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Small Companies
In order to facilitate the listing of small companies on the TASE, ISA has created a
regulatory hierarchy reducing the regulatory burden on these companies and allowing
them to channel their efforts and financial resources into developing the company's
business. A “small company” is defined as a company where (i) the value of the shares
or participation units held by the public is lower than NIS300 million; or (ii) the nominal
value of the debentures in circulation is lower than NIS200 million. These exemptions
and reliefs include cancellation of the Committee for Review of Financial Statements
(conditioned upon certain structure of the board of directors), relief from the auditors'
reviewof the implementation of the internal controls (ISOX) by the company, and certain
exemption from disclosure requirements in its periodic reports.
Corporate Governance
In recent years, various reliefs from corporate governance requirements have been
adopted, which apply to all companies listed on the TASE. These reliefs relate, inter alia,
to the manner of determining and approving the compensation of executive officers,
the possibility of the Audit Committee serving as Remuneration Committee, allowing
non-Israeli residents to serve as external directors, and exemption from the requirement
to have the CEO's terms of employment approved by the shareholders if these are
materially similar to those previously approved by the shareholders. In addition, the
disclosure requirements with respect to certain events were reduced or became more
lenient.
Other Matters in the Israeli Capital Market
At the Market Offering
A mechanism for the offering of new securities called At the Market Offering (“ATM”)
has been recently adopted. This mechanism allows companies to offer securities by
giving sell orders during trading, in the scope and on a date determined by the issuer,
at its discretion (subject to certain limitations). This mechanism allows greater flexibility
in offerings, significantly reducing the time gap between the date the offering was
decided and its actual implementation (time to market), and simplifies the existing
issuing process thereby lowering the associated costs.
Electronic Voting System
The ISA has set up an Electronic Voting System that has been in place for over a year.
This system is designated for use by investors in the capital market with the aim of
maintaining investors' interest and increase the rate of participation in general meetings.
Stock Exchange Restructuring
The ISA and the Ministry of Finance are promoting legislation that would change the
ownership structure of the TASE such that it will cease to be a non-profit organization.
The reform intends to create a differentiation between ownership and membership in
the TASE whereas today the brokers and TASE members (mostly banks), control the
TASE. It is believed that such restructuring will lead to the elimination of the existing
conflict of interest between those involved in the management of the TASE and the
various interests of the TASE members, and will contribute to fostering competition for
capital resources.