159 leading strategic buyers - and the long tail of smaller companies facing funding pressure and distressed conditions is evident in the data and in the flow of client calls we receive. Perhaps the most consequential structural trend for the Israeli tech ecosystem - and one that carries direct regulatory implications - is the sharp increase in Israeli founders incorporating their companies in the United States rather than Israel. According to data presented at a late-2025 industry conference, more than 80% of Israeli-founded companies are now choosing to register in the United States, compared with approximately 20% in 2022. This trend is driven by a combination of factors: perceived tax efficiency, ease of fundraising from US venture investors, and - particularly since 2023 - concerns about governance instability in Israel and the implications of the ongoing security emergency for business formation. The FPI implications of this trend are significant. A company incorporated in Delaware or another US state, even if predominantly operated from Tel Aviv, is a domestic issuer under US securities law - not an FPI - and loses all the accommodations discussed above. For companies that have already made this choice, or are contemplating it, the FPI analysis now needs to be part of the planning conversation at the very earliest stage of company formation and capital raise structuring. The momentum toward US incorporation may be commercially rational for individual companies, but at the ecosystem level it creates a regulatory ratchet that reduces the structural advantages the Israeli tech sector has historically enjoyed in US capital markets. Looking Ahead: What Israeli Issuers Must Do Now The confluence of factors we have described - the FPI status review, the Section 16 compliance deadline, the deregulatory but enforcement-focused Atkins SEC, the ongoing and escalating security situation, and the structural shift in incorporation patterns - creates a demanding agenda for Israeli companies in the US capital markets in 2026 and beyond. We offer the following observations for boards and management teams navigating this environment. FPI status planning should be treated as a board-level governance issue, not a periodic legal formality. The concept release process may lead to proposed rules within the next 12 to 24 months. Companies that are currently listed exclusively in the United States should model the impact of a trading volume or exchange listing requirement on their FPI status, and evaluate whether voluntary dual-listing on the TASE - or enhanced engagement with Israeli institutional investors to increase home-country trading volume - is warranted. Section 16 compliance requires immediate action where it has not yet been addressed. Every officer and director of every FPI registered with the SEC should already have EDGAR filing credentials, pre-clearance procedures should be in place, and boards should have received substantive education. The ISA’s parallel role in coordinating Israeli FPI compliance with the new requirements should be monitored closely. Risk factor disclosure is not a static document. The security situation in the region is evolving in real time, and the materiality analysis that underpinned a company’s Form 20-F risk factors filed in early 2025 may be inadequate in light of subsequent developments. Companies should treat risk factor review as a “The number of Israeli companies publicly listed on US exchanges stands at approximately 135, making Israel the fourthlargest national source of Nasdaq-listed companies worldwide” ISRAEL — HIGH-TECH
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