As an accompanying service, we offer our clients professional legal services in the commercial field from an experienced lawyer in litigation and drafting agreements. The services we provide include:
- Mergers & Acquisitions
- Transaction Support
- Legal Opinions
- Forms of Business Organization
- Commercial Litigation
- Commercial Agreements
- Joint Ventures and Partnering
- Employment Law
- Arbitrations
- Trusts
- Fintech and Banking Law
- Enforcement of foreign judgments in Israel
Below you will find a concise overview of relevant aspects of Israeli law, in case you are interested in business activity in Israel, business relationship with Israeli companies or required to obtain legal services in Israel.
A. Business and Investment Structures in Israel
There are several common forms of association for the purpose of business activity or Joint Ventures in Israel:
An Israeli company (Ltd)
The Israeli Companies Law, 1999 does not limit the maximum of nonresidents' holdings in Israeli company shares and there are also no thin capitalization rules (no minimum capital required(.
Establishing an Israeli company is a simple and fast process. Articles of Association must be submitted with the application form and an Israeli lawyer is require to verify the registration documents. The Israeli Companies Law, 1999 does not require an Israeli director, however, in order to open ITA (Israeli Tax Authority) files, at least one representative must be an Israeli resident or work visa holder.
The company must maintain a registered office in Israel and keep its statutory documents in that office as well as to submit annual audited financial statements.
A Branch of a Foreign Company in Israel
The process and requirements for registering a foreign company branch are similar to the above, but the following documents are required:
Certificate of Incorporation and a notarized translation into Hebrew, Articles of Association and a notary translation into Hebrew, Certificate of Status from the country of origin, Power of attorney for an Israeli citizen and the company’s list of directors.
The Branch is required to submit its own audited financial statements as well as that of the foreign company.
An Israeli Partnership
An Israeli partnership can be limited (with at least one general partner) or general. A general partnership does not have to be registered in the Israeli Partnerships Register.
The number of general partners may not exceed twenty and a general partner in a limited partnership can be a limited company )Ltd(.
A foreign corporation wishing to participate in a registered general partnership established in Israel must submit a copy of the Certificate of Incorporation in the country of incorporation, Certificate of Status from the country of origin, and notarized translations into Hebrew or English (an individual must submit a copy of his passport).
Foreign Partnership in Israel
A foreign partnership that wishes to register in Israel (as a limited or general partnership) must submit Certificate of Incorporation in the country of incorporation, Certificate of Status from the country of origin, and notarized translations into Hebrew or English. The application must also include the details of the general partners, the managing partners and the name and address of an Israeli resident authorized to receive documents. In a case of a limited partnership, it is also necessary to attach the partnership regulations and specify the limited partners details, means of payment and scope of liability of each limited partner.
Hedge Funds, Private Equity and Venture Capital Funds in Israel
Whether it is an Israeli or foreign partnership, the Israeli Securities Law has territorial applicability and it prohibits the offer and sale of Securities in Israel (to non-accredited investors) without prospectus. An exception to this, is a proposal or sale for non-accredited investors whose number does not exceed 35 over a 12-month period. With regard to Hedge Funds (only) the position of the Israel Securities Authority is that the above exception will not apply in case the number of non-accredited investors exceeds 50. An accredited investor is defined as one who holds NIS 8 million in cash, deposits or securities or who has annual income of NIS 1.2 million in each of the past two years.
B. Contracts in Israel
The Israeli Contracts Law (General Part), 1973, is mainly based on the English common law (as well as on continental codes and Jewish law), but there are some points to note: A contract may be made orally by acceptance; The Israeli law does not require any consideration and recognizes a gift contract; The law also explicitly stipulates duty of good faith in both the negotiations stage and the contract term and in a broad manner; The plaintiff can choose between the enforcement remedy (if possible) and compensation; A liability that a person undertook in a contract for the benefit of third party grants the beneficiary the right to demand the fulfillment of the obligation, and the result of an illegal contract is cancellation and restitution (and in exceptional cases even enforcement).
It is allowed to include choice of law clause in agreements with a foreign company. However, in a "Standard Form Contract" such provision shall be deemed to be prejudicial and voidable (in Israel) unless proven otherwise.
C. Arbitration and Mediation in Israel
Israel is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and regulations have been implemented accordingly. Israel has not adopted the wording of the UNCITRAL Model Law on International Commercial Arbitration, and, among other things, the Israeli arbitration law does not allow the arbitrator to decide on the existence and validity of the arbitration agreement, nor can temporary remedies be enforced if given by the arbitrator.
Israel has recently signed the Singapore Convention on Mediation so that mediation agreements in international commercial disputes will also be enforceable soon.
D. Litigation in Israel
Israeli courts apply the two-step forum-non-conveniens doctrine (FNC) to decide if another forum abroad is more appropriate. Israel is also a signatory to the Hague Convention on civil procedure of 1 March 1954 and thus, inter alia, no security for court fees may be imposed by reason of foreign nationality, or of lack of domicile or residence in Israel if the convention applies. Nevertheless, it is important to note that the default in Israel for any plaintiff company is to secure legal costs unless the company's financial strength is proven (for a plaintiff who is an individual the criterion is much easier).
According to the Israeli law, foreign judgments in civil matters are enforceable in Israel subject to several conditions the main of which are the requirement of reciprocity (ie there is no impediment to enforce Israeli judgments in the country where the judgment is given).
You are welcome to contact us for further details and professional service on any of the above issues.
