ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira, Liron Hacohen and Nataly Margalit, Arnon, Tadmor-Levy
agreement, the contract shall be interpreted solely according to its wording, unless: • the wording of the contract alone leads to an absurd result; and • the wording of the contract alone reveals a contra - diction between different provisions thereof. Only if these conditions are met will the court be per - mitted to exercise discretion in interpreting the con - tract. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies Under Israeli law, several provisions limit a buyer’s ability quietly to accumulate shares in a public compa - ny before launching an official offer. Specifically, any acquisition that would result in the purchaser holding: • more than 25% of shares (when no other share - holder holds at least 25%); or • more than 45% of shares (when no other share - holder holds at least 45%) must be conducted through a special tender offer process, which is subject to specific regulatory requirements. Furthermore, in the context of a partial tender offer, the offeror is required to disclose whether it has any commitments or intentions to increase its holdings in the company (see 4.6 Transparency ). Additionally, bidders building a stake in a target company are subject to the disclosure obligation mentioned in 4.2 Material Shareholding Disclosure Threshold . 4.2 Material Shareholding Disclosure Threshold Under Israeli securities laws, any person who acquires 5% or more of the shares or voting rights in a public company must: • disclose their identity and detailed holdings infor - mation to the company; and • report all subsequent purchases or sales of the company’s securities.
This information becomes publicly available through the company’s mandatory disclosures to the market. 4.3 Hurdles to Stakebuilding Israeli law does not permit public companies to mod - ify the mandatory 5% reporting threshold for sub - stantial shareholders through corporate documents or by-laws. This requirement is statutory and cannot be waived or altered. Additional quantitative limitations apply to tender offers as detailed in 4.1 Principal Stakebuilding Strat- egies , creating further structural hurdles to stakebuild - ing. 4.4 Dealings in Derivatives As a general rule, there is no prohibition on independ - ent trading in derivatives is Israel. However, certain restrictions may apply regarding the provision of advice/marketing related to derivatives, or trading with Israeli clients (such as in a trading platform), which are regulated financial activities and require appropriate licensing in Israel. 4.5 Filing/Reporting Obligations Any interested party in a public company (ie, holders of 5% or more of shares or voting rights) is required, among other things, to disclose to the company its holdings in derivative securities, the value of which is derived from the value of the public company’s secu - rities. Additionally, there are certain provisions set by the ISA regarding the disclosure of holdings in the shares of a public company that are subject to SWAP transac - tions (that is, derivative contracts between two parties that involve the exchange of pre-agreed cash flows), except for SWAP transactions that are solely for the purpose of acquiring financial exposure or do not result in crossing the mandatory reporting thresholds (such as the 5% threshold for interested parties). 4.6 Transparency Under Israeli law, in the context of a partial tender offer, the offeror must disclose:
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