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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Second Schedule (Sections 115 and 116)
1.§
In respect of a fund manager or trustee –
| Scope of assets under management / trusteeship (in new shekels) | Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule | |||
|---|---|---|---|---|---|---|
| Rate of financial sanction of value of assets under management / trusteeship | Minimum financial sanction amount | Rate of financial sanction of value of assets under management / trusteeship | Minimum financial sanction amount | Rate of financial sanction of value of assets under management / trusteeship | Minimum financial sanction amount | |
| For each shekel of the scope of assets under management/trusteeship up to 64,308,000 | 1/1,000 | 26,000 | 1/400 | 64,000 | 3/800 | 96,000 |
| For each shekel of the scope of assets under management/trusteeship from 64,308,001 to 643,078,000 | 1/9,000 | — | 1/3,600 | — | 1/2,400 | — |
| For each shekel of the scope of assets under management/trusteeship from 643,078,001 to 6,430,779,000 | 1/90,000 | — | 1/36,000 | — | 1/24,000 | — |
| For each shekel of the scope of assets under management/trusteeship above 6,430,779,000 | 1/450,000 | — | 1/180,000 | — | 1/120,000 | — |
| Maximum financial sanction amount | 257,000 | 643,000 | 965,000 |
2.§
In respect of another corporation –
| Financial sanction amount (in new shekels) | ||
|---|---|---|
| Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule |
| 257,000 | 643,000 | 1,286,000 |
3.§
In respect of an individual –
| Financial sanction amount (in new shekels) | |||
|---|---|---|---|
| — | Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule |
| An employee of the corporation who is not an office holder therein | 13,000 | 19,000 | 26,000 |
| Another individual | 15,000 | 32,000 | 64,000 |
[Translation pending]
| Scope of assets under management/trusteeship (in new shekels) | Financial sanction amount (in new shekels | ||
|---|---|---|---|
| Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule | |
| Up to 50,000,000 | 50,000 | 125,000 | 250,000 |
| From 50,000,001 to 500,000,000 | 100,000 | 250,000 | 500,000 |
| From 500,000,001 to 5,000,000,000 | 150,000 | 375,000 | 750,000 |
| Above 5,000,000,000 | 200,000 | 500,000 | 1,000,000 |
[Translation pending]
| Scope of assets under management / trusteeship (in new shekels) | Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule | |||
|---|---|---|---|---|---|---|
| Rate of financial sanction of value of assets under management / trusteeship | Minimum financial sanction amount | Rate of financial sanction of value of assets under management / trusteeship | Minimum financial sanction amount | Rate of financial sanction of value of assets under management / trusteeship | Minimum financial sanction amount | |
| For each shekel of the scope of assets under management/trusteeship up to 50,000,000 64,308,000 | 1/1,000 | 20,000 26,000 | 1/400 | 50,000 64,000 | 3/800 | 75,000 96,000 |
| For each shekel of the scope of assets under management/trusteeship from 50,000,001 64,308,001 to 500,000,000 643,078,000 | 1/9,000 | — | 1/3,600 | — | 1/2,400 | — |
| For each shekel of the scope of assets under management/trusteeship from 500,000,001 643,078,001 to 5,000,000,000 6,430,779,000 | 1/90,000 | — | 1/36,000 | — | 1/24,000 | — |
| For each shekel of the scope of assets under management/trusteeship above 5,000,000,000 6,430,779,000 | 1/450,000 | — | 1/180,000 | — | 1/120,000 | — |
| Maximum financial sanction amount | 200,000 257,000 | 500,000 643,000 | 750,000 965,000 |
[Translation pending]
| Financial sanction amount (in new shekels) | ||
|---|---|---|
| Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule |
| 200,000 257,000 | 500,000 643,000 | 1,000,000 1,286,000 |
[Translation pending]
| Financial sanction amount (in new shekels) | |||
|---|---|---|---|
| — | Breach of a provision listed in Part 1 of the First Schedule | Breach of a provision listed in Part 2 of the First Schedule | Breach of a provision listed in Part 3 of the First Schedule |
| An employee of the corporation who is not an office holder therein | 10,000 13,000 | 15,000 19,000 | 20,000 26,000 |
| Another individual | 12,000 15,000 | 25,000 32,000 | 50,000 64,000 |
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Contact Us →Third Schedule
(Sections 119 and 124(a)(18))
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(1)Set for the fund a name liable to mislead, contrary to the provisions of section 6(a);
(2)(Repealed).
