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Remuneration of Office Holders in Financial Corporations (Special Approval and Non-Deductibility of Exceptional Remuneration for Tax Purposes) Law, 5776-2016

חוק תגמול לנושאי משרה בתאגידים פיננסיים (אישור מיוחד ואי-התרת הוצאה לצורכי מס בשל תגמול חריג), תשע"ו-2016

Published: 2016-04-12Consolidated Hebrew text as of 2026-07-30 · Last amended 2026-03-31✓ Amendment status checked against the Knesset legislation record on 2026-09-28
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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.

Definitions§

1.

In this Law –

"means of control" and "control" – as defined in the Banking (Licensing) Law;

"financial body" – any of the following:

(1)an institutional body as defined in the Insurance Supervision Law;
(2)a company whose purpose is the issuance of index products as defined in the Regulation of Practice Law;
(3)a manager of a joint investment fund in trust as defined in the Joint Investments in Trust Law, 5754-1994;
(4)a portfolio manager as defined in the Regulation of Practice Law;
(5)a banking corporation as defined in the Banking (Licensing) Law, except for a small bank as defined in the Banking (Licensing) Law, 5741-1981, in respect of which seven years have not yet elapsed from the date on which it became the holder of a bank licence as defined in that Law or from the date of commencement of the Law for the Promotion of Competition in the Banking Market (Legislative Amendments), 5786-2026, whichever is later;
(6)any other body providing financial services, as designated by the Minister of Finance by Order, with the approval of the Finance Committee of the Knesset;

"Banking (Licensing) Law" – the Banking (Licensing) Law, 5741-1981;

"Companies Law" – the Companies Law, 5759-1999;

"Regulation of Practice Law" – the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Practice Law, 5755-1995;

"Insurance Supervision Law" – the Supervision of Financial Services (Insurance) Law, 5741-1981;

"generally accepted accounting principles" – the accounting standards applicable to the corporation under law, and in the absence of standards applicable to the corporation under law – accounting standards determined by the Israeli Accounting Standards Board;

"senior office holder" – as defined in section 37(d) of the Securities Law, 5728-1968;

"salary" – including ancillary conditions of salary, among them the provision of a vehicle, telephone, social benefits, allocations on account of termination of the employer-employee relationship, and all income imputed to salary in respect of a component granted to an employee;

"financial corporation" – a financial body or a controlling corporation, except for any of the following:

(1)a person who has received a foreign bank licence under section 4(a)(2) of the Banking (Licensing) Law;
(2)a person who has received a foreign insurer licence under section 15(a)(2) of the Insurance Supervision Law;
(3)a foreign portfolio manager who is a foreign practitioner as defined in section 10a of the Regulation of Practice Law;
(4)a foreign fund manager as defined in section 113a of the Joint Investments in Trust Law, 5754-1994, who has received a permit from the Securities Authority to offer units in Israel as referred to in section 113b of that Law;
(5)any other foreign financial corporation designated by the Minister of Finance by Order, with the approval of the Finance Committee of the Knesset;

"related corporation" of a financial corporation – any of the following:

(1)in respect of a financial corporation that is a financial body –
(a)a corporation controlled by the financial body;
(b)the controlling corporation of the financial body;
(c)another financial body whose controlling corporation is the controlling corporation of the financial body, as well as corporations controlled by it;
(2)in respect of a financial corporation that is a controlling corporation which is not a financial body – all the financial bodies of which it is the controlling corporation, as well as corporations controlled by them;

"controlling corporation" of a financial body – a corporation in which all of the following conditions are met:

(1)it controls the financial body;
(2)it holds 30 per cent or more of a particular class of means of control in the financial body that it controls as referred to in paragraph (1);
(3)more than half of all its assets are means of control in financial bodies that it controls;

"remuneration" – including a commitment to provide remuneration, whether directly or indirectly, and including a sum of money and anything of monetary value, salary, grant, management fees, consultation fees, lease fees, commission, a benefit in the form of interest, share-based payment, retirement remuneration that is not a pension payment and is not statutory severance pay, a benefit in kind, and any other benefit, all excluding dividend.

