Executive remuneration encompasses many aspects of the law, starting with labour law and continuing to corporate and securities law, and tax and social benefits. Many of these areas of the law are complex and constantly developing, including legislation, court rulings and common practice. The remuneration in many sectors of the Israeli market is driven by the extensive tax benefits available for true equity compensation and it is common practice to grant executives significant equity awards both upon engagement and in follow-up grants. Furthermore, Israeli public companies and reporting companies under security law are subject to stringent approval processes when dealing with executive remuneration. More limited requirements apply to private Israeli companies. In general, legislation and common practice in Israel follow the global trends regarding executive remuneration; however, there is a slight delay. For example, as at mid 2018, neither the legislation nor the market in Israel have adopted or implemented clawback provisions.


i Income tax for employees

Generally, employment income is subject to income tax, social security contributions and health tax. In certain cases, financial institutions and non-profit organisations are subject to salary tax that is levied as part of the VAT system. The taxable income also includes benefits in kind that the employee receives from the employer, directly or indirectly, and the value of such benefits is added to the employee's salary for tax purposes. In order to simplify the value calculation of some common benefits, such as company car or company mobile phone, special regulations were enacted that specify the value of such benefits.

Non-residents are subject to the same income tax rates as Israeli residents; however, they are not entitled to some of the credits that are available only to Israeli residents. Notwithstanding the foregoing, there are specific regulations that allow special tax benefits to certain non-Israeli employees, including 'foreign experts', 'foreign lecturers' and 'foreign athletes'. Employees who are residents of countries with which Israel has signed treaties for the prevention of double taxation may be subject to different taxation under the relevant treaty.

The employer must withhold income tax from the employee's salary and benefits (at the rates specified below) and transfer it to the Israeli Tax Authority (the ITA).

Income tax rates

Employment income is subject to income tax at the following progressive rates (in 2018):

Annual taxable income (NIS)

2017 tax rate

Up to 74,880


74,881 to 107,040


107,041 to 172,320


172,321 to 239,520


239,521 to 498,360


Over 498,360


In addition to the above rates, a 3 per cent surtax is imposed on annual income above a threshold of 641,880 shekels (in 2018), including income from work, business, rental income, interest income, dividends and capital gains.

Exemption from ordinary income tax or reduced tax rates, or both, applies to certain members of the population – disabled or blind people, or those in military service – and to some types of employment income, such as retirement payments, payments upon death, and certain income received by a new immigrant or returning resident.

The Ordinance (see below) provides for certain credits and deductions and under some circumstances allows for the deduction of expenses associated with the creation of income and donations to approved non-profit organisations. The most common are contributions to pension funds and provident funds that are regulated under law, as well as credits points included under law.

ii Taxation of employee stock incentive plans

The taxation of employee stock incentive plans in Israel is governed by Section 102 of the Israeli Income Tax Ordinance (New Version) (the Ordinance) and the regulations promulgated thereunder. For the purpose of Section 102 of the Ordinance, the term 'employee' includes any officer of the company. Under Section 102, an employee equity-based benefit plan may be either with a trustee or without a trustee. Tax-favourable treatment is given only with a trustee. Where the plan has a trustee, the employer may choose one of two tax routes for the plan: an ordinary income route or a capital gain route.

The general conditions required for the purpose of being eligible for the tax treatment applicable to a trustee plan are as follows:

a The plan must be filed for approval by the ITA.

b The allotting company should be an Israeli company or an affiliate of an Israeli company.

c The approved awards can be issued under the plan only to Israeli-resident employees or officers of the company or any affiliate or subsidiary.2

d Israeli-resident employees must be employed by an Israeli-resident company or by a foreign company with a permanent establishment or research and development centre in Israel, provided that the company received prior approval from the ITA.

e The awards should vest in shares and not in cash.

f The grants should be made only after the lapse of 30 days from the day the plan was submitted for approval.

g Each award must be notified to the ITA by means of annual and quarterly reports.3

h The awards or underlying shares received upon exercise or vesting must be deposited4 with or controlled by a trustee for a period of:

• no less than 12 months from the date on which the grants were made, where the employer chooses the income route (income route lock-up period); or

• 24 months from the date on which the grants were made, where the employer chose the capital gain route (capital gain route lock-up period).

i Each employee must accept in writing the terms of Section 102 of the Ordinance, the chosen tax route and the applicable trustee arrangement.

j Certain tax rulings may be required in order to implement a certain equity plan under the trustee route.

