Joint Investments in Trust Law, 5754-1994
חוק השקעות משותפות בנאמנות, תשנ"ד-1994
Published: 1994-08-23Consolidated Hebrew text as of 2026-01-01 · Last amended 2026-08-02✓ Amendment status checked against the Knesset legislation record on 2026-09-28
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Chapter VI: Management of the Fund
Section A: Open-ended Fund
Unit Price and Redemption Price§
42.
(a)The price of a unit in an open-ended fund shall be:
(1)on the first day of offering the units for the first time – a price equal to the nominal value of the unit;
(2)at any other time – a price equal at that time to the purchase price of the fund's assets under section 43, divided by the number of its units.
(b)The redemption price of a unit in an open-ended fund at any given time shall be equal to the sale price of the fund's assets under section 43 at that time, divided by the number of its units.
(c)A manager of an open-ended fund may add to the unit price or deduct from the redemption price an amount whose rate and manner of collection shall be determined in the prospectus (hereinafter – the addition); the addition forms part of the fund manager's remuneration and shall not be transferred to the fund's account.
(d)The rate of commission charged by a distributor from a purchaser of a unit or from a redeemer of a unit in respect of the sale or redemption of the unit, or from a unit holder in respect of holding the unit through the distributor, shall not change by reason of the fact that the units it sold or redeemed, or those held through it, were issued by different fund managers, unless this has been permitted under subsection (e) and subject to the conditions under which it was permitted; the rates of commission for the operations referred to shall be displayed at the distributor's office in a visible location.
(d1)A distributor shall notify in writing, as soon as possible, any person from whom an addition or commission was charged in respect of the sale or redemption of a unit, or in respect of holding it through the distributor, of the rate of the addition or commission charged.
(d2)In this section, "rate of commission" – the commission charged divided by the unit price or the redemption price, as the case may be.
(e)The Minister of Finance may prescribe in Regulations provisions regarding the manner and times at which a manager of an open-ended fund shall publish unit prices and redemption prices, and may also prescribe, upon the proposal of the Authority or after consultation with it, and with the approval of the Finance Committee of the Knesset, generally or for types of funds or distributors, the conditions under which a distributor is entitled to charge a commission from a purchaser of a unit, and provisions regarding the maximum rate of such a commission and the manner of its calculation.
Purchase Price and Sale Price of Fund Assets§
43.
(a)The purchase price and the sale price of the assets of an open-ended fund shall be calculated by the fund manager on the basis of the net asset value of the fund.
(b)The Minister of Finance may prescribe in Regulations provisions regarding the manner of determining the value of the assets of an open-ended fund and the manner of calculating the purchase price and the sale price of the fund's assets.
Orders for Units, Instructions for their Redemption and Payment therefor§
44.
(a)Orders for units offered in a prospectus and instructions for their redemption shall be submitted to a distributor; a distributor shall not refuse to distribute units of a fund offered pursuant to a prospectus whose publication has been permitted by the Authority, for reasons related to the fund or to the fund manager.
(b)The distributor shall transfer to the fund manager through a clearing house the total of the orders for units it has received and the total of the instructions for the redemption of units it has received, orders for units separately and instructions for redemption separately, all in the manner and at the time prescribed by the Authority in rules.
(c)A fund manager shall receive payment in cash only for units of a fund under its management; where units of a fund have been purchased by a person and securities have been purchased from that person by the fund manager for a fund under its management, in an off-exchange transaction or in a coordinated transaction, during a period of 30 days, it is presumed that both purchases were made as part of a single transaction in which the fund manager received payment for the fund's units other than in cash, unless the contrary is proved.
Transfer of Cash to the Fund§
45.
Where a unit in an open-ended fund has been sold, the distributor shall transfer to the fund manager's account or to the fund's account, through the clearing house, in the manner prescribed by the Minister of Finance, a cash sum equal to the unit price; where the sum has been transferred to the fund manager's account, the fund manager shall transfer it to the fund's account on the same day.
Offering of Units and their Redemption§
46.
(a)A manager of an open-ended fund shall sell units and redeem them only on days in respect of which the manager is required to calculate the purchase price and the sale price of the fund's assets, and in respect of a fixed-dates fund as defined in section 47(a) – on the dates determined in accordance with the provisions made under that section.