Approval of an Engagement for the Grant of Remuneration§

2.
(a)An engagement of a financial corporation with a senior office holder or employee in the financial corporation, directly or indirectly, in respect of the terms of the senior office holder's or employee's tenure or employment, which includes the grant of remuneration whose projected expenditure, as calculated at the date of approval in accordance with generally accepted accounting principles, is expected to exceed NIS 2,500,000 per year (hereinafter – the engagement amount), requires the approval of the following, in this order:
(1)the remuneration committee of the financial corporation, and in the absence of a remuneration committee – the audit committee of the financial corporation, if such a committee exists;
(2)the board of directors of the financial corporation, and in a financial corporation in respect of which there is an obligation to appoint external directors or independent directors – also the approval of a majority of the external directors or independent directors, as the case may be;
(3)in a financial corporation that is a public company as defined in the Companies Law – the approval of the general meeting in accordance with the provisions of section 267a(b) of that Law, with the necessary modifications.
(b)An engagement as referred to in subsection (a) shall not be approved unless the ratio between the projected expenditure, on the basis of a full-time position, in respect of the remuneration referred to in subsection (a) and the expenditure in respect of the lowest remuneration, on the basis of a full-time position, paid by the financial corporation, directly or indirectly, to an employee of the corporation, including an employee of a manpower contractor in respect of whom the financial corporation is the actual employer, and an employee of a service contractor employed in providing services to the financial corporation, in the year preceding the date of the engagement, is less than 35; for this purpose, "manpower contractor", "service contractor" and "actual employer" – as defined in the Employment of Employees by Manpower Contractors Law, 5756-1996.
(c)The provisions of section 280 of the Companies Law shall apply, with the necessary modifications, to an engagement of a financial corporation with a senior office holder or employee as referred to in subsection (a) that was not approved in accordance with the provisions of this Section, including where a material defect occurred in the approval process or where the engagement was made in material deviation from the approval.
(d)The engagement amount shall be linked to the Consumer Price Index published by the Central Bureau of Statistics from the date of publication of this Law onwards.

Calculation of Remuneration in Respect of Tenure or Employment in a Group of Companies§

3.

The calculation of the amount of remuneration provided to a senior office holder or an employee in a financial corporation for the purposes of section 2(a) shall include the aggregate of all remuneration paid to that person in connection with his or her tenure or employment both in the financial corporation and in corporations related to the financial corporation.

Amendment of the Income Tax Ordinance – No. 224§

4.

[Indirect amendment of the Income Tax Ordinance [New Version]]

Implementation and Regulations§

5.

The Minister of Finance is charged with the implementation of this Law and may, with the approval of the Finance Committee of the Knesset, make Regulations on any matter relating to its implementation.

Commencement and Application§

6.
(a)The provisions of this Law shall apply to an engagement as referred to in section 2(a) that was approved from the day of publication of this Law (hereinafter – the day of publication) onwards; however, in respect of an engagement as aforesaid that was approved before the day of publication, the provisions of this Law shall apply from the end of six months from the day of publication, and it shall require approval under the said section until that date.
(b)Notwithstanding the provisions of subsection (a), the commencement of sections 32(17) and 141b of the Income Tax Ordinance [New Version], as worded in section 4 of this Law, shall be as set out below, and they shall apply in respect of salary costs, as defined in the said section 32(17), borne by a financial corporation from the dates referred to in paragraph (1) or (2), as the case may be:
(1)in respect of an engagement approved before the day of publication – six months from the day of publication, and the payment ceiling, as defined in the said section 32(17), shall be calculated proportionally to the number of months of employment of the senior office holder or employee of the financial corporation;
(2)in respect of an engagement approved after the day of publication – the 3rd of Tevet 5777 (1 January 2017).

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חוק תגמול לנושאי משרה בתאגידים פיננסיים (אישור מיוחד ואי-התרת הוצאה לצורכי מס בשל תגמול חריג), תשע"ו-2016

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