Israeli Corporations Authority to Begin Examining Family Ties and Conflicts of Interest in Amutot and PBCs

The Israeli Corporations Authority has announced that, in the coming period, it will begin a dedicated review concerning family ties and conflicts of interest in amutot and public benefit companies (PBCs).

This review will examine amutot and PBCs’ compliance with the provisions of the Amutot Law and the Registrar of Amutot’s directive regarding family ties and conflicts of interest.

The purpose of these examinations is to ensure that amutot operate with transparency, objectivity, and loyalty solely to the interests of their organizations, while avoiding conflicts of interest and improper influence arising from family relationships.

According to the announcement, the review will focus on two principal areas: family ties among position holders and the employment and remuneration of relatives.

Family ties among position holders

The Corporations Authority’s announcement states that amutot and PBCs should avoid family relationships within their organizations’ management, control, and audit functions, as well as family ties between position holders  and parties that have material influence over the organizations’ operations.

The announcement further states that the review will examine whether sufficient separation exists between officers responsible for managing an organization’s affairs and audit executives charged with overseeing the activities of the organization and its institutions. To this end, it will review family relationships among executive board members, audit committee members or other auditing bodies, officers, authorized signatories, and other control functionaries.

Employment and remuneration of relatives

The announcement emphasizes that employing relatives of executive board members, audit committee members, or other key position holders as officers may create conflicts of interest between an officer’s duty to act solely in the best interests of the organization, including supervising employee conduct, and the officer’s family obligations. Accordingly, the review will examine amutot and PBCs’ compliance with the relevant directives, particularly how they employ relatives.

Beyond its substantive content, the Israeli Corporations Authority’s announcement also conveys a clear regulatory message. It serves as advance notice to amutot and PBCs, providing them with a defined time frame to conduct a self-assessment and address any deficiencies before the dedicated review begins.

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Adv. Sagi Gross, a partner in the Corporate Department and head of Barnea Jaffa Lande’s NGO practice, is available to provide guidance and answer any relevant questions. Our firm specializes in representing amutot (nonprofit organizations), including third-sector organizations, public benefit companies, endowments, etc.