For most companies hoping to extend abroad, Israel offers a scope of advantages and benefits, including legal insurance for directors and shareholders, a recognized and reputable corporate infrastructure, and potential tax efficiencies. So, opening your company in Israel makes sense to international investors. It is easy to form a company in Israel, with a minimum required share capital of just 1 NIS, it also provides you with instant access to a vast and talented workforce, especially in Israel and the surrounding area.
There are various ways to form a corporation and numerous types of companies to choose from in Israel.
In this article, we will stand on one of the most popular ones, limited liability companies (LLC).
Benefits of an LLC in Israel
An Israeli LLC attains the following advantages:
- Limited Liability: All of the shareholders of an LLC have limited liability beyond the worth of their shares in the company.
- One Shareholder An LLC can have just one shareholder who can either be a natural person or a legal entity. The sole shareholder can also be the sole director of the company.
- Low Minimum Capital: The minimum approved capital is just $1 USD per share.
- Easier Access to the Middle East: Israel provides an easier gateway to its neighbouring countries.
- Educated and Skilled Workforce: Israel offers a skilled, educated workforce. English is a popular language in Israel.
Establishing and forming a limited liability company in Israel involves a procedural process, which has several phases and conditions.
According to the Israel Corporation Law, any individual may establish a company on the condition that none of the company’s purposes is unlawful, corrupt, or in opposition to public policy. The company’s purposes must be detailed in the articles of association and should be submitted to the Companies Registrar.
According to the law, the formation of a new company in Israel requires at least one shareholder, who may also operate as a director of the company.
Before registering a corporation in Israel, the company’s owners must pick the company’s name which must be unique and 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. Additionally, the company’s name must not be misleading, or contrary to public policy or sentiments.
Furthermore, it is essential to draft the company’s articles of association. The article of association is a contract between the company and its shareholders, and it contains the following terms:
- Limitation of Liabilities: the owners of the company must clarify their responsibility for the company’s debt, and if it is limited or not.
- Shares and Capital: A definition of the company’s capital and how it will be dispersed amongst the shareholders. It must indicate the types of shares it will issue including registered, preferred, management of share capital, etc.
- Rights: Describe the commitments and rights of the shareholders. Give details of the management practices. Clarify the rules and regulations and anything else deemed significant.
Generally, the Articles of Association need to elucidate the goals and wants of the company. Setting up a company in Israel is not a completely simple process as it also involves state fees and bureaucracy. To guarantee its success, the company should invest a lot of thought in writing the article of Association and matching it to the needs of the company.
Forming a new company in Israel ends with the registration of the company in the Companies Registrar. In order to register, the following documents are required:
- Registration Request: This is a statement by the original shareholders that they are allowed to form the company and hold shares authorized by the government.
- Statement by the First Directors: This statement asserts the willingness by the directors to serve the company. If a legal entity is a director, its registered agent must be revealed.
- Articles of Association: The original Articles of Association must be signed by all the shareholders and include their names, addresses, legal ID numbers, and the quantity of shares they hold. The law requires that a licensed attorney assess all this information.
- Fee Payment: The registration fee payment.
Only when it is resolved that the company complies with all the conditions and requirements posed by the Corporation Law and is not prevented from establishment by the Registrar, will the company then be established. It is also highly recommended that one use an attorney who specializes in corporate law for the establishment of a new company in Israel.
The filing of annual tax returns is also required. The Israeli corporate tax rate is 26.5%.
The registration of an LLC in Israel is an easy process that can be entirely explained and assisted with by our team of experts at Damalion. Our experts can also provide support when applying for special licenses and permits to properly start the activities as a new business in Israel. Contact your Damalion expert now to open your corporation in Israel.
