Published On: Mon, Jul 16th, 2018

Government approves designated Israeli stock exchange for small and medium-sized companies

The designated stock exchange that will be supervised by the Israel Securities Authority, with the appointment of a new entity (sponsor) at the initial public offering stage, whose main function will be to accompany the firms in regulatory and business aspects of the issue.

The government approved the proposal to set up a designated stock exchange for small and medium-sized companies in Israel, in hope to provide a better solution for high-tech companies in their early stages.

The expected bill is in line with recommendations of a joint team of the Israel Securities Authority, the Ministry of Justice, and other bodies and based on a comprehensive review of experience in similar stock exchanges around the world.

The main points of the law include the establishment of a designated stock exchange that will be supervised by the Israel Securities Authority, with the appointment of a new entity (sponsor) at the initial public offering stage, whose main function will be to accompany the company in regulatory and business aspects of the issue.

In accordance with the recommendations of the team on the designated stock exchange, capital will be raised by companies that, at the date of the initial issuance, will be worth up to NIS 300 million (after money).

A company whose market value will rise during the trading period over NIS 600 million will be required to comply with the rules of disclosure and corporate governance applicable to the primary stock exchange but will be permitted to continue trading on the designated stock exchange.

Debt raising will be possible on the designated stock exchange, from a minimal amount of NIS 6 million to a maximum of NIS 36 million, provided that the amount of the issued debt does not exceed the amount of capital issued on the designated stock exchange.

The law balances the needs of the companies and the protection of investors so that the designated stock exchange will constitute a suitable investment option.

The establishment of a designated stock exchange in accordance with the above outline will contribute to the development of the domestic capital market, with the emphasis on providing a new financing channel for growth companies in Israel, which constitute a major growth engine for the economy and locomotive of the economy as a whole.

The main points of the law include the establishment of a designated stock exchange that will be supervised by the Israel Securities Authority, with the appointment of a new entity (sponsor) at the initial public offering stage, whose main function will be to accompany the firms in regulatory and business aspects of the issue.

In accordance with the recommendations of the team on the designated stock exchange, capital will be raised by companies that, at the date of the initial issuance, will be worth up to NIS 300 million (after money).

A company whose market value will rise during the trading period over NIS 600 million will be required to comply with the rules of disclosure and corporate governance applicable to the primary stock exchange but will be permitted to continue trading on the designated stock exchange.

Debt raising will be possible on the designated stock exchange, from a minimal amount of NIS 6 million to a maximum of NIS 36 million, provided that the amount of the issued debt does not exceed the amount of capital issued on the designated stock exchange.

The law balances the needs of the companies and the protection of investors so that the designated stock exchange will constitute a suitable investment option.

The establishment of a designated stock exchange in accordance with the outline will contribute to the development of the domestic capital market, with the emphasis on providing a new financing channel for growth companies in Israel, which constitute a major growth engine for the economy and locomotive of the economy as a whole.

The Ministry of Justice, Ayelet Shaked hopes to introduce the bill for first reading in the current session of the Knesset and go through second and third readings in the winter session.

The bill is jointly sponsored by Minister of Finance Moshe Kahlon and Minister of Justice Ayelet Shaked.

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