own account;
(5)shall credit and debit the client accounts held with the portfolio manager on the day of execution of the transaction.

Prohibition on Use of Client Assets§

23.
(a)A portfolio manager shall not make use of the moneys, securities or financial assets of a client, except for the purpose of executing transactions on behalf of that client and in accordance with the contract entered into with that client and the power of attorney received from that client.
(b)A portfolio manager shall not execute a transaction with a client and shall not derive a benefit from a client's assets, unless the client has given prior written consent to that transaction or to that benefit.

Remuneration and Expenses§

24.

A portfolio manager shall not make that manager's remuneration conditional on the profit derived by the client from a transaction, or on the number of transactions executed on behalf of the client.

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Chapter IV-A: Corporate Governance

Definitions§

24a.

In this Chapter –

"financial body" – any of the following: a provident fund or a managing company, as defined in the Provident Funds Supervision Law, an insurer, a licensed corporation, a fund manager or an underwriter as defined in the Securities Law, all excluding a company that controls a large portfolio management company and a company controlled by such a company;

"external director" and "relative" – as defined in the Companies Law;

"large portfolio management company", "group" and "total asset value" – as defined in the First Schedule A.

Board of Directors§

24b.
(a)The board of directors of a large portfolio management company shall comprise at least five directors; for the purpose of the appointment of external directors, a large portfolio management company shall be treated as a company whose securities have been offered to the public by prospectus and are held by the public, and the provisions of sections 239 to 249 of the Companies Law, 5759-1999, shall apply in respect of the appointment of external directors, with the necessary modifications, unless otherwise provided under this Law.
(b)A large portfolio management company shall appoint external directors after the audit committee has examined and confirmed that the eligibility conditions prescribed in section 240 of the Companies Law, 5759-1999, are fulfilled in respect of them; however, without derogating from the provisions of subsection (a), this subsection shall not apply to the appointment of the first external directors in the company.
(c)The number of directors of a large portfolio management company who also serve as directors of another financial body shall not exceed one-third of their total number.
(d)A director of a large portfolio management company shall not serve as a director of more than two additional financial bodies at the same time, except in cases permitted by the Minister of Finance by Regulations.
(e)The number of directors who are employees of, or employed by, a large portfolio management company shall not exceed one-third of their total number.
(f)Upon the appointment of the board of directors of a large portfolio management company, the composition of the board of directors shall be determined in a manner that enables the board of directors to fulfil its functions.

Prevention of Conflicts of Interest§

24b1.

A person who controls a material real-world corporation, a person connected to such a controlling shareholder, or an office holder in a material real-world corporation, shall not be appointed or serve as a director in a portfolio management company that is a significant financial body; the chairperson of the Authority may give instructions in respect of the continuation of a director's term of office during sale proceedings as referred to in section 4a(d); in this section –

"person connected to the controlling shareholder" – a relative or partner of a controlling shareholder, or a person having a connection as defined in section 240(b) of the Companies Law, 5759-1999, to the controlling shareholder;

"financial body" and "real-world corporation" – as defined in section 28 of the Law for the Promotion of Competition and Reduction of Concentration;

"significant financial body" – a financial body listed in the list of significant financial bodies published under section 29 of the Law for the Promotion of Competition and Reduction of Concentration;

"controlling shareholder", in a material real-world corporation – including a holder of a controlling block as defined in the Companies Law, 5759-1999, in a material real-world corporation in which there is no other controlling shareholder;

"material real-world corporation" – a real-world corporation listed in the list of material real-world corporations published under section 30 of the Law for the Promotion of Competition and Reduction of Concentration.

Chairperson of the Board of Directors§

24c.
(a)The board of directors of a large portfolio management company shall elect one of its members to serve as chairperson of the board of directors.
(b)The general manager of a large portfolio management company, or a person subordinate to the general manager, directly or indirectly, or a relative of the general manager, shall not serve as chairperson of the board of directors.
(c)The powers of the general manager, or powers vested in a person subordinate to the general manager, directly or indirectly, shall not be conferred upon the chairperson of the board of directors of a large portfolio management company or upon that chairperson's relative; the chairperson of the board of directors shall not serve in any other position in the company, except as a member of a board of directors committee that is not an audit committee as referred to in section 24h(d).