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(1)Contravened the provisions of section 18(2), (4), (5), (5a), (5b) or (8), in that the board of directors of the fund manager failed to discharge a function among its functions under that section for a period exceeding six months;
(2)(Repealed);
(3)Held means of control in a fund manager at a rate requiring a permit from the Licences Committee pursuant to section 23b without having obtained such a permit, or failed to comply with a directive issued to it pursuant to section 23e(a) to (c);
(3a)Controlled a fund manager that is a significant financial body, or held means of control in a fund manager as aforesaid, contrary to the provisions of section 23b2;
(4)Received into its management, whether by contract or otherwise, a fund from another fund manager, in such a manner that its market share exceeded, after receipt of the management, twenty percent, contrary to the provisions of section 23g(a), controlled fund managers in such a manner that its total market share exceeded twenty percent, contrary to the provisions of section 23g(b), or failed to comply with a directive of the Chairperson of the Authority to reduce its market share or total market share so that it would not exceed twenty percent, within the period prescribed in the directive, contrary to the provisions of section 23g(c);
(5)Purchased units of a fund affiliated to it, contrary to the provisions of section 49(c), and it ought to have known that circumstances existed by reason of which it was not permitted to purchase units as aforesaid in accordance with the provisions of that section;
(6)Offered a unit without consideration contrary to the provisions of section 58, and it ought to have known that no consideration was being paid for the unit;
(7)Took credit for a fund under its management, contrary to provisions pursuant to section 65 or pursuant to that section as applied by section 129c(3), and it ought to have known that conditions did not exist by reason of which it was permitted to take credit as aforesaid in accordance with provisions pursuant to that section;
(8)Executed a transaction between its own account and a fund's account, contrary to provisions pursuant to section 67;
(9)Paid in respect of a transaction executed for the fund a commission from the fund's assets otherwise than in accordance with the provisions of section 69, and it ought to have known that the commission it paid was not in accordance with those provisions;
(10)Failed to segregate the fund's assets from its other property, contrary to the provisions of section 76(a);
(11)(Repealed);
(12)Pledged or charged the fund's assets otherwise than in accordance with the conditions set by the Minister of Finance pursuant to section 79, and it ought to have known that those conditions were not satisfied;
(13)Disclosed the contents of information or a document that came to its knowledge by virtue of its position, contrary to the provisions of section 97(d);
(14)Failed to complete the realisation of the fund's assets by the liquidation date, contrary to the provisions of section 109(a);
(15)Voted at a general meeting of unit holders even though upon the opening of the meeting it had not announced that it had redeemed or sold units after having received confirmation from a stock exchange member regarding their holding through it, contrary to the provisions of section 111(e)(1).
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(1)arranged a scheme to which this Law applies, otherwise than by means of a joint investment fund in trust established in the manner prescribed in section 3;
(2)served as a trustee of a fund or a fund manager without having received the approval of the Chairperson of the Authority for that purpose, in contravention of the provisions of section 9(a) or section 13(a), as the case may be, or after the approval expired in accordance with the provisions of section 10 or section 14, as the case may be;
(3)offered units to the public, including units or shares of a foreign fund, otherwise than pursuant to a prospectus the publication of which the Authority permitted, in contravention of the provisions of section 25(a), and ought to have known that it was making a public offering of units otherwise than pursuant to a prospectus the publication of which the Authority permitted;
(4)published or included a matter in relation to a fund that contains a misleading particular, in contravention of the provisions of section 73(b)(2), and ought to have known that such act was capable of misleading a reasonable investor;
(5)included in a fund agreement, prospectus, report, notice or document submitted pursuant to this Law to the Authority a misleading particular, in contravention of the provisions of section 73a(a), and ought to have known that such act was capable of misleading a reasonable investor;
(6)included in an opinion, report, review or approval that was included in or referred to in a prospectus or in a disclosure, with its prior consent, a misleading particular, in contravention of the provisions of section 73a(b), and ought to have known that such act was capable of misleading a reasonable investor;
(7)failed to submit to the Authority a report, notice, document, explanation, specification or information, by the time prescribed for that purpose, in contravention of the provisions under sections 16(a1), 34(a), 52, 54(b), 61(c), 72, 77(c), 78(e), 80(c), 100(f), 101(d), 110(1), 112(d), 112a(a) or 112b, or under section 72(a) as applied by section 129c(3), or submitted a report, notice, prospectus or other document otherwise than in accordance with the provisions under sections 72a and 131(a), and ought to have known that such act was capable of misleading a reasonable investor;
(8)paid expenses from the assets of the fund otherwise than in accordance with the provisions of section 80;
(9)received a benefit in connection with the management of the fund or in connection with the performance of its duties as a trustee of the fund, otherwise than in accordance with the provisions of section 81.
