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Israel Company Law 1999

 

Miss Sahara Ozer, will attend to you (in English)
at Phone No. +972 3 546 88 88

 

In case of emergency, call Gabriel Hanner
at his cellular: +972 50 552 33 33

 

Companies Law 1999

Part II: Foundation of a Company

 

Chapter 1: Incorporation

 

Article A: Right of Incorporation

 

2. Any person may found a company, provided that none of the purposes of the company is illegal, is immoral or contrary to public policy.

The right to incorporate

3. A company can have a single shareholder.

One-person company

Article B: Legal Personality

 

4. A company shall be a legal personality having capacity for any right, duty or act consistent with its character and nature as an incorporated body.

Legal personalityof a company

5. A company shall exist from the date of its incorporation as set out in its certificate of incorporation, until its incorporation is ended upon its dissolution.

Existence of company

6. (a) Lifting the corporate veil shall take place in any one of the following ways:

Lifting the corporate veil

(1) attribution of rights and obligations of the company to one of its shareholders;

 

(2) attribution of qualities, rights or obligations of a shareholder to the company.

 

(b) Notwithstanding the provisions of section 4, the court may lift the corporate veil if a condition relating thereto is prescribed under any enactment, or if it is just and right in the circumstances of the case to do so, or if the conditions prescribed in subsection (c) prevail:

 

(c) The court hearing a proceeding against a company may, in exceptional cases and for special reasons, lift the corporate veil if any one of the following conditions prevails:

 

(1) the use of the separate legal personality of the company is intended to frustrate the intent of any law or to defraud or discriminate against any person;

 

(2) in the circumstances of the case, it is just and right to do so, taking into account the fact that there was a reasonable basis for presuming that the management of the company’s affairs was not in the company’s best interest and that it involved the taking of an unreasonable risk in respect of the company’s ability to pay its debts.

 

(d) The lifting of the veil in order to attribute the debts of the company to one of its shareholders shall be effected while taking into account the company’s ability to pay its debts.

 

(e) Nothing in the provisions of this section shall prevent a court from granting other remedies, including the suspension of the rights of a certain shareholder in the company from being paid his debt until the company fulfilled all of its other undertakings.

 

7. Where the court has ordered that the debts of the company are to be attributed to one of its shareholders under the provisions of section 6(c), or to one of its office holders under the provisions of section 54(b), the court may order that during such period as it may determine, which period shall be no greater than five years, such person may not be a director or general manager of a company nor be involved, directly or indirectly, in the founding or management of a company.

Restriction of employment

Article C: Establishment and Registration of a Company

 

8. A person seeking to register a company shall submit an application to the Registrar in the form prescribed by the Minister, to which shall be attached:

Application for registration

(1) a copy of the articles of association;

 

(2) a declaration by the first directors that they are willing to serve as directors, to be prescribed by the Minister.

 

9. (a) A person wishing to register a company shall pay a fee (hereinafter the “registration fee”) on submission of the application.

Fees

(b) A company shall pay an annual fee every year.

 

10. (a) The Registrar shall register a company if he considers that all the requirements of this Law in respect of registration, and any matter that is a precondition therefor, have been fulfilled.

Certificate of incorporation

(b) The Registrar shall give every company a registration number, as provided in section 38(c), and shall enter it on the certificate of registration.

 

(c) On registration, the Registrar shall deliver to the company a certificate of registration.

 

(d) A certificate of registration delivered to a company shall serve as conclusive evidence that all of the requirements under this Law regarding registration, and any matter that is a condition thereof, have been fulfilled.

 

(e) Nothing in the provisions of subsection (d) shall remedy any fault in the articles of association or preclude the need to remedy such fault.

 

Article D: Purpose of Company

 

11. (a) The purpose of a company shall be to operate in accordance with business considerations in realizing its profits, and within the scope of such considerations, the interests of its creditors, its employees and the public; may inter alia be taken into account; similarly, the company may donate a reasonable sum for a proper object, even if such donation is not within the scope of business considerations as aforesaid, if a provision for such is laid down in the articles of association.

Purpose of company

(b) The provisions of subsection (a) shall not apply to a company the articles of association of which provide that it was established for public purposes only, and such articles of association prohibit the distribution of profits to shareholders.

 

Article E: Acts Performed by a Promoter

 

12. (a) A company may approve the act of a promoter performed on behalf of or in place of the company prior to its incorporation.

Approval of act

(b) Approval ex post facto shall be regarded as authorization abinitio, provided that no right acquired by any other person (in this Article “a third party”) bona fide for value prior to the approval, is prejudiced.

 

13. (a) Where a third party knows, at the time of an act referred to in section 12, of the existence of a promotion, such party may regard the promoter as his opposite number or may withdraw from the act, and claim damages from the promoter, in any one of the following events:

Status of a third party regarding a promotion

(1) the company did not ratify the act within a year of the date of its being performed;

 

(2) the circumstances show that the company is not likely to become incorporated, provided that the third party has so notified the promoter thirty days in advance;

 

(3) the company did not ratify the act within thirty days of the date on which the third party so required.

 

(b) Where the company has ratified the act, the promoter shall not have any rights or obligations in respect of it.

 

(c) The promoter and the third party may contract out of the provisions of this section.

 

14. Where the third party did not know of the existence of the promotion at the time of the act, the following provisions shall apply:

Lack of awareness of promotion

(1) the promoter’s act shall oblige or benefit the promoter as the case may be;

 

(2) once a company is incorporated, it may ratify the act, provided that such ratification is not inconsistent with the essence of the act, its conditions or the circumstances of the matter; where the company ratifies an act, the promoter’s act shall bind both the company and the promoter, jointly and severally, and shall benefit the company alone.

 

Read about Chapter 2: Articles of Association

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Miss Sahara Ozer, will attend to you (in English)
at Phone No. +972 3 546 88 88

 

In case of emergency, call Gabriel Hanner
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