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Israel Company Formation

Recently, the government articulated a desire to decrease its participation in the private sector. Consequently, the Israeli government decided on a new policy, the essential aim of which being the privatisation of many of the government-held enterprises.

Therefore, it is not likely that the government will look to be involved in the ownership or participation of an entity. However, over the past ten years, in an attempt to heighten the economy and facilitate development in the private and public sectors, a clever system for promoting joint collaboration with companies engaging in both of these sectors was adopted to conduct specific projects in the area of infrastructure.

Incorporation in Israel follows this 5-stage process:

• Obtain the company registration documents, which need to be certified by a lawyer. This takes 3 days and costs approximately 1600 NIS.
• Submit the documents with the registrar of companies. This takes a day and costs approximately 2200 plus 2 NIS for each page in the Articles of Association.
• Register for taxes with the Ministry of Finance. This takes 15 days.
• Register for VAT with the Ministry of Finance. This also takes a day.
• Register for National Insurance. This takes 14 days.

A company in Israel can be formulated in the following ways.

How do I register my business?

A few important documents need to be given to the Registrar of Companies in order to process the registration of a company. The documents, some of which must be submitted in Hebrew, are listed below:

• A copy of the articles of association of the company, which will detail particulars such as: the name of the company; the aims of the company; specifics relating to the registered share capital; and those relating to limitation of liability
• An application to the Registrar of Companies to register the company, signed by the business' shareholder(s)
• A written statement by the directors, including a declaration of their willingness to act in such role
• A written declaration by the shareholder(s) stating that there is no licit limitations preventing such shareholder(s) from incorporating the company
• In the case of a shareholder incorporated overseas, a certified copy of such shareholder's documents of incorporation
• For a director who is not an Israeli resident, a certified copy of the personal details of such director as appearing on the relevant pages of their passport

Remember that it is possible to entirely evade the registration procedure outlined above: as an investor, you may decide to purchase a business that has already been established in Israel.

Limited Liability Company

This is the usual structure through which business is conducted in Israel.

Generally, under the guidelines of the Companies Law, every person (it is allowable for a business to have a sole shareholder) has the right to incorporate a company, given that the aims of it do not contradict the guidelines of the Companies Law, are not immoral, and do not conflict with public / government policy.

A business is recognised as extant from the date of its incorporation and will be deemed extinct with the company being wound up (whether voluntarily or compulsorily).

Two main types of limited liability companies which may be incorporated under the Companies Law are

Partnerships

Overseas partnerships may run in Israel, provided that all necessary information with respect to the partnership is given to the Registrar of Partnerships, including particulars of the partners, and of at least one Israeli resident who is authorised to accept legal notices on the partnership's behalf. Generally, registration of a foreign partnership may be done in a similar fashion to that of an Israeli partnership.

A Private Company

Defined in the Companies Law as a company not being a public company.

A private company consists of two or three main orders:

• The General Meeting that has the authority to alter business articles of association and, commonly, the power to delegate directors
• Board of Directors, which must have a minimum of one director and whose main purpose is to devise the company policy
• An optional general manager who is responsible for the daily operations and business affairs; under the guidance of the Board of Directors

A Public Company

A company whose shares are listed for trading on the stock exchange, or which were offered to the public.

Offshore Companies

By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
  
• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
  
• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
  
• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
  

Characteristics of an offshore company:

• Memorandum and Articles of Association
  
• Certificate of Incorporation
  
• Registered Office/Agent
  
• Shareholders / Members
  
• Directors / Managers
  
• Company secretary
  
• Statutory Register
  
• Bookkeeping
  

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

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