By Amit Acco, Partner |

The licensing of a Construction company Is crucial for any construction company to operate in Israel. A contractor in classification C5 is a contractor is with the highest construction capacity.

The registration of construction is a gradual one, meaning that a contractor can ask for his classification to be raised from C1 to C2 up to C5, but this by itself takes not less than 5 years.

Another option is to buy a company that has a C5 classification and then in practice, the purchasing company instantly becomes the owner of a company with a C5 and he can perform work with an unlimited financial scope. The disadvantage of this option is that the process of buying a company with a C5 is an extremely complex process and the company has to meet a great many conditions that the Registrar of Contractors sets in order to qualify the work of the company with the higher classification. Also, although the buyer becomes the owner of a C5 very quickly, the buying process ends after many, many years.

To determine the correct process for application, there is also a need to specify the exact type of license that is required, namely Infostructure or building. We also need to know if the company that wishes to register is a Parent company or another company already registered as a C5 contractor. In such an exception, we can expedite the process to obtain C5 for the parent company.

Scenario To Be Aware Of – Possible Violations

Some contractors do not meet the required constructor criteria or are not registered in the contractor’s register. In recent years, the Registrar of Contractors puts more emphasis on registration compliance, and in some cases, when there was a concern that work is being carried out in violation of the law, the registrar imposes administrative work stoppage orders, which often carry severe losses.

Another undesirable phenomenon is contractors who are registered in the contractor register, however, their branch registration or financial classification does not match the work they actually perform. This may violate contractor registration regulations. In such cases, the registrar of contractors has the authority to apply sanctions against that contractor.

Another optional violation may take place in case the subsidiary company is relying on the parent company contractor registration. When a condition ceased to exist in the parent company, the Contractor Registrar may lower the subsidiary’s classification, on the grounds that the condition due to which the parent company received the special classification ceased to exist. In such an event, the registrar normally turns to the subsidiary company, and requests to present data and references that prove the independent performance of the subsidiary company. Only after receiving the data related to the subsidiary, the Contractor’s Registrar will exercise his discretion to decide whether to leave the classification intact or to lower it.

According to the law on the registration of contractors, the Contractor Registrar is obliged to consult an advisory committee, which consists of experts in the field of engineering before making a decision regarding a particular company registration.  In some cases where the committee or the registrar decides to summon the contractor to be present in front of the committee (for registration or for grade (branch) classification). The Contractor Registrar may also summon the contractor to discuss possible disciplinary violations or safety deficiencies. We recommend being represented by lawyers on these committees, and being well supported by both legal and engineering advice and knowledge.

Kan-Tor & Acco is well experienced in this legal field of constructors registration in Israel and can provide your company with the best legal service and advice.