Powers of the Minister of Finance§

24d.

The Minister of Finance may prescribe eligibility conditions for directors and members of committees that the board of directors of a large portfolio management company is required to appoint under this Chapter, provisions for ensuring the effectiveness of the internal control system and the internal enforcement programme and their proper operation, including provisions regarding the duty to appoint office holders to be in charge of the said system and programme and their eligibility conditions, as well as provisions for ensuring effective risk management.

Conduct of Board of Directors Meetings§

24e.
(a)The meetings of the board of directors of a large portfolio management company shall be held at least once per quarter; the period of time between one meeting and the subsequent meeting shall not exceed four months.
(b)A majority of the directors shall constitute a quorum at meetings of the board of directors, provided that all of the following conditions are fulfilled:
(1)an external director was present at the meeting;
(2)the number of directors who serve as directors of more than one financial body, who were present at the meeting, did not exceed one-third of those present.
(c)At the meetings of the board of directors, minutes shall be drawn up in which the names of those present, the main points of the discussion and the decisions taken shall be recorded.
(d)Should an external director be absent from four consecutive meetings of the board of directors, that director's term of office shall expire.

Functions of the Board of Directors§

24f.

The functions of the board of directors of a large portfolio management company shall include, inter alia:

(1)to appoint a general manager, to supervise that manager's performance and to examine the manner in which the board of directors' decisions are implemented by the general manager;
(2)to approve the internal control system and the internal enforcement programme, and to verify that the company has tools enabling monitoring of the implementation of the investment policy in accordance with the instructions and the client's needs;
(3)to appoint an internal auditor in accordance with the audit committee's proposal, to approve that auditor's work programme in accordance with the audit committee's recommendation, and to discuss material deficiencies in the company's operations and the ways of remedying them;
(4)to approve the work procedures that the company is required to establish pursuant to instructions under this Law and that the Authority has determined are to be approved by the board of directors;
(5)to discuss the company's compliance with the licence conditions as prescribed in section 8;
(6)to discuss any matter of material importance to the company's operations or to its supervision and oversight.

Prohibition on Delegation§

24g.
(a)The board of directors of a large portfolio management company is not entitled to delegate its powers under paragraphs (1), (3) and (5) of section 24f.
(b)The board of directors of a large portfolio management company may delegate its power under paragraph (2) of section 24f to the audit committee, provided that it receives from the audit committee an update on any decision taken by the audit committee under that paragraph that is of material importance to the company's operations, promptly after the decision is taken, and also receives from the audit committee, at least once a year, a review of the matters listed in that paragraph.

Audit Committee§

24h.
(a)The board of directors of a large portfolio management company shall appoint from among its members an audit committee (in this Law – audit committee).
(b)The functions of the audit committee shall be:
(1)to propose to the board of directors a candidate for the position of internal auditor in accordance with section 24f(3), to deliberate on the work programme proposed by the internal auditor and to submit its recommendations to the board of directors regarding the programme;
(2)to identify deficiencies in the company's operations through the internal auditor and other control and supervision bodies, to determine ways of remedying deficiencies of such kind that are not of material importance to the company's operations and to propose to the board of directors ways of remedying deficiencies that are of material importance to its operations;
(3)to examine the company's internal audit system and the functioning of the internal auditor, and also whether the resources and tools necessary for the performance of the internal auditor's functions are at the internal auditor's disposal;
(4)to confirm that the eligibility conditions prescribed in section 240 of the Companies Law, as referred to in section 24b(b), are fulfilled in respect of the external directors.
(c)The number of members of the audit committee shall not be less than three; all the external directors shall be members of the audit committee and shall constitute a majority of its members; the chairperson of the committee shall be an external director.
(d)The chairperson of the company's board of directors and any director who is employed by the company or regularly provides services to it, as well as the controlling shareholder of the company or a relative thereof, shall not be members of the audit committee.
(e)The internal auditor shall receive notices of the convening of audit committee meetings and shall be entitled to participate in them.
(f)The internal auditor may request the chairperson of the audit committee to convene the committee to deliberate on a matter specified in the request, and the chairperson of the audit committee shall convene it within a reasonable time from the date of the request, if the chairperson sees reason to do so.
(g)At least once a year the audit committee shall hold a meeting with the internal auditor alone.
(h)Meetings of the audit committee shall be held at least once every three months.
(i)The quorum for a meeting of the audit committee is at least three members, including an external director; however, in urgent cases where a director is prevented from participating in a meeting of the audit committee and as a result a quorum is not present at the committee meeting, the quorum for that meeting shall be at least two members, including an external director; the minutes of such a meeting shall contain an explanation of the urgency of holding the meeting.
(j)Minutes shall be kept of audit committee meetings, recording the names of those present, the main points of the deliberation and the decisions taken; the minutes shall be available for inspection by every director of the company.

