Client updates / Corporate

A new circular by the Israel Tax Authority determines the terms for granting options to employees when the vesting of such options is contingent upon performance milestones or the occurrence of an IPO or exit event.

The Delaware Court of Chancery issued a precedent recently, whereby an acquisition agreement may be cancelled due to the occurrence of a “Material Adverse Effect” (MAE) in the acquired entity.

Israel’s Innovation Authority (the IIA, formerly the Office of the Chief Scientist) has issued new rules regarding the licensing of IIA-funded know-how for use by multinational corporations outside of Israel.

The Ministry of Justice recently published a new memorandum regarding an amendment to the Companies Law. This amendment seeks to authorize the Registrar of Companies to administratively strike off a company from the Companies Register.

Recently, a four month proxy fight over control of an Israeli incorporated NASDAQ traded company was settled, following a series of proceedings held before the Tel Aviv District Court. At a crucial juncture, the Tel Aviv Court was asked to issue a temporary injunction over a transaction initiated by the board, which included a highly dilutive (24.9%) issuance of shares.

The Israeli Supreme Court has set a precedent by ruling that the Business Judgment Rule should also be applied to a company’s board of directors when it is deciding whether or not to file a derivative suit.

On March 23, 2018, the TASE board of directors approved the launch of a new index in conjunction with the Ministry of Economy and Industry.

The Knesset recently approved the Law for the Reduction in the Use of Cash. This law imposes bans and restrictions on the making and receiving of payments using cash and checks at the sums therein prescribed.

The State Comptroller, Judge Joseph Shapira (retired), published an audit report on the financing of political parties in relation to parliamentary parties in the 20^th Knesset for the period from April 2015 until year-end 2016.

The Israel Tax Authority published a draft circular today about a sale of rights in a corporation when a portion of the consideration is paid to the seller at a future date.

The Israeli Law, Information and Technology Authority (ILITA) recently published a new draft directive regarding the handling of customers’ personal information (which is organized as a registered database or as a database under compulsory registration) when it is held by an acquiree company and is being transferred to the acquirer company within the scope of a merger or acquisition transaction. 

A significant precedent was handed down recently by the Israeli Supreme Court, whereby a company’s separate and independent standing must be recognized, even after a motion for a derivative suit has been approved.

New court decision on transfer pricing taxation may shift structuring of M&A transactions from shares to assets.

It is not uncommon for Israeli incorporated companies to seek investments abroad. In many cases, such investments are done through public offerings on international stock exchanges. Securities issued by Israeli companies are traded on the NASDAQ, the London Stock Exchange and a variety of other exchanges, including Australia. These situations, which make perfect sense from a business perspective, give rise to interesting and sometimes quite complex legal issues.

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.

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.

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.