ISRAEL Law and Practice Contributed by: Shiri Shaham, Yuval Shalheveth, Aviad Lachmanovitch and Asher Bichoonski, Arnon, Tadmor-Levy
limitations on the commission or other fees imposed upon buyback. There are additional requirements applicable to the buyback of listed bonds. With respect to loans extended to individuals (as opposed to corporations), the Fair Credit Law requires proper disclosure of the right for buyback and the terms thereof. Nonetheless, the said law does not define such terms or require lenders to always allow the borrower to perform such buyback. 3.8 Public Acquisition Finance Israeli regulations do not expressly address “certain funds” conditions, and there are no provisions explic- itly imposing regulatory requirements on this matter. There are customary contractual terms that may impose similar provisions but while these provisions are relatively common, they are not mandatory. 3.9 Recent Legal and Commercial Developments The following recent developments have required cer- tain changes to legal documentation of credit facilities and security documents. • The Fair Credit Law 1993, which applies to loans provided to individuals, was amended in 2023 and required additional disclosures, limited the interest rate and added further regulatory requirements. • The Insolvency and Economic Rehabilitation Law 2019: (a) changed many of the terms used in the context of insolvency; (b) changed the procedure for enforcement of security interests of entities under insolvency proceedings; (c) disallowed creditors to unilaterally terminate agreements upon insolvency; and (d) required that 25% of the proceeds from realis- ing floating charges will be distributed to unse- cured creditors. • Changes to the privacy protection legislation required amendments to the provisions in loan agreements relating to the collection, use and transfer of data.
• The application of the Credit Data Law, 2016, which includes the collection of information relat- ing to credit provided to individuals to a centralised database managed by the Bank of Israel and the use of such information by authorised credit data bureaus, required proper documentation, address- ing: (a) disclosure of the transfer of information to the centralised database and the use of credit indications; and (b) consent of the borrower for obtaining detailed credit reports regarding the borrower. • The Financial Data Service Law 2021 requires lend- ers to co-operate with licence providers of finan- cial data services, including financial consultants, aggregators of information and providers of price comparison services. The said changes sometimes require amendments to the loan documentation. On the commercial side, the increased activities of non- banking lenders and the increased sale of credit port- folios among lenders of various types made it neces- sary to comprehensively address the right to assign the loans and the backing securities, as well as changes which may be required upon such assignments. 3.10 Usury Laws Israeli law provides maximum interest rates on certain loans. Loans to individuals are subject to a maximum interest rate and a maximum penalty interest rate. The maximum rate for loans in local (Israeli) currency is based on a margin of 15% per annum over the base interest rate published by the Bank of Israel (the effec- tive maximum rate is currently 19%). The maximum rate for loans in foreign currency is LIBOR plus 15% per annum. The law was not formally updated but the Secured Overnight Financing Rate (SOFR) will probably be taken as the base interest. The maximum penalty interest rate is the maximum (ordinary) interest rate multiplied by 1.2. For index-linked loans in the new Israeli shekel, the maximum interest rate that can be applied on the
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