Swords of Iron: Israel Securities Authority Guidelines and Reliefs
The Israel Securities Authority has announced a series of reliefs for reporting corporations to help them maintain routine business activities throughout Operation Swords of Iron.
Reliefs for Reporting Corporations
Publishing Q3 reports for 2023
All reporting corporations have received an extension until December 31, 2023, to publish their Q3 reports for 2023.
Any reporting corporation that chooses to use the extension must publish an immediate report for investors on the date it reached the decision to adopt the extension or by November 30, 2023, whichever is earliest.
Any reporting corporation that chooses to use the extension and publish its Q3 reports for 2023 after November 30, 2023, will be prohibited from publishing a shelf offer report and raising funds through it, as long its Q3 reports for 2023 have not been published, unless the ISA decides otherwise.
To read the ISA’s full announcement click here.
Period of a shelf prospectus extended by an additional three months
Shelf prospectuses (including those that received a 12-month extension) that are due to expire during the applicable period from October 7, 2023, through January 7, 2024, will be extended and will remain in effect for an additional three months. (This relief will continue to apply unless the permit has been suspended or revoked or a condition has been met that nullifies its validity, or if the ISA decides not to renew it pursuant to any law.)
To read the ISA’s full announcement click here.
Memorandum of law regarding the extension of periods and the postponement of deadlines in connection with the convocation of annual general meetings, extending the terms of office of external or other independent directors, etc.
The Ministry of Justice has published a memorandum of law for public comments, whose purpose, inter alia, is to extend periods and postpone deadlines prescribed in the Companies Law. The memorandum of law contains several reliefs the ministry formulated with the ISA to enable reporting corporations to function optimally during the war. The memorandum of law addresses, inter alia, the following:
- Postponement of the deadline for convening an annual general meeting.
- Extension of the terms of office of external directors or other independent directors.
- Extension of the validity of a number of time-constrained approvals required pursuant to the Companies Law, such as the approval of a remuneration policy, approval of the authorization of the chairman of the board of directors or his relative to serve as the CEO, and the validity of a transaction with a controlling shareholder.
We note that this is currently only a memorandum of law, which has not yet entered into force.
Conducting board meetings and general meetings via means of communication
The ISA staff clarified that, as a rule, there is no legal obstacle to convening general meetings of shareholders or bondholders, or meetings of boards of directors and their committees, by means of communications without a physical presence, provided all participants can hear each other simultaneously. This applies regardless of the state of war declared in Israel and without any period of restrictions.
To read the ISA’s full announcement click here.
Continuity of reporting and readiness to publish immediate and periodic reports
The ISA emphasized that every reporting corporation must ensure its ability to maintain reporting continuity and its readiness to publish immediate and periodic reports through the Magna system as required by law. Reporting corporations that assess they are likely to encounter difficulties complying with the statutory requirements regarding the filing of immediate and periodic reports, including technological difficulties filing reports in the Magna system (electronic signatories are unavailable, problems connecting remotely to report from home, etc.), should contact the ISA staff as soon as possible to receive assistance and solutions.
The ISA has published the contact information of corporate department employees and Magna technical support staff to help reporting corporations resolve reporting and computer-related problems.
To read the ISA’s full announcement click here and here.
Recommendations for Corporations
Provide updates to the board of directors.
The outbreak and duration of the war may affect the Israeli economy, and reporting corporations in particular. Thus, we recommend that the management of a corporation regularly analyze the existing and future effects of the war on its activities and business results and update its board of directors on an ongoing basis, whether during meetings or in writing, about the existing and potential developments and effects on the corporation.
Provide updates to investors.
Pursuant to the Securities Regulations, a reporting corporation must inform investors about any event or matter that deviates from the corporation’s ordinary course of business and has or could have a material impact on the corporation due to its nature, scope, or possible outcome. A reporting corporation must also inform about any event or matter that could significantly affect the price of the corporation’s securities.
Therefore, we recommend that corporations consider updating their investors as part of an immediate report, if and to the extent the corporation assesses the war as having or being likely to have a material quantitative or qualitative impact on the corporation. Corporations should consider issuing such updates from time to time as needed, depending upon the impact of the war on their activities and results.
Furthermore, we recommend that reporting corporations include disclosures in their board of directors’ reports published during the war and/or during the war’s aftermath regarding the actual and potential effect of the war on the corporation’s activities and business results. We also recommend that corporations consider the necessity of updating their disclosures in their last periodic report about the assessed level of risk posed by the security situation in Israel.
***
Barnea Jaffa Lande’s Capital Markets Department is at your service to answer any questions, and will continue to issue updates on relevant developments.