Internal Auditor§

24i.
(a)The provisions of sections 3(a), 4(b), 8, 9, 10 and 12 of the Internal Audit Law, 5752-1992, shall apply, with the necessary modifications, to the internal auditor appointed under section 24f(3).
(b)The internal auditor shall examine, inter alia, the regularity of the company's operations from the standpoint of compliance with provisions of law, proper business conduct and the procedures prescribed by the company's board of directors under this Law.
(c)The internal auditor shall report findings to the chairperson of the board of directors, to the audit committee and to the general manager.

Limitation on Application§

24j.

The provisions of this Chapter shall not apply to a large portfolio management company during the first six months from the time it became a large portfolio management company.

Amendment of First Schedule A§

24k.

The Minister of Finance may, by Order, on the proposal of the Authority or in consultation with it, with the consent of the Minister of Justice and with the approval of the Finance Committee of the Knesset, amend the First Schedule A.

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Chapter V: Registration and Reporting

Registration of Transactions§

25.
(a)A portfolio manager shall maintain records of every transaction executed on behalf of a client.
(b)A licence holder shall maintain records of every advisory action given to a client.
(b1)An investment marketer shall maintain records of every marketing action taken in relation to a client.
(c)The provisions of subsections (b) and (b1) shall apply even if the advisory action or the marketing action did not result in a transaction.
(d)A licence holder shall retain records as referred to in this section for a period of seven years.
(e)The Minister of Finance, in consultation with the Authority and with the approval of the Finance Committee of the Knesset, may prescribe the particulars to be included in records as referred to in this section, as well as the manner of their preparation, retention and delivery to the client.

Reporting to Client§

26.
(a)A portfolio manager shall furnish to the client, at least once every three months, a detailed report on the composition of the client's investment portfolio, on the client's financial account and on the client's charges, directly or indirectly, in respect of fees and expenses, including in respect of payment to a person who controls the portfolio manager or is controlled by the portfolio manager, or to a company under the control of such a person, and shall also attach particulars of the transactions executed on behalf of the client during the period that has elapsed since the previous report, highlighting transactions the execution of which involves special risk and credit transactions, if any were executed.
(b)Reporting to a client on whose behalf a portfolio manager acts under a blind trust shall be made in the form, at the times and subject to the conditions specified in the agreement between them; such a client may give in advance in writing the consents required under this Law, in whole or in part.
(c)A portfolio manager shall furnish to the client additional particulars at any time, upon the client's request, whether regarding the state of the client's investment portfolio or financial account, or regarding a particular transaction; however, the portfolio manager may refrain from doing so if the portfolio manager finds that the client's request is not reasonable.
(c1)A licence holder shall notify the client of any change in the address of the licence holder's place of business within seven days from the date on which the licence holder began to carry on business as a licence holder at that address.
(d)A report under this section shall not contain any misleading particular.

