ISRAEL Law and Practice Contributed by: Benjamin (Benny) Sheffer and Lance Blumenthal, S. Horowitz & Co.
in value, or the target board changes its recommen- dation after concluding it must do so to fulfil its legal duties. 4.13 Securities Regulator’s or Stock Exchange Process The tender offer documents must be filed with the ISA and the Tel Aviv Stock Exchange (TASE), but formal pre-approval of the offer price or terms is generally not required. The ISA reviews the disclosure to ensure, inter alia, accuracy and fairness and may request clar- ifications or amendments. The timing depends on the complexity of the transac- tion, but the process usually takes a few weeks. If the offer includes share consideration, a prospectus must be approved by the ISA, which can take longer. The tender offer timeline is set by the Securities Regu- lations (usually 21–35 days), rather than by the regula- tor’s discretion. If a competing offer is launched, the timetable may be extended to allow shareholders a fair opportunity to consider both offers, and the first bidder generally has the discretion to adjust its terms or withdraw its offer. A final deadline is usually included in the merger or takeover agreement to avoid prolonged uncertainty. By that date, all required conditions (such as regula- tory approvals) must be completed. If the deal is not finished by the long-stop date, either party can usually walk away without penalty. 4.14 Timing of the Takeover Offer A tender offer can be extended if it cannot be com- pleted because regulatory approvals are still pend- ing, but the extension must comply with the statutory timelines (see 4.13 Securities Regulator’s or Stock Exchange Process ) and be clearly disclosed to the market. The bidder will generally keep the offer open until approvals are received, provided that the delay is for legitimate regulatory reasons. The Israel Securi- ties Authority may require updated disclosures if the process becomes lengthy. It is common practice to begin the regulatory approval process after the deal is announced but before the offer closes, and some approvals often progress
before the formal launch of the tender period. In sen- sitive sectors like energy and infrastructure which may require approvals from various authorities, bidders usually engage regulators early to avoid timing issues and reduce execution risk. 4.15 Privately Held Companies Privately held companies in Israel are most common- ly acquired through share purchases, where buyers acquire shares directly from existing shareholders, or through asset purchases when the buyer wants selected assets without assuming wider liabilities. Statutory mergers under the Israeli Companies Law are also used when tax or operational efficiencies justify a more formal combination. In such circum- stances, extensive due diligence across financial, legal, employment, tax, IP and data compliance areas, securing any required regulatory approvals (such as from the Israel Competition Authority or sector-specif- ic regulators), and complying with shareholder rights in the Articles of Association and shareholders’ agree- ments, is paramount. Employee rights are a major focus owing to strict Israeli labour law around continuity of employment, accrued benefits, and pension/severance liabilities. There is usually a need for tax restructuring, and in more complex cases, buyers may seek advance rul- ings from the Israeli Tax Authority. Clearly worded representations, warranties and indemnity protections are vital to mitigate risks fol- lowing the closing. 5. Overview of Regulatory Requirements 5.1 Regulations Applicable to Energy and Infrastructure Companies Establishing and operating a new company in the energy and infrastructure sector in Israel is subject to specific regulations.
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