The general terms and conditions of each tax route are as follows:

a The non-trustee plan route: the awards are not required to be deposited for a lock-up period with a trustee. Any award granted under this tax route, except for non-tradable rights to acquire shares, is subject to an immediate tax event (even if the shares are subject to restrictions). The tax event for non-tradable rights to acquire shares is deferred to a later time, when the employee sells the underlying shares. Upon the tax event, the employee is taxed at his or her full marginal income tax rate (including social security and health tax). In addition, the employer is not entitled to a tax deduction in the event that the employee obtains a tax deferral.

b The trustee plan or income route: the awards and any underlying shares must be deposited with a trustee for at least 12 months. The employee will be taxed at the time of sale at his or her marginal income tax rate and the employer will obtain a tax deduction.

c The trustee plan or capital gain route: the awards and underlying shares must be deposited with a trustee for at least 24 months. The employee will be taxed at the time of sale at a tax rate of 25 per cent. (For publicly traded companies or companies who list soon after the date of grant, only the increase in market price from the date of grant (if any) will be eligible for the reduced tax rate of 25 per cent and the remainder will be taxed as work income.) The employer will not be entitled to a tax deduction, except for circumstances in which the gain is subject to ordinary income tax rate (as detailed above), in which case a deduction is allowed where the gain is taxed as work income provided there is a charge back by the allowing company.

iii Social taxes for employees

Employment income derived by Israeli residents is also subject to social security contributions and health tax as follows:

For the portion of income up to 60% of the average salary (reduced rate) of 5,678 shekels

For the portion of income above 60% of the average salary and up to a total income of 43,240 shekels







Social insurance







Health insurance












iv Tax deductibility for employers

Generally, any income paid by the employer for which the employer withholds income tax from the employee's salary is a deductible expense for the employer.

In respect of equity awards, the tax consequences for the employer (local subsidiary) will depend on the type of awards granted and whether such awards are granted under a non-trustee route, a trustee capital gains route or a trustee ordinary income route.

Non-trustee route

For non-tradable rights to acquire shares granted under a non-trustee plan, the employer is not entitled to a tax deduction either at the time of grant, vesting, exercise or conversion or sale. For shares granted under a non-trustee plan where the employee is taxed at the time of grant, the employer will be entitled to a deduction, in the tax year in which the employee realises the income, equal to either the amount of the employee's work income, or the amount the allowing company charged the employer for the shares, whichever is the least. The employer will not be entitled to any deduction at the time the employee subsequently sells the shares. Where the employee is not taxed at grant, the employer will not be entitled to a tax deduction.

Trustee capital gains route

In respect of equity awards of a publicly traded company, the employer will be entitled to deduct, in the tax year in which the employee realises a capital gain, either the portion of the employee's gain that is treated as work income, or the amount the allotting company charged the employer for the award, whichever is the least. This rule applies to income classified as ordinary income under Section 102(b)(3) of the Ordinance and not in the event in which income is subject to ordinary income tax as a result of the violation of the statutory requirements (sale or released from trust before the end of the lock-up period).

Trustee ordinary income route

For all types of equity awards, assuming that the stock is not sold or released from trust before the end of the lock-up period, the employer will be entitled to deduct, in the tax year in which the employee realises work income, either the amount of the employee's work income, or the amount the allowing company charged the employer for the options, whichever is the least.


Hot topics in executive remuneration include the following:

a Relocation due to the tech companies operating research and development centres in Israel: the main effect of relocation is on equity awards, an aspect that should be examined in advance of relocation.

b Personal services companies being used at times by executives instead of direct engagement: this engagement structure triggers exposure to both the executive and mainly to the employer owing to reclassification issues. Any such engagement should be carefully examined prior to implementation.

c Equity compensation: as a result of the beneficial tax treatment that may be applied to equity awards made by companies with operations in Israel, companies are interested in implementing the most efficient plan for employee equity awards. The structure of any such equity plan will depend on the specific circumstances of the allotting company.

d Proxy advisory firms becoming more and more significant players in the Israeli capital market and in the structuring of executive remuneration.

e Share Based Compensation Accounting Expenses and the effect on transfer pricing arrangements (cost plus) between Israeli subsidiaries and their parent companies.


