The benefits of operating under a license and regulatory regime Value A higher value for the operator, on account of greater certainty to investors and the market in general. “Cleaner” operation is of higher value, even if carries with it smaller revenue.

The Israeli Tax Authority (ITA) published a draft circular concerning the taxation of foreign corporations that derive income from the provision of services via the internet to Israeli residents. Such circular was published due to the need of the ITA to provide an interpretation of the Israeli tax legislation, in respect of income derived from e-commerce, so as to accommodate the substantial e-commerce activities taking place in or via Israel. The current definitions and rules, which relate to terms such as permanent establishment or place of doing business, have been commonly used in respect of brick and mortar businesses, and the need has arisen to provide an interpretation for such terms so as to allow them to appropriately be applied to the digital economy.

An amendment to the Minimum Wage Law was recently promulgated, which will be gradually applied with reference to four periods. The first period begins on April 1, 2015, when the minimum wage is to be updated to NIS 4,650 (gross). The first update must be made in the April 2015 wage, which is payable at the beginning of May 2015. All employers in the economy, including employers who are not employing employees at minimum wage, must specify the minimum wage rate in all pay slips. As a result, pay slips must be revised accordingly. Pursuant to the law, for the purpose of calculating compliance with the minimum wage, base wage/combined wage, cost of living increases and permanent allowances being paid to employees on account of their work must be taken into account. The subsequent minimum wage updates shall be as follows: Ÿ     On April 1, 2016, the wage shall be updated to the higher of NIS 4,650 or 47.5% of the average wage in the economy as it shall be on that date. Ÿ     On July 1, 2016, the wage shall be updated to the higher of the wage during the second period or NIS 4,825. Ÿ     On January 1, 2017, the minimum wage shall be updated to NIS 5,000. If you need additional details or advice regarding specific circumstances, feel free to contact our Labor Law Department.

Recently, Judge Ruth Ronen of the Economic Department of the Tel-Aviv District Court handed down a ruling which related to an issue which is pertinent to virtually every publicly listed company.   When do negotiations reach a point of becoming material information, thereby constituting inside information? The background to this case was that Africa Israel Industries had published a tender offer in 2012 for the purchase of shares in Negev Ceramics, without publicly disclosing that negotiations were being conducted with Olympia, a Canadian company. The Administration Enforcement Committee (established under the Securities Law) had ruled that the publishing of the tender coupled with lack of disclosure constituted insider information. Judge Ronen presided over the appeal against this ruling.   Judge Ronen ruled that the negotiations had indeed reached the point of becoming material information. Her decision was based on the application of the materiality/magnitude test, which weights the probability of the event occurring against the anticipated impact of the event on the company. It is not difficult to see the logic in the assumption that the fact that negotiations are underway might be material information and that therefore, whoever executes transactions with securities while in possession of such information is considered as having made use of insider information. However, it appears that the ISA’s Administrative Enforcement Committee was prepared to go even further and expressed the opinion that the same materiality test for the purpose of ascertaining abuse of insider information should be used for the purpose of ascertaining the application of a reporting obligation. The Committee’s position may be interpreted as deciding that, when negotiations reach the point of becoming material, the Company must issue an appropriate immediate report. Judge Ronen decided that it was unwarranted to examine the correlation between abuse of insider information and a corporation’s general disclosure obligation, within the scope of the petition. However, the critical question remains: Should every public company assume that it is obliged to publish an immediate report every time it conducts negotiations and they reach the level of becoming “material”? Firstly, one must consider whether such a requirement is reasonable and feasible. One must keep in mind two salient points: There is never certainty that negotiations, whether or not material, will eventually lead to an agreement and; the very disclosure that negotiations are underway could thwart the transaction or adversely affect its conditions. Secondly, since negotiations are often a dynamic, lengthy process, it is unreasonable to expect public companies to repetitively perform analyses during the course of negotiations in order to ascertain whether, at any given stage, the correlation between the probability of a successful conclusion of the negotiations and the anticipated impact of the current draft of the agreement, has reached a level of “materiality” that dictates the publication of an immediate report. Even if the conclusion had been that it would be advisable and wise to oblige public companies to publish immediate reports about negotiations, considering the implications and possible repercussions, such an obligation should be clearly and unequivocally defined. For example, the Securities Law prescribes specific provisions regarding insider information. Furthermore, the Securities Regulations include express provisions regarding the imposition of reporting obligations, and require the reporting of any transaction for the purchase of a “material asset.” The Regulations enable the company’s board of directors to delay the reporting under particular circumstances, but do not allow a company to delay reporting in any instance of securities being offered pursuant to a prospectus. In other words, there are circumstances when information about material negotiations must be published: before the execution of a transaction with securities, before the publishing of a tender offer and before the publication of a prospectus, and in relation to purchases of material assets. However, one should not deduce from this that there is a sweeping obligation to publish an immediate report about negotiations, and certainly, it would be advisable to carefully analyze all relevant considerations, such as reasonability and the appropriate legal source before imposing such an obligation.

The Israel Immigration Authority recently published a new, experimental, streamlined procedure for issuance of work visas for foreign experts, allowing the holder to work in Israel for up to 30 days over a 12 month period. Previously, multinational companies that wished to send professionals to Israel to work with their Israeli RD centers or strategic partners for short periods of time were required to apply for and obtain a work permit (from the Ministry of Economy) and then a work visa at an Israeli consulate abroad, all before entering Israel. Under the new procedure, application for a work permit for an expert employee will be expedited, with full processing completed within 6 days in most cases.  Once the work permit is granted, the expert may enter Israel as a tourist, provided that he or she reports to the Immigration Authority within two business days of arrival, where the tourist visa will be converted to a work visa. This new process should lessen the burden on multinationals or non-Israeli acquirers that require their expert employees to supervise operations in Israel, and it allows these companies to send their experts to Israel on an urgent basis.