Client updates / Corporate

The court’s determinations in the Kovach ruling underscore how important it is for employers to carefully and wisely manage their undertakings to grant Stock Options to employees, especially in startup companies that use options as a key remuneration tool.

On April 2, 2025, the President of the United States signed an Executive Order announcing the imposition of very extensive customs tariffs on products being imported into the United States. Following is a quick analysis of the implications of the order on Israeli manufacturers in various sectors of the economy.

The Israel Tax Authority (ITA) recently published updated guidelines, regarding tax aspects applying to investments in companies through SAFEs. Such guidelines were published following the previous guidelines published by the ITA during May 2023, and which expired at the end of 2024.

Pursuant to the Registrar of Companies’ directives, every company incorporated in Israel, whether under local or foreign ownership, must file its reports and applications to the Registrar of Companies solely online, through the Corporations Authority’s website.

A new Israeli Supreme Court ruling states that, in particular instances, Israeli law will apply to engagements and agreements, even if those agreements stipulate that foreign law applies to them. In its decision, the court also issued several significant rulings that could affect commercial relations, in instances when cogent provisions of law apply.

Companies that did not report their digital address to the Registrar of Companies as part of their 2023 annual reports must report them in the 2024 reports. If they fail to do so, they may face fines and sanctions.

In Israel, voluntary liquidation is an orderly procedure that begins with the preparation and submission of a solvency statement by a company’s directors. This is followed by the shareholders’ approval of the liquidation, delivery of notices to the company’s creditors and the Registrar of Companies, and finally the company’s liquidation. It is crucial to conduct the procedure in an orderly manner to avoid exposures, fines, and debts.

A tax assessment dispute in Israel has led to a new court ruling dealing with relationships between subsidiaries in a multinational group and classification of the nature of the business activities that the companies provide to each other.

The high fine spares Meta an official determination by the Israel Competition Authority that it violated competition law by failing to report mergers, and serves as a “warning sign” to other international corporations that may not be sufficiently familiar with the obligation pursuant to Israeli law to report a merger if the company fulfills the monopoly criterion.

A district court in Israel has ruled to impose personal liability on a company’s CEO and director for the company’s accumulated debt to the Registrar of Companies in respect of annual fees, after the company ceased operating, because the CEO and director refrained from opening court proceedings to liquidate the company.

The IIA’s funding tracks for proof of concept (PoC) give breathing room to fledgling entrepreneurs and ventures during their efforts to transform an idea into a product, even before outside investors are considered.

After lengthy discussions, the Knesset approved a wartime compensation outline for businesses. The outline offers compensation of up to a maximum of ILS 1.2 million to businesses with annual turnovers ranging between ILS 12,000 and ILS 400 million.

The compensation for businesses will be based on their fixed expenses, which they must bear despite the decrease in revenue and business activity, and to help businesses survive the period.

Since a combat situation in Israel is not deemed force majeure, the legislature and the regulatory authorities recommend that parties to contracts hold dialogues on the contract terms in good faith, to the extent the state of emergency does not enable all contract clauses to be performed. Concurrently, the Knesset enacted the Postponement of Deadlines Law, which allows those entitled to postpone performance of contracts under particular circumstances.

Contrary to the headlines, a careful examination of the amendment shows it is anchored in Supreme Court case law, and that it creates greater certainty with regard to contract interpretations in the business sector.

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. 

In a precedential ruling, the Supreme Court stated that the profit test for dividend distribution only includes an examination of the financial statements from the last two years. According to the ruling, there is no room to take into account information regarding an expected loss that has not yet appeared in the reports.

For the first time, the Israel Tax Authority has announced its position regarding investments via SAFEs. It determined that, under particular circumstances, the investment is to be considered an advance on a share investment account.

Minutes of board meetings and board committee meetings have become a key tool for Israeli courts when examining directors’ conduct against the business judgment rule. Therefore, it is important to know how to record, document, and distribute minutes.

Companies should promptly settle unresolved issues with the Registrar of Companies in order to avoid sanctions, fines, and difficulties obtaining credit.