Dear clients and friends,
On 15 February 2016 the Knesset (the Israeli parliament) passed Amendment No. 27 to the Israeli Companies Law, 1999. The changes introduced in this amendment are relevant to companies whose securities are publicly traded, with certain changes being particularly relevant to Israeli companies whose shares are listed for trade (either exclusively or through dual listing) on non-Israeli stock exchanges.
The following is a summary of the main changes brought about by this recent amendment:
- An Audit Committee may also serve as a Compensation Committee: A company’s Audit Committee whose composition meets the composition requirements applicable to Compensation Committee may serve as the company’s Compensation Committee.
- Change to majority required to authorise the chairman of the board to serve as the company’s CEO: The majority required to enable a chairman of a board of a company to serve as its CEO was relaxed from at least two thirds of shares not held by the controlling shareholders to at least one half of such shares (provided that not more than 2% of non-controlling shares do not object).
- Non-Israeli external directors: A company that has shares or bonds that were publicly offered, or that are listed on a stock exchange, outside of Israel, may appoint non-Israeli external directors. Previously, the language of this provision suggested that the number of non-Israeli external directors was limited to one. In addition, the Minister of Justice was granted authority to determine other types of companies that may appoint non-Israeli external directors.
- Continuity of service of external directors: An external director on the board of a private company whose bonds were publicly offered or listed, and that subsequently offered or listed its equity securities, may continue to serve as an external director until the end of such director’s original term of appointment.
This publication provides general information and should not be used or taken as legal advice for specific situations, which depend on the evaluation of precise factual circumstances.