The relations between an executive and the engaging entity are usually reflected in an employment or service provider agreement. Personal employment contracts may be either written or oral; however, generally there is no obligation to sign employment agreements with the employees (with the exception of certain groups of employees). However, employers are required to provide all employees with written notice detailing certain required employment terms in accordance with the provisions of the Notice to the Employee and Job Candidate Law (Employment Conditions and Candidate Screening and Selection) 5762-2002 and relevant regulations, no later than 30 days after the date of commencement of their employment. A formal notice is also required to be provided when those terms and conditions are changed or updated (subject to certain exceptions).

For labour law purposes, there is no difference in legislation between executives and common employees. All employees are entitled to the protection of the relevant labour law legislation.

i Enforcement of non-compete and non-solicit provisions

In general, in certain fields, such as in the high-tech industry and with respect to senior employees, it is customary to include protective and post-termination covenants in the applicable employment agreements.

However, covenants not to compete, as well as covenants not to solicit, are rarely enforced in Israel. In general, Israeli law prefers, prima facie, the employee's freedom of occupation over the employer's right that a former employee will not compete with it.5 Accordingly, an employee is prohibited from competing with a former employer only if such competition may harm a legitimate interest of the employer (such as the breach of a trade secret).6 Similarly, when examining a claim of solicitation, the labour courts would check, among others, whether or not it is common for employees to transfer between competing companies in the particular industry.

According to case law, non-compete covenants that are incurred by employees will not be enforced unless there are specific circumstances, such as the following: (1) the former employer owns a trade secret that is unlawfully used by the employee; (2) the former employer has invested unique and valuable resources in the employee's training; (3) upon termination of the employee's employment with the former employer, the employee received special consideration in return for his or her non-compete undertaking; and (4) when a balance between the extent of the employee's conduct and good faith in taking the new position and the employee's obligation of fidelity towards the former employer indicates that the enforcement of the employee's non-compete covenant is justified. In this respect the courts will also consider the position of the employee and the field in which the employer operates.

In any event, even if a court decides to enforce a non-compete covenant, the enforcement will only be with respect to an obligation that can be considered reasonable in the scope of the employee's position, time and geographical limitation. The court also has the power to redraft the non-compete obligation (blue pencil) in order to make it more reasonable. In order to increase enforceability of a non-solicit provision, it is recommended to limit the scope of the restriction as much as possible.

We note that the use of gardening leave provisions may increase the enforceability of non-compete covenants for the duration of the gardening leave.

A person's non-compete and non-solicit obligations in his or her position as shareholder would be easier to enforce than a parallel undertaking made by an employee. If applicable, such undertaking should be made within the transaction documents, as a commercial provision, rather than within the employment documents.

ii Highlights for termination of employment in Israel

The general practices for termination of employment, which apply also in the case of a change of control, include, among others, performing a hearing procedure prior to making a final decision regarding the termination of the employee's employment, exercising good faith when making this decision, providing the employee with a prior written notice of termination, and confirming that all outstanding entitlements to which the employee is entitled are paid to him or her on time according to law.

According to the Severance Pay Law, as a general rule, an employee who is dismissed after completing at least one year of service with a particular employer or in a particular workplace is entitled to statutory severance pay.

Severance pay is calculated based on the employee's monthly base salary (as in effect at the time of termination) multiplied by the number of years of service (prorated when applicable).

In Israel it is very common, and in most circumstances mandatory, for an employer to effect a pension arrangement for its employees. The employer's payments to such pension arrangement are partially on account of (or in certain circumstances, in lieu of) the statutory severance pay (severance fund). Upon termination of employment, the employer transfers the pension arrangement to the employee. To the extent that payments to the severance fund were made on account of severance pay, then in addition, the employer pays the employee the shortfall between the amounts accrued in the severance fund, and the amount of statutory severance pay to which the employee is entitled by law.