24.§
The commencement of this Law is on the 30th day of Tishrei 5777 (1 November 2016) (hereinafter – the commencement date), and the Minister may, by Order, with the approval of the Finance Committee of the Knesset, postpone the commencement date if the Minister finds that the postponement is necessary for the purpose of preparing for the implementation of the provisions of this Law.
31.§
The commencement of this Law is on the date of entry into force of Regulations under section 57(a) of the principal Law, as worded in section 12 of this Law, or on the 11th day of Tishrei 5778 (1 October 2017), whichever is the later (hereinafter – the commencement date). [3.10.2018]
32.§
(a)During a period of two years from the commencement date, the provisions of section 67(a)(1) of the principal Law shall not apply to a controlling shareholder of a trustee of an exchange-traded fund or to a company controlled by such a controlling shareholder of a trustee, where they are one of the following:
(1)a banking corporation;
(2)a company controlled by a banking corporation.
(b)The provisions of section 69 of the principal Law shall apply to a fund manager in respect of a tracking fund under its management that was an exchange-traded certificate on the eve of the determining date as defined in section 28(b), upon the expiration of six months from that date, provided that the rate of commissions to be paid from the assets of such a fund for the execution of transactions in the fund's assets shall not exceed the rate of commissions paid by a market maker for the execution of transactions for the purpose of fulfilling its obligations under an agreement concluded between the market maker and the fund manager in respect of that fund, and if that fund had no market maker – a market maker in units of another exchange-traded fund under the fund manager's management; for this purpose, "market maker" – as defined in section 82(a)(6) of the principal Law.
33.§
(a)In this section –
"conversion commission" – a commission paid to the issuer of the exchange-traded note in accordance with the note's prospectus;
"tracking fund" and "exchange-traded fund" – as defined in section 1 of the Principal Law, as worded in section 1 of this Law;
"open-ended fund" and "the Authority" – as defined in the Principal Law;
"exchange-traded notes" – obligation certificates as defined in section 35a of the Securities Law, in respect of which all of the following conditions are met:
(1)their purpose is joint investment or the generation of joint profits;
(2)one of the following applies to them:
(a)they confer on the holder thereof the right to receive consideration derived from the price of an index of securities, commodities or futures contracts or from the price of commodities;
(b)they confer on the holder thereof the right to receive consideration derived from the price of currencies and they are an arrangement of a type determined by the Minister of Finance under section 2(a) of the Principal Law, as worded in section 2 of this Law;
(3)they were held by the public on the eve of the commencement day.
(b)Notwithstanding the provisions of section 2(a) of the Principal Law, as worded in section 2 of this Law, and of section 35a1 of the Securities Law, as worded in section 29(2) of this Law, the provisions that applied to exchange-traded notes on the eve of the commencement day shall continue to apply to them from the commencement day until the date to be determined by the Minister of Finance by Order (in this section – the determining date); the Minister may determine, as aforesaid, different dates for different types of exchange-traded notes, provided that the latest of the dates determined by the Minister under this subsection shall not be earlier than the expiry of 75 days from the commencement day. [See Kovetz HaTakanot 5778 No. 8038 of 12.7.2018 p. 2412]
(c)The Chairperson of the Authority shall grant, upon its request, to a company that issued exchange-traded notes on the eve of the commencement day (in this section – the issuing company), to a company that controlled the issuing company on the eve of the commencement day, or to a company controlled by a company that controlled the issuing company, a licence to serve as a fund manager under section 13 of the Principal Law, if the Chairperson was satisfied that the provisions of that section are met in relation to it, and the provisions of subsection (a1) of that section shall not apply in this regard; a request for a licence under this subsection may be submitted to the Chairperson of the Authority within 30 days of the date of publication of this Law; where the company has submitted a request for a licence as aforesaid, it may operate during the period from the determining date until the decision of the Chairperson of the Authority on that request, as a fund manager in respect of units that were exchange-traded notes and became units under subsection (e)(3), and the provisions of the Principal Law applicable to such a fund manager shall apply to it during that period.
