Israeli Corporations Authority<\/a> is in charge of Israeli company law and enforces a number of regulations.\u00a0 In this article, Advocate Michael Decker from our Israeli law office provides some basic information about the advantages and complications involved in establishing an Israeli company.<\/p>\nA few advantages to establishing an Israeli company<\/h4>\n
1 – Limitation of Liability<\/em><\/strong><\/p>\n![\"Establishing](\"https:\/\/lawfirmbackup_200125.k1uagm.ap-southeast-2.wpstaqhosting.com\/wp-content\/uploads\/2017\/10\/expensesincome-150x150.jpg\")
The primary benefit of establishing a Limited Liability Company (LLC) is, as the name suggests, a limitation of liability. This means a company’s shareholders cannot incur a liability that exceeds the value of their shares.\u00a0 Thus, if the company is in debt, creditors cannot claim reimbursement from shareholders, offering shareholders the necessary security to carry out their professional activity without fear that their personal assets will be at risk.\u00a0 On the other hand, in certain extreme cases, such as when the risk is taken by an unwise actor or a premeditated action by the shareholders in order to harm the interests of the creditors, the law allows the court to withdraw this security and use the shareholders’ assets to reimburse some or all of the debts owed to the creditors.<\/p>\n
2 – An Independent Legal Entity<\/em><\/strong><\/p>\nAs an independent legal entity, the company has rights and duties and is authorized to carry out numerous legal and financial operations.\u00a0 These include the following:<\/p>\n
-Signing a contract
\n-Registering as the owner of a real estate property in the land registry cadastre (known as “tabu” in Israel)
\n-Making commitments
\n-Carrying out commercial transactions
\n-Opening a bank account<\/p>\n
If something happens to the company owners, including bankruptcy or even passing away, the company can continue to operate without suffering any legal consequences. As a separate legal entity, the company has an unlimited life and exists independently.<\/p>\n
3 – A More Flexible Functional Structure<\/em><\/strong><\/p>\nThe shareholders of an Israeli company are free to choose the financial and functional structure of their company. They can thus distribute their shares and their respective rights according to the terms and conditions they agree to. The division can implemented before the company is even created. These are incorporated into the company’s bylaws or under a cooperation agreement.<\/p>\n
4 – The Fees Involved\u00a0<\/em><\/strong><\/p>\nEach company is subject to charges which must be paid for its workers to the National Insurance Fund (Bituah Leumi<\/em>) and to the tax authorities. The percentage of these social security contributions is set according to the amount of taxable income collected by the company. Although the tax legislation is very dynamic, and a case-by-case study is necessary, the creation of an LLC is likely to be the ideal structure to save social charges and taxes.<\/p>\nIn addition, the company must pay the annual fee to the Trade and Companies Registry. As of 2018, the fee is 1,488 NIS (companies wishing to pay in the first two months of the year benefit from a discount).<\/p>\n
CONTACT US – Israeli corporate lawyers<\/h4>\n
If you are interested in establishing an Israeli company and seek legal assistance, feel free to contact us.\u00a0 For more information on other articles we have written on Israeli company law, see our series of articles<\/a> on our website.<\/p>\n[author_and_contact_info]<\/p>\n
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Establishing an Israeli company is complicated.\u00a0 The Israeli Corporations Authority is in charge of Israeli company law and enforces a number of regulations.\u00a0 In this article, Advocate Michael Decker from our Israeli law office provides some basic information about the advantages and complications involved in establishing an Israeli company. A few advantages to establishing an…<\/p>\n","protected":false},"author":22,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[161],"tags":[],"class_list":["post-19473","post","type-post","status-publish","format-standard","hentry","category-corporate-and-commercial-law-en"],"acf":[],"yoast_head":"\n
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