By Amit Acco, Partner
The Israeli Companies Registrar, operating under the Ministry of Justice, defines a company as a corporation formed and registered in Israel, in accordance with Israeli law.
It is necessary to register the company with the Companies Registrar. While Hebrew and Arabic are the official languages of Israel, in practice, corporate documents in English will generally be accepted by the Registrar. However, the Companies Registrar does require that the Articles of Association be translated into Hebrew as well. Most companies limit the personal liability of their members, usually in the form of shares. In this case, the term “Limited” (or the abbreviation “Ltd.”) must appear as part of the full name of the company.
Private or Public Company
A company may be registered as a “Private Company” or a “Public Company” with securities registered on a Stock Exchange. Both types of companies must present annual reports, including audited financial statements to their shareholders.
A private company, consisting of 1-50 shareholders, and one director, may not offer or sell debentures or shares to the public and its Articles of Incorporation must contain restrictions on the transferability of its shares.
A public company, with a minimum of 7 shareholders, may offer stock or debentures to the public, but only after issuing a prospectus in accordance with the requirements of the ICO and the Securities Law. Also, a public company is obliged to publish an annual report that includes the audited financial statements and directors’ report, all to be filed with the Companies Register where they are available to the public.
A company incorporated overseas may establish a branch or local office in Israel as long as it is registered as a foreign company with the Companies Registrar within a month of its establishment.
If the company uses the term “limited” as part of its name, then it must display its name and the name of the country in which it is incorporated in every invoice, letter, announcement, advertisement or other official publication.
To register, a foreign company must submit all the necessary documents to the Companies Registrar. There is no requirement to publish the financial statements of a private company.
Opening a Business Bank Account
It is necessary to open a commercial bank account through which all company finances will be conducted. When the company opens the account, it is required to present copies of the company’s Articles and Registration Certificate, approved by an accountant or an attorney, as well as an accountant or attorney’s approval of signatory rights for the company.
Work Visas for Foreign Nationals
While it is not a requirement to have an Israeli registered company to be able to apply for an Israeli work visa, many companies prefer to establish an Israeli entity, that will allow them to deduct expenses (as office expenditures, salaries, VAT ). This is a common practice in long-term projects or operations in Israel.
Ministry of Interior regulations does not require that an Israeli-based company will be sponsor applications for B-1 work visa and work permits for foreign experts in Israel, although this is recommended if possible.
In many cases (for example in multinational projects), where there is no Israeli company that is involved (and capable of sponsoring the application), an application for a work permit can be submitted by a foreign company.
Such applications are normally more complicated than normal and require an extra burden of proof regarding the foreign company.