(d)The Chairperson of the Authority shall grant, upon its request, to a company that served on the eve of the commencement day as trustee for holders of exchange-traded notes, a licence to serve as a fund trustee under section 9 of the Principal Law, if the Chairperson was satisfied that the provisions of that section are met in relation to it, and the provisions of subsection (a1) of that section shall not apply in this regard; a request for a licence under this subsection may be submitted to the Chairperson of the Authority within 30 days of the date of publication of this Law; where the company has submitted a request for a licence as aforesaid, it may operate during the period from the determining date until the decision of the Chairperson of the Authority on that request, as a trustee for a fund whose units were exchange-traded notes and became units under subsection (e)(3), and the provisions of the Principal Law applicable to such a trustee shall apply to it during that period.
(e)Where a fund agreement has been signed in accordance with the provisions of section 5 of the Principal Law, as worded in section 3 of this Law, in respect of an exchange-traded note, the following provisions shall apply from the determining date:
(1)the trust deed signed in respect of the exchange-traded note under the provisions of Chapter V-A of the Securities Law shall lapse without requiring the consent of the holders of the note therefor, to the extent such consent is required by law, and the cancellation of the obligations of the issuing company or the trustee for holders of the exchange-traded notes that were in force on the eve of the determining date, or their modification, shall not be regarded as harm to the rights of the holders of the exchange-traded notes; however, the lapse of the trust deed shall not derogate from the validity of a right of action that existed for a holder of an exchange-traded note against the trustee on the eve of the determining date;
(2)the assets of the issuing company, to the extent of its obligations to the holders of the exchange-traded notes on the eve of the determining date, shall be regarded as the fund's assets;
(3)
(a)each exchange-traded note shall become a unit of an exchange-traded fund or a unit of an open-ended fund in accordance with the notice of the issuing company as referred to in subsection (h), in a manner to be determined by the Authority, if the conditions determined by the Authority for becoming a unit of that type of fund are met in respect of the exchange-traded note, and if the fund manager has published a prospectus in respect of the change under a permit from the Authority under subsection (m);
(b)exchange-traded notes that became units of an exchange-traded fund under the provisions of sub-paragraph (a), and that on the eve of the determining date were, in accordance with the issue prospectus, dormant notes, shall become dormant units within the meaning of section 57(b) of the Principal Law, as worded in section 12 of this Law.
(f)A fund agreement as referred to in subsection (e) shall be signed between the fund manager or a company that submitted a request to serve as fund manager under subsection (c), and the company that served on the eve of the determining date as trustee for the exchange-traded notes in respect of which the agreement was signed, unless that company notified the fund manager that it does not wish to enter into such an agreement.
(g)The exchange, the exchange clearing house, a distributor, a registration company and any other party that maintains a register of exchange-traded notes shall update the registration of exchange-traded notes that became units of an exchange-traded fund or units of an open-ended fund, under the provisions of subsection (e)(3)(a).
(h)The issuing company shall notify the Authority and the exchange, at least 60 days before the date of signing of a fund agreement as referred to in subsection (e), of its intention that the exchange-traded note shall become a unit of an exchange-traded fund or a unit of an open-ended fund, as referred to in paragraph (3)(a) of that subsection.
(i)The issuing company shall not deduct a conversion commission in respect of the conversion of an exchange-traded note, 30 days before the determining date.
(j)Where a fund agreement as referred to in subsection (e) has not been signed by the determining date, the exchange-traded note shall be redeemed in accordance with the terms of compulsory redemption in the prospectus and the redemption proceeds shall be paid to the holder thereof without deduction of a conversion commission.
