Full Press Release Details
Translation into English of Staff Position of the Israel Securities Authority
Authority Letterhead]
Subject: Change to reporting in accordance
with Chapter E'3 of the Securities Law
On November 26, 2015 the Company announced the completion of
an initial public offering of its securities on the NASDAQ, which was effected by way of prospectus prepared in accordance with
American law, subsequent to which the Company is required to report in English to its shareholders in the USA pursuant to the laws
which apply to companies listed for trading on the NASDAQ.
The Company received approximately $13 million dollars in the
offering, and following the offering, the shareholders who acquired the Company's securities in the offering held approximately
83% of the issued and outstanding share capital of the Company.
Following the aforesaid offering, the Company reported that
it intends to hold a shareholders meeting on December 28, 2015 for purposes of voting on approving a change in reporting to Chapter
E'3 of the Securities Law ("Dual Listing").
Should the Company hold separate class meetings of the holders
of securities traded on the TASE, in order to comply with the provisions of Section 35XXXII(c) of the Securities Law for the purposes
of changing to reporting under a Dual Listing?
Staff Position of the Israel Securities Authority
Section 35XXXII of the Securities Law establishes that a Company
whose securities are listed on the TASE as well as an exchange abroad included in the appendix to the Securities Law, is permitted
to change its reporting to Chapter E'3 of the Securities Law if it received the consent of "of a majority of votes
of holders of the securities - other than controlling shareholders of the body corporate - who participate in the vote
in meetings of securities holders by categories, called by the body corporate for this matter"[1]
(emphasis not in the original):
Translations of the Securities Law are taken from Israel Securities Authority unofficial convenience translation
35XXXII. (a) If the securities of a body corporate
are listed for trading on a Stock Exchange and are also listed for trading on a Stock Exchange abroad, and if it reports under
the provisions of Chapter Six, it may shift to reporting under the provisions of this Chapter as long as its securities are listed
(a1) If the provisions of subsection (a) do not
apply to a body corporate because a certain category of its securities is listed for trading only on the Stock Exchange, it may
shift to reporting under the provisions of this Chapter, if the Authority granted it exemption from reporting under the provisions
of Chapter Six, and the Authority may make the grant of the said exemption conditional on conditions that in its opinion are necessary
in order to secure the interests of the public that invests in securities that are listed for trading only on the Stock Exchange.
(b) A body corporate that reports under the provisions
of this Chapter, may shift to reporting under the provisions of Chapter Six.
(c) A shift said in subsections (a) to (b) requires
the consent of a majority of votes of holders of the securities - other than controlling shareholders of the body corporate
- who participate in the vote in meetings of securities holders by categories, called by the body corporate for this matter.
Aside from the change in the language of reporting, the shift
in reporting also changes the principles of the reporting and the regulatory supervision. A company which starts Dual Listing reporting
can also relatively easily delist its securities from trading in Israel.
As such, the legislator saw fit that such a shift in reporting
should be effected only pursuant to approval of the holders of securities of the corporation, on the assumption that the investors
who relied on the Securities Law (including disclosures and reporting) are liable to be negatively impacted from the shift in reporting.
As such, the purpose of the arrangement set out in Section 35XXXII
of the Securities Law is to ensure that a decision of a company to change from reporting in accordance with Chapter F of the Securities
Law will be made by the securities holders who acquired their securities when the company reported under Chapter F, and in reliance
upon such reporting. The staff position is such that the purposive interpretation of the statute requires relating to the holders
of securities which are traded on the TASE (who acquired their securities in reliance upon the Israeli law) as a separate class
from the holders of securities listed on the NASDAQ (who acquired their securities in reliance upon American law). As such the
decision to change the reporting to Dual Listing reporting requires the consent of the class meeting in which only holders which
hold their securities on the TASE participate.
This interpretation is necessary. The investors in the public
offering on the NASDAQ acquired their securities in reliance upon its reporting regime. Such investors do not rely on the reports
of the Company to the TASE and are not protected by the Securities Law. They rely on the reports of the Company under American
law and are protected by such. Granting them the ability to bring about the decision on a shift in reporting (and in effect the
end of reporting under Israeli law) is not acceptable.
As such, in order to comply with the provisions of Section
35XXXII(c) of the Securities Law, the Company must hold class meetings, while distinguishing between the various classes of security
holders - such that there will be separate meetings of the holders of securities which are traded on the TASE and separate
meetings of the holders of securities which are traded on the NASDAQ.
By virtue of our authority under Section 36(f) of the Securities
Law, the Company is requested to publish this staff position in an immediate report no later than December 20, 2015 at 10:00 A.M.
Division of Corporations