preface

38
BUSINESS STRUCTURE
TASE regulations require a company to hold only one type of
shares for issuing stocks.
♦ Preferred Stock - provides preferred rights for both dividends
and/or liquidation.
♦ Management Shares - usually issued to the founders, entitling
them to special rights, especially in respect of appointing
directors and voting rights.
♦ Redeemable Shares - the Companies Act permits companies
to issue redeemable shares. Such shares may entitle their
holders to exercise various rights, as determined by the
company, including voting rights and profit sharing.
♦ Warrants - entitle conversion to common stock at a predetermined
price.
♦ Convertible Bonds - entitle conversion of bonds to shares at a
pre-determined conversion ratio.
♦ Dividends - An Israeli company may distribute its retained
after-tax earnings by way of dividends. The dividends can be
distributed from real earnings alone (after elimination of
inflationary gains). Distribution of dividends is subject to
fulfillment of two criteria: profitability test and the ability to
meet all existing and future contingent liabilities, based on
audited or reviewed financial statements, not earlier than six
months prior to the actual distribution of dividends.
4.1.3. Partnerships
The Partnership Ordinance (New Version) 1975 governs the activities of
partnerships. If a partnership is established for the purpose of
conducting business in Israel, it is required to be registered with the
Registrar of Partnerships at the Ministry of Justice. Registration
requires, inter alia, furnishing the Registrar of Partnerships with the
partnership's name, activities, address, partners’ names and identifying
details, etc.
♦ A partnership may not have more than 20 partners. However, a
partnership of lawyers or auditors for engaging in their profession
may include over 20 members. The Justice Minister is entitled to
apply this provision to other partnerships of certain professionals for
engaging in their profession.
BDO Israel