(k)Notwithstanding the provisions of section 13(c) of the Principal Law, an employee of the issuing company who, on the eve of the date of publication of this Law, participated in decision-making concerning the management of the investment portfolio of an exchange-traded note, and who does not hold a portfolio manager's licence under the Advisory Law –
(1)may continue to do so at that issuing company, at a related company to that company that has submitted a request to serve as fund manager under subsection (c), or at a fund manager that is a related company to that issuing company; for this purpose, "related company" – as defined in the Securities Law;
(2)may continue to do so at any fund manager with respect to the management of an investment portfolio of a tracking fund, if the employee participated in decision-making as aforesaid at the company for 12 months during the three years preceding the commencement day.
(l)During the period from the commencement day until the latest determining date determined by the Minister under subsection (b) –
(1)the Authority shall not grant a permit to publish a prospectus for the offering of units of an exchange-traded fund;
(2)the Authority shall not grant a permit to publish a prospectus for the issue of exchange-traded notes and no shelf offering report shall be published, including for the purpose of expanding a series of exchange-traded notes.
(m)The Authority may prescribe provisions with respect to the prospectus for the offering of units of a fund and the report that the fund manager shall be required to submit by reason of the conversion of exchange-traded notes into units of a fund, as referred to in subsection (e)(3), and with respect to particulars to be included in such prospectus and report.
(n)The provisions of section 104a(e) of the Principal Law, as worded in section 24(2) of this Law, shall apply to a fund whose units became units of an exchange-traded fund under the provisions of subsection (e)(3)(a), with the following modification: the date on which the units of the fund became units of an exchange-traded fund as aforesaid shall be regarded as the date on which its units were first offered to the public.
(o)A change in the conversion dates of an exchange-traded note does not require the consent of the holders of the note, and shall not be regarded as harm to the rights of the holders of that note, provided that all of the following conditions are met:
(1)the purpose of the change is that the exchange-traded note shall not be considered an arrangement to which the Principal Law applies under the provisions determined by the Minister under section 2(a) of the Principal Law, as worded in section 2 of this Law;
(2)the issuing company gave notice of the change thirty days before the amendment of the trust deed;
(3)during the period from the notice of the issuing company as referred to in paragraph (2) until the date of the change, no conversion commission shall be deducted in respect of the conversion of the note.
(p)Notwithstanding the provisions of this Law, during the period from the commencement day until the end of the two tax years following the tax year in which the commencement day falls (in this subsection – the transitional period), for the purposes of the Income Tax Ordinance [New Version] (hereinafter – the Ordinance), amounts paid from an exchange-traded fund to a unit holder in the exchange-traded fund shall be regarded as if paid by an issuing company to a holder of an exchange-traded note issued by the issuing company.
(q)Notwithstanding the provisions of the Ordinance, where a fund agreement as referred to in subsection (e) has been signed in respect of an exchange-traded note, and it has been determined in the fund agreement that the exchange-traded fund shall be an exempt trust fund, the following provisions shall apply:
(1)the cancellation of an obligation of the issuing company, following the lapse of the trust deed as referred to in subsection (e)(1), shall not be regarded as income in the hands of that company;
(2)the conveyance of the assets of the issuing company to the fund, as referred to in subsection (e)(2), shall not be considered a sale;
(3)the conversion of an exchange-traded note into a unit of a fund as referred to in subsection (e)(3)(a) shall not be considered a sale; for the purpose of calculating the capital gain in the hands of a holder of such a unit, the original price and the date of acquisition of the unit shall be regarded as the original price and the date of acquisition of the exchange-traded note that became that unit;
(4)the balance of the issue expenses shall be allowed as a deduction during the remaining amortisation period for the purpose of determining the taxable income of the fund manager, even if the fund manager is not the issuing company; the balance of the issue expenses shall not be allowed as a deduction as aforesaid for the purpose of determining the taxable income of the issuing company, if it is not the fund manager;
(5)in this subsection –
"issue expenses" – expenses incurred for the purpose of issuing exchange-traded notes that became units of a fund as referred to in subsection (e)(3)(a);
"income" and "taxable income" – as defined in the Ordinance;
"date of acquisition", "original price", "sale", and "exempt trust fund" – as defined in section 88 of the Ordinance;
"balance of the issue expenses" – the issue expenses that have not yet been taken into account for the purpose of calculating the taxable income of the issuing company in accordance with the Ordinance;
"remaining amortisation period" – the period remaining for the amortisation of the balance of the issue expenses for the purpose of determining the taxable income of the fund manager in accordance with the provisions of the Ordinance.
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