Client updates / Capital Markets

The number of companies with a decentralized ownership structure, i.e., with no controlling shareholder, has been rising in recent years, as has their share of the capital traded on the Tel Aviv Stock Exchange. The recently proposed amendment to the Israeli Companies Law aims to revise the corporate governance regulations specifically applicable to such companies. 

The SEC is expanding the application of US Foreign Corrupt Practices Act provisions. It is commencing law enforcement proceedings against non-American companies operating outside the United States and against actions that merely raise concerns of acts of corruption. Companies with international operations must familiarize themselves with the FCPA’s provisions and prepare accordingly.

Law enforcement authorities in the United States are adopting a policy of lenient law enforcement measures against corporations that cooperate during investigations, document their activities, and implement compliance programs. This policy also applies to Israeli companies operating in the United States.

In order to contend with the meager supply of investment advice or portfolio management services via technological interfaces, the Israel Securities Authority has published a proposed amendment to the directive focusing on two main services: trading signal services and social trading. Both of these services rely on digital media.

The publication of the questionnaire aligns with global trends and reflects the importance of this subject for investors. According to the TASE press release, only 70 companies currently publish full ESG reports.

At the conclusion of a proceeding conducted over about two years, an Israeli court recommended that the class plaintiffs withdraw their actions in light of the legal difficulties and since there is no reasonable possibility that the legal questions will be  ruled in favor of the plaintiffs. The plaintiffs accepted the court’s recommendation, and the court dismissed in limine 66 class actions.

The draft of Israel’s Arrangements Law – Economic Plan for 2023-2024 addresses digital assets extensively for the first time. The draft bill contains a section dedicated to the regulation of digital assets and addresses stablecoins, taxation issues, the banking system, DAOs (decentralized autonomous organizations) and more.

The Israel Securities Authority recently published a proposal for a series of legislative amendments relating to digital (cryptographic) assets, whose implications go beyond the realm of digital assets and do not herald much good news for Israeli crypto ventures.

The Israel Securities Authority is seeking to expand its power. If its draft bill is accepted, this will have far-reaching consequences, as the ISA will have the power to investigate offenses related to fraud, bribery, money laundering, and cryptocurrencies (which the ISA considers to be securities).

Activity in the form of financial decentralization (Decentralized Finance - DeFi) does not exempt from requirements in the field of prevention of money laundering prohibition or compliance with sanctions. It turns out that DeFi is subject to the same "laws of gravity" as projects in the traditional financial industry.

The Israel Securities Authority’s (ISA) new draft amendment to the general permit to offer foreign brokerage services in Israel proposes to obligate permit holders to supervise the activities of marketers on their behalf. For example, permit holders must carry out due diligence examinations of marketers.

The Israeli CMISA published two draft circulars about its intent to tighten the supervision over crypto assets, in the wake of the Celsius crypto meltdown.

Dominant shareholders, holding alone or in concert more than 50% of the voting power in public companies, have traditionally characterized the Israeli capital market. Consequently, Israeli corporate governance rules for public companies have focused on protecting the public of shareholders from the dominant powers of the all-controlling shareholder.

The risk of money laundering is one of the main risks involved in using and trading cryptocurrencies. This amendment to Proper Conduct of Banking Business Directive 411 addresses how banks should manage money laundering and terror financing risks.

A few weeks ago, a new law came into effect in the United States that made significant changes to how small companies can raise money. 

The Jumpstart Our Business Startups Act (better known by its nickname, the “JOBS Act”) aims to ease the process for startups to seek investments, with a potentially dramatic effect.

Now, two years after the JOBS Act became law, we can look back and see just what effect these changes have had on the process of taking startups through initial public offerings (IPOs), and how this affects Israeli startups.

According to a new ISA legal position, convening a general meeting of shareholders to vote on a public company’s appointment of an independent auditor requires expanded disclosure.

The Israel Securities Authority guides provides basic guidelines to corporations going public and answers critical initial questions.

Until now, only foreign funds from a limited number of foreign exchanges have been able to register for trading in Israel. A Ministry of Finance amendment to the relevant regulations seeks to change this.

From “low” to “moderate” risk of money laundering: the Cayman Islands Monetary Authority’s classification change and its impact on Israel.

The global stock index provider Morgan Stanley Capital International (MSCI) recently announced it is seeking market feedback on Israel’s possible inclusion in its European indices. MSCI, considered one of the largest stock index providers in the world, plans to announce a decision by the end of February 2022.