Principal types of business entities in Israel:
The Israeli Companies Ordinance (ICO) defines a company as a corporation formed and registered in Israel, in accordance with Israeli law.
It is necessary to register the company with the Companies Registrar. While Hebrew and Arabic are the official languages of Israel, in practice, corporate documents in English will generally be accepted by the Registrar. However the Companies Registrar does require that the Articles of Association be translated into Hebrew as well.
Most companies limit the personal liability of their members, usually in the form of shares. In this case, the term "Limited" (or the abbreviation "Ltd.") must appear as part of the full name of the company.
Private or Public
A company may be registered as a "Private Company" or a "Public Company" with securities registered on a Stock Exchange. Both types of companies must present annual reports, including audited financial statements to their shareholders.
A private company, consisting of 1-50 shareholders, and one director, may not offer or sell debentures or shares to the public and its Articles of Incorporation must contain restrictions on the transferability of its shares.
A public company, with a minimum of 7 shareholders, may offer stock or debentures to the public, but only after issuing a prospectus in accordance with the requirements of the ICO and the Securities Law. Also, a public company is obliged to publish an annual report that includes the audited financial statements and directors’ report, all to be filed with the Companies Register where they are available to the public.
A company incorporated overseas may establish a branch or local office in Israel as long as it is registered as a foreign company with the Companies Registrar within a month of its establishment.
If the company uses the term "limited" as part of its name, then it must display its name and the name of the country in which it is incorporated in every invoice, letter, announcement, advertisement or other official publication.
To register, a foreign company must submit all the necessary documents to the Companies Registrar. There is no requirement to publish financial statements of a private company.
The Partnership Ordinance defines a partnership as an entity that consists of persons who contract to form a partnership. Personal liability of the partners is not limited unless they are limited partners of limited partnerships. A foreign partnership is also permitted to do business in Israel.
A self-employed person works entirely for himself and is entirely liable for the business.
This type of business entity is found mainly in the agricultural sector, (cooperatives such as a kibbutz or moshav), transportation businesses and certain types of marketing operations associated with agricultural products.
Non-Profit Organizations (NPO)
These entities operate mainly as academic institutions, hospitals, charitable organizations and municipalities. NPOs are subject to a special law dealing mainly with the formation of such organizations and the way they may operate as such.