(b)A manager of an open-ended fund shall redeem a unit pursuant to an instruction received from the distributor; where the fund manager has received an instruction to redeem a unit, the manager shall cancel the unit and shall transfer from the fund's account to the distributor through the clearing house, in the manner prescribed by the Minister of Finance, a sum in cash equal to the redemption price of the unit that was redeemed, and the distributor shall transfer the said sum to the unit holder on the same day; where the fund agreement provides that the addition shall be deducted from the redemption price, the fund manager shall transfer to the distributor and the distributor shall transfer to the unit holder the said sum less the addition.
(c)
(1)A distributor who has received an order for a unit or an instruction to redeem a unit before the hour indicated in the prospectus and determined in accordance with rules set by the clearing house after consultation with the Authority (hereinafter – the designated hour), on a day in respect of which the sale price is to be calculated, shall transmit it to the clearing house on that same day by the designated hour, or within a period of time set by the clearing house in rules as aforesaid; where an order or instruction as aforesaid was received on another day or after the designated hour – the distributor shall transmit it before the designated hour on the next day in respect of which the sale price is to be calculated;
(2)where a purchase order or a redemption instruction for a unit as referred to in paragraph (1) has been received by the clearing house, the clearing house shall transmit it to the fund manager on the same day within a period of time set by the clearing house in rules as referred to in subsection (i);
(3)where a distributor or the clearing house has not transmitted a purchase order or a redemption instruction before the hour referred to in paragraphs (1) or (2), they shall be deemed to have been submitted on the day on which the fund manager received them, unless they were cancelled by the person who placed the order or gave the instruction; provided that if the fund manager received them after the said hour, they shall be deemed to have been submitted before the designated hour on the first price calculation day following the day on which the fund manager received them;
(4)nothing in the provisions of paragraph (3) shall derogate from the right of the person who ordered the unit or gave the redemption instruction to compensation under any law by reason of the failure to transmit the order or the instruction as referred to in paragraphs (1) or (2).
(d)The Minister of Finance may prescribe by Regulations, generally or for types of funds, the day on which a distributor shall transfer the sum referred to in section 45 and the day on which a fund manager shall transfer to the distributor the sum referred to in subsection (b).
(e)The Minister of Finance may prescribe by Regulations, generally or for types of funds, the days in respect of which a manager of an open-ended fund is required to calculate the purchase price and the sale price of the fund's assets.
(f)A manager of an open-ended fund may from time to time suspend the offering of units to the public and renew it, provided that the manager has published notice thereof in a newspaper at the time prescribed by the Minister of Finance by Regulations.
(g)
(1)Where the net asset value of an open-ended fund has fallen below the minimum value, or the number of its unit holders has fallen below the minimum number prescribed by the Minister of Finance, for thirty consecutive days or for sixty days within a period of ninety days (hereinafter – interim period), the fund manager shall be obliged to continue offering its units to the public, and if the fund is not a fund for non-residents – shall offer them to any person, until the net asset value of its assets and the number of its unit holders reach the minimum value and the minimum number prescribed by the Minister of Finance for thirty consecutive days; where the offering of units as aforesaid requires the publication of a prospectus – the fund manager shall publish it no later than thirty days from the end of the interim period;
(2)the provisions of paragraph (1) shall not apply if the fund manager has given notice of the winding up of the fund;
(3)for the purposes of this subsection, "offering of units to any person" – excluding a foreign national or non-resident who is precluded, under the laws of the state of which they are a national or in which they are resident, from purchasing or holding units in the fund.
(h)Where the number of units ordered on any given day exceeds the number of units offered on that day, the fund manager shall respond to every order at a uniform rate; the fund manager shall notify the clearing house of the said rate no later than the close of trading on the exchange, in the manner prescribed by the Minister of Finance.
(i)The operations of the clearing house under sections 44, 45, 46(b) and (c)(2) and 53(c) shall be carried out in accordance with rules to be set by the clearing house and reported by it to the Authority.
Fixed-Dates Fund§
47.
(a)A manager of an open-ended fund may provide in the fund agreement for fixed dates for the offering of units and their redemption (in this Law – fixed-dates fund), and the following provisions shall apply in that regard:
(1)the Authority may prescribe by directives conditions under which the dates for the offering of units and the dates for their redemption must be identical, and conditions under which those dates need not be identical;
(2)the dates for the offering of units and the dates for their redemption shall be days in respect of which the fund manager is required to calculate the purchase price and the sale price of the fund's assets;
(3)the period between consecutive fixed dates for the offering of units and the period between consecutive fixed dates for the redemption of units shall not exceed 12 months or a longer period that the Authority may prescribe by directives in accordance with the type of fund, provided that it shall not exceed 36 months.
