Israel’s Companies Registrar plays a crucial role in the process of registering a corporation in Israel. They are responsible for overseeing and approving the formation of limited liability companies (LLCs), which is the main focus of this article.
Limited Liability Companies (LLCs)
LLCs offer a significant advantage by protecting their shareholders from becoming debtors of all the company’s debts. This means that upon establishing a limited liability company, the shareholders are only liable for the company’s debt up to the total shares they hold. This protection provides a sense of security, unlike in the case of establishing a new entity that is not a limited company, where the shareholder’s economic risk is the amount of any obligation of the company.
Formation Process
Establishing and forming a limited liability company (LLC) in Israel involves a procedural process with several stages and conditions. According to Israeli corporation law, failure to comply with the relevant law and tax obligations required to establish a company may prevent its establishment. In the following paper, we will describe the requirements of Israeli corporation law when forming an LLC.
Company Establishment Requirements
According to the Israel Corporation Law, any person (including legal persons) may establish a company on condition that none of the company’s purposes is unlawful, immoral, or contrary to public policy (Israel Corporation law, section 2). The company’s purposes must be detailed in the association articles and submitted to the Companies Registrar.
Shareholder and Director Requirements
According to the law, forming a new company in Israel requires at least one shareholder, who may also serve as a director.
Choosing the Company Name
Before registering a corporation in Israel, the company’s owners must choose the company’s name. The company’s name can be any name if it is original. In other words, the name must not be similar to the name of an existing company. In addition, the company’s name must not be misleading or contrary to public policy or feelings.
Drafting Articles of Incorporation
Furthermore, it is necessary to draft the company’s articles of incorporation. The articles of incorporation is a contract between the company and its shareholders and contain the following elements:
Company Goals
The goal of the company – every corporation in Israel must describe the company’s goals in the company’s articles of incorporation. The possible goals are to engage in various legal activities, any lawful business, or any activity except those listed in the company’s articles of incorporation.
Limitation of Liability
Limitation of liability- the company’s owners must describe their responsibility for its debt and whether it is limited.
Capital and Shares
The company’s capital and shares- establishing a new company in Israel must include a description of its capital and distribution among its shareholders, including specific details of the capital of preferred shares, share capital management, and more.
Additional Features
Additional features- elements not obligated to detail under the Israeli company law, including regulations concerning the management practices of the company, details of the rights and obligations of the company’s shareholders, and more.
Company Registration Process in Israel
Setting up a company in Israel involves state fees and bureaucracy. To ensure its success, the company should invest considerable thought in writing its articles of incorporation and matching them to its needs.
Establishing a new company in Israel involves registering with the Companies Registrar. Four documents are required to register: a registration request, a statement of the first shareholders, a declaration of the first directors, and the articles of incorporation.
Registration Request
Registration, Formation request
Statement of First Shareholders
The statement of the first shareholders is that they are permitted to establish a company and hold shares and that Israeli law does not restrict them.
Declaration of First Directors
Declaration of the first directors. This is a statement of willingness to serve as directors. If a corporation serves as a director, it must specify the name of its agent.
Articles of Incorporation
Articles of incorporation- The first articles of incorporation should be signed by the first shareholders, and their names, ID numbers, addresses, and number of shares allotted to each of them should be described. The Israeli Corporation Law requires that an attorney will verify those details.
State Fees
In addition to the documentation, one must pay a state fee, as Israeli law requires. This fee is a financial contribution to the state for the administrative work involved in processing the company’s registration.
Conclusion
It’s crucial to ensure that the company complies with all the conditions and requirements posed by the Corporation Law and is not prevented from being established by the Registrar. To navigate this complex process, it’s strongly recommended to seek the guidance of an attorney specializing in corporate law. This emphasis on legal assistance will make the audience feel guided and supported in their company formation journey.
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We are here to support you in your company formation journey. With offices in Tel Aviv, New York, and Los Angeles, California, we invite you to schedule a complimentary consultation with our firm. This consultation will help you understand how we can assist with your Israeli legal and business matters, providing you with the support you need.
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