Reporting to the Authority§

27.
(a)A licence holder shall submit to the Authority once a year a notice regarding the fulfilment of insurance requirements and the scope thereof, and if the licence holder is a corporation – also an auditor's confirmation regarding the fulfilment of the minimum equity requirement under this Law.
(b)(Repealed)
(c)A licence holder is required to report to the Authority immediately if a condition of the conditions for the grant of the licence ceases to be fulfilled in respect of that licence holder, and if the licence holder is an individual – also if that individual is not insured as required under the provisions of section 20c, or if a condition has been fulfilled by reason of which the Authority is entitled to revoke or suspend a licence, and for the purpose of examining trustworthiness as referred to in section 10(a1), a licence holder shall notify the Authority of the occurrence of any of the following, in Israel or abroad:
(1)a conviction of an offence;
(2)the filing of an indictment or the conduct of disciplinary proceedings, in respect of the commission of an offence;
(3)an investigation or administrative inquiry in connection with the commission of an offence or a breach of a provision of economic law, by an authority competent to conduct an investigation or administrative inquiry proceedings, as the case may be;
(4)payment of a monetary liability as an alternative to criminal proceedings, in connection with a breach of a provision of economic law, as well as the existence of administrative proceedings in respect of a breach of such a provision, the possible outcome of which is the imposition of an administrative enforcement measure;
(5)payment of a monetary sanction or receipt of a demand for such payment, in respect of a breach of a provision of economic law;
(6)a judgment in a civil claim or a civil claim filed in respect of a breach of a provision of economic law, including by way of a claim under section 63 of the Civil Wrongs Ordinance [New Version], provided that such claim included an allegation of deceit or negligence;

in this subsection –

"provision of economic law", "offence" – as defined in section 9a(d) of the Joint Investments Law;

"monetary liability as an alternative to criminal proceedings" – as defined in section 260(a) of the Companies Law.

(c1)A licence holder shall report to the Authority the address of that licence holder's place of business and any change thereto, within seven days from the date on which that licence holder commenced engaging as a licence holder at that address.
(c2)A licensed corporation, a fund manager and a banking corporation shall report to the Authority, without delay, on the new employment of a licence holder or the termination of employment of a licence holder employed by them.
(c3)A licensed corporation, a fund manager and a banking corporation shall submit to the Authority on the 21st day of January of each year a report setting out the names of all licence holders employed by them on the last day of the month preceding the date of submission of the report and the address of the branch at which they are employed, as well as the names of licence holders whose employment terminated after the date of submission of the previous report under this subsection; the report under this subsection shall separately set out the holders of an adviser's licence or the holders of a marketer's licence, as well as the holders of a portfolio manager's licence.
(d)A licence holder or a banking corporation is required to report as stated in this section to the Authority also pursuant to a special demand by the Authority or by the chairperson of the Authority, and shall also report pursuant to such a demand on any event or matter in respect of which information thereon is material to a reasonable client who requires that licence holder's or banking corporation's services.
(e)A licence holder or a banking corporation is required to provide to the Authority, in writing, upon demand by the Authority or by an employee of the Authority authorised by it, an explanation, details, information and documents in connection with the particulars contained in a report or a notice under this section.
(f)The Authority may publish on its website or in two widely circulated daily newspapers, in its opinion, published in Israel in the Hebrew language, reports or notices submitted under this section, and may instruct the licence holder or the banking corporation to publish reports or notices as aforesaid in such manner as it shall direct.
(g)A report under this section shall not contain a misleading particular.

Manner of Reporting to the Authority§

27a.
(a)A request by an authorised corporation for the revocation or suspension of its licence under section 10(b), as well as a report, notice, information and any other document that an authorised corporation is required to submit to the Authority or to the stock exchange under sections 27 or 27c, shall be submitted under Chapter VII-A of the Securities Law.
(b)(Repealed)

Certified Copy§

27b.
(a)(Repealed)
(b)A certified copy of a document submitted to the Authority shall be accepted in any legal proceeding as the original and shall constitute conclusive evidence that the original document is in the possession of the Authority.

Additional Reports§

27c.

The Minister of Finance may, in consultation with the Authority and with the approval of the Finance Committee of the Knesset, prescribe provisions on the following matters:

(1)additional reports, beyond those listed in this Law, that a licence holder or a banking corporation is required to submit to the Authority or to the client, the particulars to be included therein, the times of their preparation, submission and their form; the Minister may also prescribe an obligation to publish such reports to the public and the manner of their publication;
(2)the particulars to be included in reports that a licence holder, a banking corporation or a fund manager is required to submit under this Law, the times of their preparation, submission and their form;
(3)an exemption for a licence holder, a banking corporation, a fund manager or categories thereof, from the reporting obligation under this Law.

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