There are several scenarios in which employees, although not dismissed, would be entitled to severance pay as if they had been dismissed (constructive dismissal). One of these scenarios is where employees resign by reasons of a substantial deterioration in the conditions of their employment, or in view of other matters of labour relations affecting them, and because of which the employees cannot be expected to continue their employment; the employees may also claim for a unilateral change of their employment terms, which may be considered a breach of their employment agreement with all attached implications.7

Upon termination and the carrying out of a final settlement of accounts, it is quite common that an employee is requested to sign a letter of receipt and release of claims towards the employer ('release').

According to Israeli case law,8 such a release does not constitute a formal bar to future claims by employees. However, a release may be enforced if the following conditions are met: (1) the employee was aware and had knowledge of the rights that he or she waived; (2) the employee was presented with a clear and comprehensible account of the sums he or she received prior to signing the release; (3) the release is clear and unambiguous; and (4) the employee signed the release of his or her own free will and not as a result of coercion by the employer.

We note that an employee cannot be forced to sign a release. On the other hand, if the employer decides to pay the employee an ex gratia (voluntary) payment or benefit over and above the legal requirement, the employer may condition such payment upon the signing of a release.

iii Methods for the transfer of employees due to mergers and acquisitions

When dealing with the issue of transfer of employees within a merger or acquisition, it is necessary to distinguish between the two primary types of acquisitions of a company: an asset transaction, which, in general, results in a change of employers, and a new legal personality of the business. In such a situation, Israeli labour law provides employees with certain protections regarding their rights in the workplace, even though their employer has changed (primarily where the employees continue to be employed in the same workplace, but by a different employer).

A share transaction is not considered a change in legal personality and therefore, all the obligations and rights of employees are preserved exactly as they existed before the sale.

The following analysis refers to asset sales only; however, in certain circumstances it may also be relevant to share transactions.

As a rule, an employee cannot be transferred to another employer without the employee's consent. Therefore, if an employee does not give his or her consent to the transfer, the seller would need either to continue to employ the employee or to terminate his or her employment (with all the relevant implications).

If an employee agrees to transfer to the buyer, then the employment agreement between the employee and the buyer will be considered a new agreement (subject to the following proviso), even if employment with the buyer is based on the same identical terms as the prior employment with the seller. The employee's consent to the transfer may either be in writing or implied (such as where the employee works for the buyer under the new terms of employment for a certain period).

In practice, there are two methods of transferring employees from the seller to the buyer. The first method involves the seller terminating the employees' employment and the buyer rehiring such employees ('fire and rehire'). From the seller's perspective, this method is identical to a normal situation of termination of employment. In such circumstances, the seller will have to carry out a final settlement of account with each person whose employment is being terminated, including providing prior notice and payment of severance pay.

The second method involves maintaining the employees' continuity of employment, that is, the buyer 'steps into' the seller's position as employer for all intents and purposes. In general, the seller and the buyer can agree that the buyer will step into the seller's shoes as employer for all intents and purposes. In such circumstances, the buyer will assume all the seller's obligations to the employees while maintaining the rights of the employees that are dependent on their seniority. This method increases the buyer's financial obligations towards the employees, as certain employee rights are based on the employees' continuity of employment with the employer. For example, the buyer's obligation to pay severance pay upon the future termination of any of the transferred employees may be increased, as this amount derives from the employees' last salary (which tends to increase over time), multiplied by the number of years of service.

iv Additional issues

In recent years, there has been a revival in the area of unionising of unorganised employees, which involves new, traditionally unorganised sectors (including the high-tech, cellular and insurance sectors). Amendments in the applicable law and principal rulings have substantially limited an employer's ability to prevent or intervene in any initial unionisation, thus facilitating the unionisation attempts.

The classification of a worker as an employee or an independent contractor is a matter of status, and, therefore, is not necessarily determined according to the contractual agreement between the parties. Accordingly, the labour courts and other authorities may reclassify a worker who was contractually defined as an independent contractor, as an employee based on the actual circumstances of the engagement, with all the financial implications of that reclassification. Employers should therefore limit the engagement of independent contracts to those who meet the legal criteria for the same.


According to Section 15 of the Securities Law of 1968 (the Securities Law), companies granting securities to 35 or more non-qualified offerees (including employees) in any 12-month period must file a prospectus with the Israeli Securities Authority (ISA) and receive an ISA permit to issue the prospectus. Section 15 of the Securities Law, however, also provides certain exemptions from the requirement of issuing a prospectus.

