Before you start
Most businesses in Israel that plan to grow, raise investment or limit the owners' personal liability operate through a private limited company. A company is a separate legal entity: it signs contracts, owns assets and is responsible for its own debts.
Before registration, the founders need to agree on a few basic points: who the shareholders are and how the shares are divided, who will serve as directors, and what the company will be called.
Choosing a name
The name must not be identical or confusingly similar to the name of an existing company, and some words need special approval. A private company's name ends with the word Ltd (in Hebrew, B.M.). It is worth checking early that the name is also free to use as a brand, since registration of a company name does not give trademark rights.
The registration documents
Registration is made with the Registrar of Companies, part of the Israeli Corporations Authority. The main documents are:
- The articles of association, which set out the rules of the company: share classes, the appointment of directors, how decisions are made and how shares can be transferred
- An application for registration signed by the founding shareholders
- A declaration by each first director confirming their consent to serve
- Payment of the registration fee
A company needs at least one shareholder and one director, and the same person can hold both roles. There is no minimum share capital and no requirement for the shareholders or directors to live in Israel.
The articles of association matter
Standard articles are enough for some companies, but where there are several founders, tailored articles and a founders' agreement prevent many future disputes. Questions worth settling at the start include what happens when a founder leaves, how new investors come in, and who can sign on behalf of the company.
After registration
Once registered, the company receives a certificate of incorporation and a company number. The next steps usually include opening a bank account, registering with the Israel Tax Authority for income tax and VAT, and registering with the National Insurance Institute if the company will have employees.
The company must also keep a shareholder register, record its decisions, file an annual report with the Registrar of Companies and pay the annual fee. Changes such as a new director, a share transfer or a change of address must be reported.
