Israeli Corporations Authority Structure and Israeli Nonprofit Law
The Israeli Corporations Authority is responsible for a number of corporate bodies, including Israeli nonprofit organizations. (Nonprofit organizations are called amutot or amutah in singular; public benefit companies are called cheletz; and endowments are called hekdeshim.)
This Series of Posts
Our team of lawyers at Cohen, Decker, Pex & Brosh has experience in a variety of fields, including Israeli nonprofit law. This article is one in a long series focusing on what you need to know about nonprofits or charitable organizations (an amutah in singular and amutot in plural) in Israel. This series of posts will discuss the various rules for the proper and legal management of nonprofit organizations in Israel in order to better help you administer your Israeli nonprofit organization. This and subsequent articles on the topic are based on the Ministry of Justice’s Hebrew regulations for Israeli nonprofit organizations.
For more information on the Israeli Corporations Authority which oversees Israeli nonprofit organizations, see the government website. For more articles from an Israeli lawyer and legal advice for Israeli nonprofit organizations related to the topic of this article, see our articles about the three mandatory institutions of an amutah, by-laws and written procedures and obtaining a certificate of proper management.
Background Information on Israeli Nonprofit Organizations
The Israeli Corporations Authority was established in April 2006 and is responsible for the registration and supervision of corporate bodies. There are two main branches of the Corporations Authority: one focusing on business and the other focusing on nonprofit organizations. The business branch includes the Registrar of Companies (chavorot), the Registrar of Partnerships (shutafuyot) and the Registrar of Pledges (mishkonot). The nonprofit organizations branch includes the Registrar of Amutot, Public Benefit Companies (cheletz) and the Registrar of Endowments (hekdeshim). These varying units are under the Corporations Authority in order to assist the state in its relations with both commercial and nonprofit organizations in the country.
The Registrar of Amutot and Israeli Nonprofit Organizations
The Head of the Corporations Authority is the Registrar of Amutot and has wide-reaching authority to act through the nonprofit organizations branch of the Corporations Authority. As of 1998, any amutah that seeks state support or seeks to give services to the state is required to provide a certificate of proper management issued by the Registrar of Amutot. The reasoning for this decision is to ensure that funds received by an amutah from the state or other public funds are managed properly and legally according to the Amutot (Nonprofit Societies) Law. This law specifies, among other things, that funds are used to further the goals of the nonprofit organization in Israel and that only a certain amount of annual nonprofit donations can be allocated for overhead costs, which helps ensure that the vast majority of donations go toward furthering the nonprofit’s clearly defined goals. Public Benefit Companies in Israel (cheletz), often abbreviated PBC, are different from nonprofit organizations like amutot, but they are also required to provide a certificate of proper management.
The Registrar of Amutot helps ensure that nonprofit organizations are managed properly, and in the event they do not meet the required standard, the Registrar of Amutot will withhold a certificate of proper management and impose sanctions against the amutah (ranging from fines to instituting liquidation proceedings against the nonprofit organization). Under the Amutot Law in Israel, the Registrar of Amutot unit is entitled to periodically examine the management of Israeli nonprofit organizations.
If you are interested in starting a nonprofit organization (whether an amutah or cheletz) in Israel, in ensuring that you are managing it according to updated laws and regulations, or have any other questions regarding the Corporations Authority, the Registrar of Amutot or nonprofit (amutah) management in Israel, please contact us.
Advocate Joshua Pex specializes in Israeli nonprofit law and would be happy to discuss the needs of your nonprofit organization with you.
: 03-3724722, 055-9781688