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Form an Israeli LLC Limited Liability Company Introduction
An Israel Limited Liability Company (LLC) is formed with filings in the Companies Registrar which is regulated by the Israel Corporation Law. Its shareholders are protected from liabilities incurred by the company beyond their shares value.
The State of Israel used to be a British colony of Palestine when it became independent in 1949. Its political system is a unitary parliamentary constitutional republic. It democratically elects a parliament known as the Knesset and has a president and a prime minister.
Israel Limited Liability Company (LLC) Benefits
An Israeli Limited Liability Company (LLC) obtains the following benefits:
Israel Company Name
An Israeli Limited Liability Company must be an original name which is not similar to any other company name. Either the word “Limited” or the abbreviation “Ltd.” must appear at the end of the LLC’s name.
Articles of Incorporation
The Articles of incorporation are considered a contract between the shareholders and the company and must contain the following terms:
In essence, the Articles of Incorporation needs to explain the purposes and needs of the company.
Four documents need to be filed with the Companies Registrar:
Minimum Authorized Capital
The minimum authorized capital is $1 USD per share.
All of the shareholders have limited liability beyond the value of their shares in the company as specified in the Articles of Association.
The shareholders can be natural persons or legal entities of any nationality and residing in any country. Unless the Articles of Association state differently, every shareholder has one vote for each share.
The LLC’s shares are private and cannot be sold to the public.
A LLC may establish different share classifications (i.e. preferred and regular shares), with each class providing different ownership and voting rights. The different share classes of the company must be stipulated in the company’s Articles of Association.
Profits may be distributed to its shareholders as dividends. However, distribution of dividends cannot occur until these two criteria are fulfilled:
A minimum of one director is required who can be a shareholder and residing in any country and a citizen of any country. While the law specifies that every company must have a Board of Directors, if there is only one director then there will be a one member Board of Directors.
Officers (President, Secretary, and Treasurer) are not required. However, a LLC can appoint a General Manager and if one is not appointed the Board of Directors will manage the company subject to the following management structure.
The management of a LLC is conducted by:
Registered Agent and Office
Every LLC must have a registered office in Israel and a registered agent.
Every LLC must maintain daily accounting records. The LLC is required to prepare financial statements for every fiscal year. The company’s auditor and the Board of Directors must approve the financial statements and present them at the annual general meeting.
A company auditor who is a licensed CPA must be appointed by every company who approves the annual financial statement prior to the Board of Directors approval.
The filing of annual tax returns is required. The Israeli corporate tax rate is 26.5%.
Annual General Meeting
Unless the Articles of Association state otherwise, an annual general meeting is required.
Special meetings can be called for by either the Board of Directors or a minimum of 10% of the shareholders.
Reports to the Registrar of Companies
Every LLC must notify the Registrar of Companies about any important changes such as Board of Directors membership, change of shareholders, change of registered office or agent, amendments to the Articles of Association, etc. Said notices must be filed within 14 days of their occurrence.
An annual report must be filed with the Registrar of Companies which includes shareholders and directors information. There is no requirement for the filing of financial statements.
The Registrar of Companies can enforce these notice requirements with fines imposed on companies failing to comply with these requirements.
All of the documents filed with the Registrar of Companies are available to the public.
Registration can take up to four weeks for completion.
Shelf companies are available to purchase for faster registration.
Form an Israeli Limited Liability Company (LLC) Conclusion
An Israeli Limited Liability Company (LLC) obtains the following benefits: limited liability, minimum of one shareholder and director, low minimum capital, easy access to opportunities in the Middle East, an educated and skilled workforce, and English is popular.