Lawyers in Israel - Home > About Our Law Firm >
Israel Company Registration >> List of Company Law Articles >> Israel Company Law

Israel Company Law 1999


Miss Sahara Kaplan, 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

Chapter 2: Preservation and Distribution of Capital

Article A: Permitted Distribution


301. (a) A company may only effect a distribution in accordance with the provisions of this Chapter; however, a company may undertake in its articles of association or in a contract not to effect distribution under restrictions additional to the provisions of this Chapter,.

(b) A distribution in contravention of the provisions of this Chapter shall be a prohibited distribution.

No contracting out

302. (a) A company may effect a distribution of its profits (hereinafter “the profit criterion”), provided that there is no reasonable suspicion that such distribution might deprive the company of its ability to pay its existing and anticipated debts when the time comes for so paying (hereinafter “the ability to pay criterion”).

(b) In this section:

“profits” for the purpose of the profit criterion – the balance of surplus or the surplus, accumulated over the past two years, whichever is the greater, in accordance with the latest adjusted financial reports, audited or surveyed, prepared by the company, provided that the date in respect of which the reports were prepared is no earlier than six months prior to the date of distribution;

“adjusted financial reports” – financial reports adjusted to the index, or financial reports which replace or will replace such reports, in accordance with accepted accounting procedures;

“surplus” – sums included in a company’s equity originating from the net profit of the company, as determined according to accepted accounting practice, and other sums included in the equity under accepted accounting practice other than share capital or premiums that are to be considered surplus, as prescribed by the Minister.

(c) The Minister may lay down provisions regarding presumptions as to the fulfillment by a company of the conditions of the ability to pay criterion, and exemptions or alleviations regarding adjustment of the financial reports.

Permitted distribution

303. (a) The court may, on the application of a company, allow it to effect a distribution in respect of which the profit criterion is not fulfilled, provided that the court is convinced that there is no reasonable suspicion that such distribution might prevent the company from being able to pay its existing and anticipated debts when the time comes for such payment.

(b) A company shall notify its creditors of the submission of an application to the court as provided in subsection (a), in the manner prescribed by the Minister.

(c) A creditor may apply to the court and oppose the application of a company to permit it to effect a distribution.

(d) The court may, after having given the opposing creditors the opportunity to put their case, approve the company’s application, in whole or in part, reject it or make the approval of it conditional.

Distribution with consent of court

304. (a) Where a company decides to allot shares with a nominal value for consideration of less than their nominal value, including bonus shares, it must convert part of its profits from share premiums or from any other source including its own equity set out in its latest financial reports into share capital, as defined in section 302(b), in the sum equal to the difference between the nominal value and the actual consideration.

(b) The court may, on the application of a company, permit it to effect an allotment of shares for consideration of less than the nominal value of the shares, other than in accordance with subsection (a), on such conditions as it may prescribe.

Allotment of shares at less than nominal value

305. The Minister may prescribe provisions for the implementation of this Chapter.


Miss Sahara Kaplan, 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

Article B: Dividend
Read more


Israel Lawyers - Home


Company Registration

Company Registration
Nominee Shareholder
Nominee Director
Incorporate with a Nominee Director
Nominee Director Duty
Foreign Company Options
Register foreign company in Israel
Israel Options Comparison
Declaration of Trust
Deed of Trust
Foreign Shareholder
Corporate Foreign Shareholder
Israeli Company F.A.Q
Israel Company Law
Search a company
by name or registered number
List of Companies
List of Israeli public companies

Israel Company Law

Interpretation of the law
Foundation of a Company
Right of Incorporation
Legal Personality
Establishment and Registration of a Company
Purpose of Company
Acts Performed by a Promoter
Articles of Association
Contents of Articles and their Alteration
Name of the Company
Objects of the Company
Registered Share Capital and Distribution Thereof
Limitation of Liability
The Registrar of Companies
The Companies Registry
Keeping of Registers
Structure of the Company
Organs of the Company
Powers and the Liability for Acts
Division of Powers Among
Principal Organs
Liability of Company for Acts of Organs
Liability of Individuals in an Organ
Avoidance of Unauthorized Acts
The General Meeting
Powers of the General Meeting
Annual General Meeting and
Special General Meeting
Convening and Direction of
General Meeting
General Meeting of a Private Company
Quorum at General Meeting and Chairman of General Meeting
Voting at General Meeting
Voting by Voting Paper and Statement of Position
Minutes of the Meeting
Defects in Convening Meetings
The Board of Directors
Powers of the Board of Directors
Chairman of Board of Directors
Convening of Meetings of Board of Directors
Meetings of the Board of Directors and their Direction
Voting at the Board of Directors
Minutes of Meetings of the Board of Directors
Defects in Convening Meetings of the Board of Directors
Committees of the Board of Directors
Audit Committee
The General Manager
Administration of the Company
Register of Shareholders and Substantial Shareholders
The Registers
Register of Shareholders
Registration of Share Warrant
Register of Shareholders and Shareholders Outside Israel
Reports of Private Companies
Reporting by Public Company
Internal Auditor in a
Public Company
Appointment of Auditor
Ending of Auditor’s
Term of Office
Fees Payable to Auditor
Powers, Duties
and Responsibilities of Auditor
Financial Reports
The Shareholder
The Shareholder and the Share Certificate
Rights and Obligations of Shareholders
Derivative and Class actions
Derivative Action and Derivative Defense
Representative Action
Office Holders in a Company
Directors’ Appointment and Term of Office
Term of Office of Director and Termination thereof
Restrictions on Appointment and Termination of Office
Corporation as a Director
Substitute Director
External Director
Appointment and Dismissal
of Other Office Holders
Duties of Office Holders
Duty of Care
Fiduciary duty
Exemption, Indemnification and Insurance
Rights of Director
Transactions with Interested ies
Capital of the Company
Securities and Transactions Therein
Freedom to Diversify
Registered Share Capital
Issue of Securities
Transfer of Securities
Preservation and Distribution of Capital
Permitted Distribution
Prohibited Distribution
Redeemable Securities
Acquisition of Companies
Special Tender Offer
Forced Sale of Shares
Purchase of Shares of the Minority by Holder of Control
Power to Purchase the Shares of Opposing
in a Private Company
General Provisions
Alteration of Class of Corporation
Foreign Companies
Compromise or Arrangement
and Monetary Sanctions
Monetary Sanctions
A Public Company
Traded Outside Israel

Doing Business in Israel

Israel Company Registration

An Agent in Israel

Israeli Laws

Israel Tax

Israel Real Estate

Litigation in Israel

Agency in Israel

About Our Law Firm

242nd., Ben-Yehuda St. Tel-Aviv, Israel

See map to our offices

Avocat FrançaisEnglish  עברית

Site Map