This article is intended for businesspeople not living in Israel who wish to register a new company in Israel and/or for companies residing outside of Israel that wish to establish a subsidiary in Israel, and/or an attorney representing the above parties.
The challenge
An individual or a company that do not reside in Israel, which is interested in establishing a new company in Israel is liable to run into several problems:
- The Israel Corporations Authority (Registrar of Companies Unit) will accept only original documents signed at source. The documents must be in Hebrew. Any entity wishing to establish a company, in other words the company’s first shareholders and directors, must sign in front of an official body that confirms the signatures. Such an official body can be the overseas Israeli Consul (in the country of residence of the shareholders and/or directors), or an Israeli attorney who is located overseas.
Occasionally the Israeli Consul is situated in a location distant from the shareholders and/or directors, and it is not so easy for them to get there. Additionally, the Consul will not confirm a signature on Hebrew language documents for a person who does not speak or understand Hebrew.
- The Israeli company must have an Israeli address in order to receive official documents. The address must be a physical address and not solely a post office box.
Technical matters that should be taken into account:
- The procedure vis-à-vis the Israel Corporations Authority takes between four days and two weeks.
- In order to register a company whose directors or shareholders are foreign residents, they must attach a copy of their passports.
One of the documents required for establishing a company in Israel is the Articles of Association.
The Articles of Association lays down rules for the company’s conduct (a sort of code of laws in this regard) such as: appointing or dismissing directors, convening of a general assembly of shareholders or directors, company decision-making and more.
These rules have both internal and external significance to the company.
There is internal significance to the company due to the Articles of Association; namely the relationship between shareholders, between shareholders and members of the Board of Directors, and between the directors themselves.
In addition, there is external significance in the relations between the company and third parties.
It is highly important that this document be formulated by an Israeli attorney well-versed in this area.
There are two solutions:
Solution 1:
Based on our experience in dealing with Israeli bureaucracy, we’ve discovered that the simplest and most elegant solution is to establish a company in the name of the attorney who acts as a temporary and short-term trustee on behalf of the client. Then, immediately upon the company’s establishment, the attorney transfers company shares to the client, dismisses the first appointed director (the attorney) and appoints directors on behalf of the client.
Solution 2:
The second option is more complicated: translating the documents into English. The client arrives at the Consul with the documents in both languages and the Consul agrees to confirm the client’s signature on the Hebrew documents that he must sign. The company is still required to supply a physical address in Israel.
Summary
Registering a company in Israel under the ownership of a non-resident or foreign company is definitely possible. However, it must be done while paying attention to the aspects we have mentioned above.
Our firm has vast and significant experience in accompanying the establishment of companies by non-residents or companies whose place of residence is outside of Israel. We routinely accompany these companies in their activity in Israel.
We will be happy to be at your service and provide you with a professional legal consultation and service.
Note:
This article provides general and preliminary information only and should not be construed in any event as legal counseling and/or as a substitute for legal counseling in respect of any case and its circumstances.
The above should not be relied upon without consulting with an Israeli lawyer before taking any action or making any decision. The above is true as of the date of its composition, and its veracity may change from time to time.
Adv. Tali Kessler is a partner at Rechnitz, Kessler & Co. Law Office & Notary engaged in the fields of commercial law, real estate and land taxation.
Distribution and/or duplication and/or photocopying of this document and/or part thereof without permission are prohibited.
