AGMs in Israel: Unlock Expert Insights and Everything You Need to Know
Annual General Meetings (AGMs) are a cornerstone of corporate governance in Israel, ensuring transparency and accountability within companies. Here’s a comprehensive checklist to help you navigate the essential aspects, legal requirements, and procedural guidelines of AGMs in Israel.
Legal Mandate and Timing for AGMs
Know the Deadline: Companies must hold an AGM no later than fifteen months after the previous AGM, as mandated by Section 60 of the Companies Law. This applies to all companies, regardless of their legal form.
Plan Ahead: Ensure your company’s Articles of Association outline procedures for rescheduling the AGM if necessary. If not, the AGM must occur within the legally mandated timeframe.
Rescheduling and Legal Consequences
Avoid Legal Issues: If an AGM is not held on time, any shareholder or director can request the court to mandate the meeting. Directors responsible for delays may be liable for court costs.
Notification and Agenda Setting
Send Invitations Early: Directors must invite shareholders to the AGM no later than seven days before the meeting. The invitation should include the date, place, and agenda.
Add Agenda Items: Shareholders with more than 1% of the voting rights can request additional agenda items. Submit proposals in writing to the Board of Directors.
Conducting the AGMs
Choose the Format: AGMs can be conducted through:
- Physical meetings.
- Virtual meetings, provided all participants can communicate simultaneously.
- Written resolutions, if unanimously agreed upon by all voting shareholders.
Elect a Chairman: Start the meeting by electing a Chairman to preside over the proceedings.
Voting Options: Shareholders can vote in writing directly or through a proxy. Decisions are typically made by a simple majority based on the number of shares voted.
Quorum and Voting Rights
Ensure a Quorum: A quorum requires at least two shareholders with a minimum of 25% of the voting rights. If not met, postpone the meeting for one week.
Understand Voting Rights: Each share grants one vote unless specified otherwise in the articles of association.
Financial Statements and Auditing
Prepare Financial Statements: Accountants should compile accurate financial data following accounting standards.
Review and Distribute: Board members review the financial statements, and shareholders receive copies before the AGM.
Get Approval: Present and approve the financial statements at the AGM. Shareholders can ask questions and seek clarifications.
Audit Compliance: Ensure financial statements are audited to present a true and fair view of the company’s financial position.
Documentation and Compliance
Retain Records: Keep AGM minutes and financial statements for seven years at the company’s registered office. Shareholders have the right to access these records.
Avoid Penalties: Non-compliance with AGM requirements can lead to legal and financial repercussions, such as refusal to register certain actions by the Companies Registrar and tax penalties for overdue payments.
Additional Tips for AGMs
Did You Know? Shareholders can request the inclusion of additional agenda items if they hold more than 1% of the voting rights.
File Correctly: While there’s no need to file financial statements with the Companies Registrar, ensure timely filing with tax authorities.
Stay Informed: Regularly check the Companies Registrar’s website for updates on filing requirements and compliance.
Conclusion
AGMs are vital for maintaining corporate transparency and accountability in Israel. By following this checklist, companies can ensure compliance with legal requirements, foster shareholder engagement, and build a foundation for sustainable growth. Adhering to these guidelines not only keeps your company within the law but also strengthens trust and transparency among shareholders and stakeholders.
For those looking to perfect their approach to Annual General Meetings (AGMs) in various jurisdictions, Klea offers unparalleled expertise. Our comprehensive internal article, Mastering AGM in Algeria: The Ultimate Guide, provides invaluable insights tailored specifically for AGMs in Algeria. With extensive experience in multiple jurisdictions, Klea is uniquely positioned to help you navigate AGM requirements internationally, ensuring compliance and fostering success across borders.