The following are the most common exemptions used by companies that have not listed any of their securities (shares or bonds) for trade on the Tel Aviv Stock Exchange (hence, not reporting corporations):

a Section 15B(2)(a) of the Securities Law provides that an offering to employees, pursuant to a benefit plan, of securities by a company that is not a 'reporting company' (i.e., a company required to file reports to the ISA) and whose shares are not listed for trade on a foreign stock exchange, will be exempt from the prospectus requirement if the total consideration received by the company within such offer does not exceed approximately 19.9 million shekels (adjusted for inflation) and the total number of shares that may be issued under the awards granted in the offering, combined with all other employee offers made in the 12-month period preceding the specific offer, does not exceed 10 percent of the total issued and outstanding share capital of the company (excluding convertible securities issued to anyone who is not an employee).

b Section 15B(4) of the Securities Law provides that an offering of securities by a company that is not a 'reporting company' (i.e., a company that is required to file reports to the ISA) does not require the publication of a prospectus if all the following conditions are met: (1) the maximum proceeds from the offer do not exceed approximately 2.65 million shekels (adjusted for inflation); (2) the total number of shares that may be issued in the offering does not exceed 5 per cent of the issued and outstanding share capital of the company; (3) the total number of shares that may be issued under the offering, combined with the shares issued in all other offers of the company that were not made pursuant to a prospectus, does not exceed 10 per cent of the total issued and outstanding share capital of the company (excluding convertible securities issued under any previous offer); and (4) the number of individuals being offered securities under the offer, and all other individuals who participated in the past in offerings made by the company that were not made pursuant to a prospectus, does not exceed 75. This is an automatic exemption and no official request or approval is required.

Section 15D of the Securities Law provides that the ISA may exempt from any or all the provisions of the Securities Law a company:

a whose securities are listed for trade outside Israel;

b that is not a reporting company; and

c that offers or sells its securities to its employees or to the employees of a corporation under its control, in Israel, within the framework of an employee benefit plan:

• if the ISA is satisfied that the laws of the country where the securities are traded sufficiently protect the interests of the employees in Israel; and

• the ISA may condition the exemption on such terms as the ISA shall prescribe for the purposes of ensuring that all the details required to be brought to the attention of the employees will be at the disposal of the employees, including a Hebrew translation of all the offering documents, and their delivery to the employees. This exemption requires a specific application to the ISA and a specific and formal approval.


Pursuant to the Securities Law and the regulations promulgated thereunder, Israeli reporting corporations (public companies and private companies with publicly traded debt) are required to provide public disclosure regarding the remuneration of senior office holders, as follows.

i Annual disclosure

In the framework of the annual report, reporting corporations have to include detailed information regarding the remuneration of (1) the top five senior office holders who received the highest remuneration in the corporation (or in corporations controlled by it) in the relevant year, (2) the top three senior office holders who received the highest remuneration in the corporation itself, if not included under (1), and (3) any interested party entitled to receive remuneration from the corporation (including shareholders holding more than 5 per cent and board members).9

The disclosure in the annual report is in the form of a table, detailing the annual sums of all components of the remuneration, including salary, bonuses, share-based awards, pension arrangements, retirement plans and any other remuneration, whether granted by the corporation itself or by another entity, with respect to his or her service in the corporation (or in corporations controlled by it). The value of share-based awards is set according to generally accepted accounting principles.

ii Quarterly disclosure

In the framework of the quarterly report, reporting corporations have to include information regarding any material changes in connection with office holders' remuneration.10

iii Ongoing disclosure

Reporting corporations have to file immediate reports regarding remuneration, in the event of (1) any engagement with the chief executive officer regarding remuneration that requires the approval of the general meeting, (2) any engagement with an officeholder that deviates from the company's compensation policy, and therefore requires the approval of the general meeting, and (3) any extraordinary transaction with the corporation's controlling shareholder.11 Usually, immediate reports have to be filed on the next business day following the approval of the remuneration terms by the relevant organs.12

The immediate report has to include detailed information regarding all components of the remuneration, as described above. There is no obligation to attach the remuneration agreements themselves, but rather only a description thereof.

