preface

4. BUSINESS STRUCTURE
4.1. BUSINESS ORGANIZATIONS
4.1.1. General
BDO Israel
Most of the legal entities in the modern Israeli business world operate
under Israeli law. These legal entities include companies, partnerships,
cooperatives, and nonprofit organizations. Individuals may conduct
business without establishing any separate legal entity.
4.1.2. Companies
The most common form of business entity in Israel is a limited liability
company with capital stock (share capital). The Companies Law, 1999,
which went into effect on February 1, 2000, oversees corporate
activities. However, issues pertaining to liquidations, pledges and
secured bonds are still settled by the Companies Ordinance, which
preceded the Companies Law.
A company can either be limited by capital stock or unlimited - in which
case its stockholders have no ceiling to their liability.
No requirements exist regarding the nationality or residency of
stockholders and company directors.
In order to be incorporated, a company must register with the Registrar
of Companies at the Ministry of Justice. An incorporated company is
required, inter alia, to have Articles of Incorporation.
The Articles of Incorporation state, inter alia, the company's name,
objectives, the composition of its capital stock (ordinary, preferred,
etc.), the number of shares the founders undertook to purchase and the
stockholders’ liabilities.
The Articles of Incorporation define the rules for managing the
company and the relationship between the company and its stockholders
and directors. They also determine the procedures for amendment of the
Articles.
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