(b)A manager of a fixed-dates fund may make the redemption of units in the fund conditional upon advance notice being given by the unit holders; the Authority may prescribe by directives preconditions for making redemption conditional upon the giving of advance notice as aforesaid.
Suspension of Offering of Units and their Redemption§
48.
(a)Notwithstanding the provisions of section 46, the Chairperson of the Authority may –
(1)direct, after consulting the Chairperson of the board of directors of the exchange in Israel, generally or for types of funds, the suspension of the offering of units of an open-ended fund or their redemption, for a period not exceeding three trading days, if trading did not take place or if the results of trading seriously disrupted the ability to buy or sell securities for a fund, or to calculate the purchase price and the sale price of a fund's assets;
(2)approve, upon a written request by a manager of an open-ended fund that has been approved by the trustee, the suspension of the redemption of units for a period not exceeding three trading days, if due to a serious disruption in the normal course of work of the fund manager or of a person providing services to the fund manager, the fund manager was prevented from redeeming units; during a period of suspension as aforesaid, units shall not be offered to the public;
(3)direct, after consulting the Commissioner of Capital Markets, Insurance and Savings as defined in the Financial Services Supervision Law (Insurance), 5741-1981, and after having given the fund manager and the trustee a suitable opportunity to state their arguments, the suspension of the offering of units of an open-ended fund and their redemption for a period not exceeding seven trading days, if the Chairperson was of the opinion that without the suspension the interests of the unit holders were liable to be harmed.
(b)The Chairperson of the Authority, with the approval of the Minister of Finance, may extend the validity of a direction given under subsection (a)(1), for as long as the grounds referred to therein subsist, and under subsection (a)(3), for additional periods each not exceeding seven trading days, and for no more than sixty consecutive days in total.
(c)The Chairperson of the Authority shall publish a notice in a newspaper of the exercise of the Chairperson's powers under this section.
(d)(Repealed).
Restriction on Holding of Units by an Affiliated Party§
49.
(a)In this section –
"affiliated party" – a person who controls a fund manager, an employee of a fund manager, a member of an investment committee of a fund manager, a director of a fund manager, a person employed by a fund manager in managing the fund's investment portfolio, an employee of a person so employed, and a corporation controlled by any of the foregoing;
"affiliated fund", in relation to an affiliated party – a fund managed by a fund manager controlled by an affiliated party or in which the affiliated party is employed, serves or is engaged;
"rate of units held" – the number of units of a fund held by a person on any given day, out of the total number of units of the fund on the last day preceding that day.
(b)Where an affiliated party has purchased units of a fund affiliated with the affiliated party, or where there has been a change in the number of units of such a fund held by an affiliated party, the affiliated party shall notify the fund manager, in writing, of the purchase of the units or of the change in the number of units held by the affiliated party, on the day of the purchase or the change, as the case may be.
(c)An affiliated party shall not purchase units of a fund affiliated with the affiliated party unless all of the following conditions are met:
(1)the affiliated party has received from the fund manager written information regarding the total number of units of the fund on the last day preceding the day of purchase of the units, regarding the overall rate of the fund's units held on that day by affiliated parties, and regarding the net asset value of the fund on that day;
(2)some portion of the units of the fund is held by unit holders who are not affiliated parties;
(3)the overall rate of units of the fund that will be held by all affiliated parties immediately after the purchase shall not exceed twenty-five percent.
(c1)The provisions of subsection (c)(3) shall not apply if on the last day preceding the day of purchase of the units of the affiliated fund the net asset value of the fund did not exceed three times the minimum value prescribed under section 46(g).
(d)Where the overall rate of the fund's units held by all affiliated parties has exceeded the rate prescribed in subsection (c)(3), the following provisions shall apply:
(1)the fund manager shall be obliged to continue offering the units of the fund to the public, until the overall rate of units held as aforesaid decreases to the rate prescribed in subsection (c)(3);
(2)the rate of addition in respect of the fund shall not exceed the average rate of additions in all funds managed by the fund manager;
(3)the rate of the fund manager's remuneration shall not exceed the average rate of the fund manager's remuneration in all funds managed by the fund manager; in this paragraph, "rate of the fund manager's remuneration" – the amount of the fund manager's remuneration divided by the average net asset value of the fund during the period in respect of which the remuneration was paid; for this purpose, the average net asset value of the fund shall be calculated according to the net asset value of the fund on each of the price calculation days during the period in respect of which the remuneration was paid.
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