In addition, a detailed report shall be filed in the event a reporting corporation convenes a general meeting for the approval of a remuneration policy.


i Approval requirements

The Israeli Companies Law sets out the required approvals for officer remuneration in Israeli companies, which may include approvals by the remuneration committee, the board of directors, the shareholders by a regular majority or the shareholders by a majority of the non-controlling shareholders, all depending on whether the company is public or private, whether the officer is a director, a controlling shareholder, the chief executive officer or another office holder, and whether the suggested remuneration terms are consistent with the remuneration policy.13

In recent years, proxy advisory firms started to be active in the Israeli capital market and had a major effect on the design of remuneration policies and officer compensation terms.

ii Remuneration committee

In accordance with the Israeli Companies Law, Israeli reporting corporations are required to appoint a remuneration committee, consisting of at least three directors, including all external directors who will constitute the majority members of the committee.14 External directors are members of the board who comply with certain independence requirements set out in the Israeli Companies Law. The chairman of the board, the company's controlling shareholder or a relative, a director who is employed by the company and a director who regularly provides services to the company may not be members of the remuneration committee.15 The main responsibilities of the remuneration committee are:

a to advise and make recommendations to the board of directors regarding the adoption of a remuneration policy and its continued validity once every three years;

b to advise and make recommendations to the board of directors whether to update the remuneration policy and examine the implementation thereof from time to time; and

c to decide whether to approve the remuneration of officers, when such approval is required.16

iii Remuneration policy

The boards of directors of Israeli reporting corporations are required to adopt a policy regarding remuneration and terms of employment of officers, after examining the recommendations of the remuneration committee in this regard.17 The remuneration policy should be approved by a company's board of directors and by a majority of the non-controlling shareholders of a company;18 however, even if shareholders' approval is not obtained, the board of directors may still adopt the remuneration policy, provided that the remuneration committee, and thereafter the board of directors, have determined, based on detailed arguments and after re-discussing the remuneration policy, that despite the shareholders' opposition, approval of the remuneration policy is in the company's best interest.19

The Israeli Companies Law sets forth certain mandatory issues that must be included in the remuneration policy, including a provision regarding reimbursement of remuneration in the event of financial restatement.

viii Specialised regulatory regimes

Israeli regulation of executive remuneration also regulates executive remuneration in the Israeli financial sector. Remuneration of executives in the Israeli financial sector is regulated by the Israeli Remuneration for Office Holders in Financial Corporations Law (Special Approval and In-admissibility of Expenses for Tax Purposes due to Irregular Remuneration) 5776-2016 (the Remuneration in Financial Corporations Law).

The Remuneration in Financial Corporations Law applies to all financial bodies in Israel, including, generally, institutional bodies, companies whose purpose is issuance of index products, mutual fund managers, portfolio managers, banking corporations and other bodies providing financial services as generally determined by the Israeli Minister of Finance (Financial Corporations), and, generally, does not apply to foreign Financial Corporations. This law applies the same rules, including caps, to all Financial Corporations, regardless of their size or scope of activity. In addition, this regulation shall also apply to controlling corporations of financial bodies (i.e., a company meets all these conditions: (1) it controls a financial body; (2) it holds more than 30 per cent of such financial body; and (3) more than 50 per cent of its assets are holdings in financial bodies in which it has control).

According to the Remuneration in Financial Corporations Law, the expected expense for the remuneration of an executive office holder, or the expected expense for the employment of an employee of a financial corporation, may not be higher than 35 times the lowest expense paid in the year preceding the date of the agreement, directly or indirectly, for the employment of any employee of such financial corporation (including contractor workers). Additionally, if the expense for the remuneration of an executive office holder or employment of an employee of a financial corporation is expected to exceed 2.5 million shekels (approximately US$700,000) (the ceiling), then it will require certain special approvals: (1) approval of the remuneration committee or the audit committee; (2) approval of the board of directors, which in a public company will include the majority of the external or statutory independent directors; and (3) in a public company, the approval of the shareholders of the financial corporation, which will include the majority of the non-controlling shareholders.

The Remuneration in Financial Corporations Law also sets a deterrence mechanism for high compensation in financial corporations, by not allowing a financial corporation to deduct from the financial corporation's taxable income the amount of expenses for remuneration or employment that exceeds the CPI-linked ceiling.

