Types of Corporate Entities in Israel
There are various types of corporate entities in Israel. This article will explore their respective traits.
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Public companies
A public company is one which holds out its shares for ownership by the public. Its shares will be registered for trade on a stock exchange or offered to the non-Israeli public or to the public by way of a prospectus.
A stock exchange is a system utilized by public, bonds and government companies for trading securities, such as shares, bonds and options. Securities are fungible and tradable instruments which a company offers to the public for the purpose of raising capital.
Private companies
The definition of a private company is residual and broad. It encompasses in its purview any company which is not a public one.
What is a bonds company?
A bonds, or debenture company is one which holds out its bonds for possession by the public. The bonds of the company will be registered on an exchange and will be offered to the non-Israeli public or the public by means of a prospectus. A public company is similar to a bonds company in that the former holds out its shares to the public, while the latter does so its bonds.
Bonds are a means for soliciting funding from the public. They entitle their owner to have the company repay its financial undertaking through them with the addition of a premium. This accords the owner a right towards the company. In contrast, shares accord the owner a right in the company, meaning of representative ownership of the company and partaking in its profits.
What defines a statement company?
A statement company is one which offers its securities to the public. These can be in the form of stocks or bonds. This can be done through a prospectus or in the form of a company which trades its shares on an exchange. Both public and bonds companies are considered statement companies.
The significance of a company being defined as a statement company lies in its reporting requirements. The reporting requirements of these companies are governed both by the Israeli Companies Law and the Israeli Securities Law and are more extensive than those for non-statement companies, which must only adhere to the former.
Government companies
A government company is one which places in the hands of the government more than half the voting rights of a general assembly or the ability to appoint more than half of its directors.
Not-for-profits
A non-profit company is one which acts for the public interest. In this respect, it is similar to a non-profit association. This type of company may not distribute profits to its shareholders and its bylaws must limit themselves strictly to purposes involving the public welfare.
Foreign companies
A foreign company is one which is incorporated outside of Israel, to the exclusion of a partnership. For a foreign company to maintain a place of business in Israel, it must be registered as such with the Israel Registrar of Companies.
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