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5 Steps to Israel Company Formation | Business Start-Up
Form a Corporation In Israel
– What is Needed:
1. Israeli Corporation Name:
Before starting we need to know the company name. The name cannot include the word “Assurance” or “Insurance” unless the company director has an Israeli license to run an insurance business.
After we prepare the documents for the Company registration, we submit them to the Israeli government for filing.
If the name you suggested is acceptable by the laws of Israel, but the registrar may decide it is too similar to another registered company. In Israel, there is not a system set up at this time to check name availability by phone or Internet.
You can provide more than one name and our legal department will try to register the company with the chosen names by order of preference.
We will prepare all the documents for all the names you provide and we will present the documents to the Registrar after approval of the name.
2. Israeli Corporation Shareholders
The minimum number of shareholders is one and the minimum number of directors is also one. In Israel, a director can be a natural person or can be another corporation. (Israel Company Law., Article C 253.)
A shareholder may also be a Director. This means the company can be registered with one person or corporation.
It is perfectly acceptable to register a company with foreign corporate shareholders or directors. To do so, the registrar will require a legalized (notarized) copy of the documents of the Corporate Shareholders and Directors and legalized (notarized) copy of the passports of the shareholders and Directors of the holding companies.
If you need the corporation to be registered ASAP we have a solution: we register the new offshore company with our holding company who acts as nominee shareholder and director. In this case, the new entity can be registered in a few days.
You will have to provide all the legalized documents mentioned above during the following year after the transfer of shares to your foreign company, and if you do not wish to transfer the shares, the new company can be held by our holding company indefinitely.
If our holding company holds the shares for more than a few weeks, we will need to sign a trusteeship agreement.
3. Share Capital
The amount of share capital you choose is not an important factor. It is merely a formality and has no true bearing on initial company value. We typically register one million regular shares at a par value of one NIS (Israeli New Shekel). The one million shares does not cost any more than one hundred.
As stated above, you can register the company with one corporate shareholder if you wish.
You will be able to issue more shares later if you want to change the relations between your shareholders or if you want to add a new partner.
Any transfer of shares (except from nominee to the real owner and vice versa) is subject to a small tax. However, the issue of new shares is not taxable.
4. Management Shares and Regular Shares
It is possible to register the company with Management Shares. Management Shares are used when you want to give control of the company to one party but without change in the dividend distribution, when it will be divided.
For example, we can issue 50 regular shares to each shareholder and give 49 management shares to one shareholder and 51 to the other one. This means that one party will have the majority in managing the Board of Directors (including the nomination of the CEO), but the two shareholders will split equally the dividends when distributed, because they each have 50 regular shares.
If you decide to register the company without management shares, the regular shareholders will vote in order to nominate the company director (in your case the director of Quality Assurance Management Asia Pte. Ltd. will nominate the director of the new company).
Example of issued shares to shareholders
Regular Shareholder No 1: 50 Regular shares
Regular Shareholder No 2: 50 Regular shares
Management Shareholder No 1: 51 Management shares
Management Shareholder No 2: 49 Management shares
Total Issued Shares: 200 Management and regular shares
5. KYC responsibilities
To form a corporation in Israel, international anti-money laundering law requires us to verify new clients. This is called Know-Your-Client or KYC. We need to confirm a company’s existence and identify the individuals behind it. If you decide to register the company with nominees, we need a scanned copy of the passport of the person(s) behind this company (any director/s or shareholder/s).