In addition to the above, the Israeli regulation also sets certain restrictions upon the executive remuneration of officeholders in different types of third-sector corporations (non-governmental organisations).


1 Shachar Porat, Orly Gerbi and Efrat Tzur are partners, and Keren Assaf and Michal Lavi are associates at Herzog Fox & Neeman, Law Office.

2 However, this excludes a controlling member of the issuing company, which is defined as anyone who holds 10 per cent or more of the issued share capital of the issuing company or of the voting rights in it, or who has rights to 10 per cent or more of the issuing company's profits, or who is entitled to appoint a director in the issuing company.

3 Under tax regulations promulgated under Section 102, reports regarding details of the grants must be filed at the end of each quarter, on Form 146, and annually, by 31 March of the following year, on Form 156. However, for reports due in 2004 onwards the deadline has been extended indefinitely because of problems with the system; the date will be published in the future. Forms 146 and 156 are to be completed in a mechanised form by using special software that can be purchased on the market and are to be filed either on a disk or through a special system that links accountants to the tax authorities.

4 On 24 July 2012, the ITA published formal guidance regarding the deposit requirements under Section 102 (the Guidance). In short, the Guidance determines that for grants approved after 24 July 2012, the company must provide the trustee with a copy of the applicable board resolution within 45 days of the board resolution and further provide signed grant documents within 90 days of the board resolution. In relation to grants approved on or before 24 July 2012, the general requirement is that written notice should have been provided to the trustee regarding the grants within 90 days of grant. On 6 November 2012, the ITA published a clarification to the provisions of the Guidance regarding equity awards granted under trustee routes under Section 102 of the Ordinance on or before 24 July 2012. The clarification determines (among other issues) that, in relation to grants made on or before 24 July 2012, a regular transfer of the grant details in writing from the company to the trustee within 90 days of the grant date will be sufficient to satisfy the deposit requirements. The clarification further includes two alternative solutions in the event the grants were deposited more than 90 days after the date of grant. Both alternatives required a formal application to the ITA, which could have been filed by 5 November 2013. These alternatives are no longer available; therefore, any amendment of a previous delay in deposit will require a tax ruling from the ITA.

5 LA 164/99 Frumer v. Radguard Ltd PDA 34, 294 (1999); CA 6601/96 AES Sys. Inc. v. Saar PDI 54 (3), 85.

6 LA 15/99 Dairex Medical Sy Ltd. v. Avner Spektor PDA 40 721 (a limitation on profession for a period of three years was not enforced); LA 189/03 Girit Ltd. v. Mordechai Aviv PDA 39 728 (an undertaking not to communicate with suppliers for a period of one year was enforced); LA 1141/00 Har Zahav Food Services Ltd v. Foodline Ltd PDA 38 72 (a non-compete provision for a period of nine months was not enforced); LA 1045/00 Kadron Flight Techs Ltd v. SGD Eng'g Ltd PDA 36 180 (a limitation on profession for a period of one year was not enforced).

7 Section 11 of the Severance Pay Law, 404 SH 136; LA 1271/00 Emi Matom Architects Engineers and Consultants Ltd v. Haim Avraham PDA 39 587.

8 LA 163/05 Discount Bank Israel v. Sason Maron, available on Israeli legal databases, 11 July 2006, and the case law cited therein.

9 Regulation 21 of the Securities Regulations (Periodic and Immediate Reports) 1970.

10 Regulation 48 of the Securities Regulations (Periodic and Immediate Reports) 1970.

11 Regulation 36B of the Securities Regulations (Periodic and Immediate Reports) 1970.

12 Regulation 30 of the Securities Regulations (Periodic and Immediate Reports) 1970.

13 The fifth chapter of the sixth part of the Companies Law, 5759-1999.

14 Section 118a of the Companies Law, 5759-1999.

15 Section 115(b) of the Companies Law, 5759-1999.

16 Section 118b of the Companies Law, 5759-1999.

17 Section 267a(a) of the Companies Law, 5759-1999.

18 Section 267a(b) of the Companies Law, 5759-1999.

19 Section 267a(c) of the Companies Law, 5759-1999.