Business
The Companies Law 5759-1999 with strong minority protections
The Companies Law of 1999 replaced the Mandate-era Companies Ordinance and governs incorporation, governance and shareholder remedies. It is notable for strict rules on related-party transactions, mandatory external directors in public companies, and an accessible derivative action.
Key rules
- Jurisdiction — The State of Israel. The Economic Department of the Tel Aviv District Court hears corporate and securities cases.
Governing law
- Companies Law 5759-1999
- Securities Law 5728-1968
- Insolvency and Economic Rehabilitation Law 5778-2018
- Antitrust Law, now the Economic Competition Law 5748-1988
In practice
The Companies Law imposes unusually rigorous approval requirements on transactions with controlling shareholders, requiring approval by a majority of disinterested shareholders, and this has produced an active body of case law in the Economic Department of the Tel Aviv District Court. Public companies must appoint external directors. The derivative action and class action mechanisms are used vigorously by comparison with many jurisdictions. The 2018 Insolvency Law consolidated corporate and personal insolvency and shifted emphasis towards rehabilitation. Incorporation with the Registrar of Companies is straightforward and there is no minimum capital requirement.