Client updates

There have been cases where bonuses have been paid by a controlling shareholder of a public company out of his own pocket to officers as remuneration for their work in the company. This raises the question as to whether a controlling shareholder is allowed to personally guarantee additional remuneration to officers of the company that is inconsistent with the company’s remuneration policy.

An amendment to the Securities Regulations (Periodic and Immediate Reports) was promulgated in March 2017, whereby small reporting corporations shall be able to publish their financial statements on a bi-annual basis, provided that they have not issued bonds that are being held by the public. In this regard, a “small corporation” is defined in the said regulations.

The Constitution, Law and Justice Committee recently approved the Privacy Protection Regulations (Data Security), 5767-2017, which enacts new and comprehensive norms for entities that manage or hold databases regarding data security procedures. In practice, these regulations affect many entities in the Israeli marketplace, from small businesses managing client information databases to large corporations.

The Israeli District Court of Tel Aviv ruled against global food giant, Nestle, and its subsidiary Nespresso in a claim filed by them in Israel against Espresso Club, an Israeli company, on the grounds of alleged copyright infringement, trademark violations, unfair competition and damage to Nespresso’s reputation.

The subject of discrimination in the labor market in general, and the subject of ageism in particular, has lately become a hot topic in the public discourse. A recent ruling handed down by the Regional Labor Court in Tel-Aviv in the Bat Sheva Simchi vs. Maabarot Products Ltd. case addressed the issue of age discrimination.

A significant precedent was handed down recently by the Israeli Supreme Court on the subject of the judicial audit that should be performed in relation to companies’ business resolutions.

The judgment officially adopts the Business Judgment Rule prescribed in Israeli law with regard to the auditing standard that should be applied to board resolutions. The judgment further prescribes that it is also warranted to adopt the Enhanced Scrutiny Rule under circumstances when the Business Judgment Rule does not provide an adequate solution. The judgment also engages in subjects not yet addressed by the court, including issues pertaining to dividend distributions, leveraged buyouts, officers’ duties in a company and the relation between them.

Within the scope of a new directive published recently by the database registrar at the Israeli Law, Information and Technology Authority, entities, such as service-providers, that retain recordings of telephone conversations or chat correspondence with their customers will be forced to enable their customers (the subjects of the information) to also access information of this type. This according to the right of access prescribed in the Privacy Protection Law and the regulations instituted by virtue thereof.

Anyone who followed the financial press in Israel In the recent months would have realized that the Israel Securities Authority is on the war path against the binary option industry in Israel, and has every intention of closing it down. According to the Chairman of the ISA, Prof. Shmuel Houser, binary options are very similar to gambling, and often may involve fraudulent business practices intended to deceive the unaware investing public. 

The Israel Antitrust Authority (‘’IAA’’) has announced its intention to impose a financial sanction in the sum of NIS 25,640,000 on Bitan Wines, due to its violation of the terms of the merger between Bitan Wines and the Mega supermarket chain.

The Tel Aviv District Court approved an action as a class action filed by the minority shareholders of Delek Energy Systems Ltd. against its controlling shareholder and officers of the company.

The Antitrust Authority published for public comments a new guidelines draft on the subject of information-sharing between competitors for the purpose of contending with cyber threats.

Despite the growing sensitivity to violations of the competition laws and the uptrend in the imposition of stricter penalties by the authorities in respect thereof, business managers and consumers who have fallen victims to competition-law offenses in Israel hesitant in instituting civil proceedings against offenders.

The Israel Tax Authority (“ITA”) is promoting legislation that will require foreign companies not subject to the Israeli tax regime today to report and even pay tax in Israel.

For the first time, social NPO’s can enjoy attractive, convenient loan terms guaranteed by the State for funding an investment or working capital in the NPO, and without providing a personal guarantee.

Last week, the Israel Securities Authority published draft legislation for public comments that will permit corporations to obtain loans through crowdfunding with an exemption from the prospectus requirement.

The Israel Tax Authority published a draft  circular on taxation of virtual currencies (bitcoins and the like). According to the Draft, the ITA’s position is that virtual currencies should be deemed “assets” and not as currency or foreign currency or even as financial instruments.

The new law prescribes that, as of January 1, 2017, every taxpayer must pay tax annually (January through December) for every residential apartment that he owns in excess of two apartments, at the sum defined pursuant to the provisions of the law. The taxpayer will be allowed to choose which of his apartments he deems to be his first two apartments, and which shall be taxable under this law.

A few days ago, the Israeli Antitrust Authority published a draft statement presenting its position with regard to the circumstances under which a supplier will be able to dictate the resale price of its products to its distributor for the next link in the supply chain (Resale Price Maintenance arrangements – RPM), without such an arrangement being considered an illegal restrictive arrangement.

A Supreme Court judgment handed down in December by the Honorable Justice Yoram Danziger ruled that the demand by local planning and building committees that deeds of indemnity be signed is illegal (Bikel Flowers Ltd. vs. the Local Planning and Building Committee – Rishon Letsiyon).

Further to the recent hearing held in October 2016 (see our clients update dated 01 December 2016), the Electricity Authority published on 19 December 2016, a decision detailing the main principles of the upcoming competitive process for the construction of Solar Power Plants in Israel, with a capacity of up to 1,000 MW.