ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira and Moshe Pasker, Arnon, Tadmor-Levy
the acquisition of interests in natural resources or other essential services. 2.3 Restrictions on Foreign Investments Israel has no general unified legislation or approval regime for foreign direct investment (FDI). As a result, there are no broad, cross-sec - tor consolidated controls on foreign investments in the country. Foreign entities can generally purchase and sell assets and securities in Israel at will, and FDI is not categorically prohibited in any par - ticular sector. That said, there are a series of standalone, sector-specific FDI regulations and requirements. These regulations and require - ments often relate to investments in companies operating in the public utility and infrastructure fields. FDI requirements may also stem from terms included in government licences, public tenders or concessions. In addition, under Israeli law there are various restrictions and prohibitions related to anti- terrorism and national security concerns. For example: • the Israeli State bans all economic activity of Israelis with “enemy states, entities or nation- als” , including direct and indirect trade. Iran, Syria, Lebanon and Iraq (with certain exemp - tions for Iraq) are considered to be “enemy states” by the Israeli State; • the Israeli State also restricts imports from “non-enemy states” without diplomatic ties with Israel, which require special permits; and • defence-related exports and knowledge transfer are strictly regulated to protect national security, and the export of certain civilian goods that could have military appli - cations (ie, dual-use goods) is also highly regulated.
Within Israel’s regulatory structure, regulators overseeing a specific sector typically have wide discretion in issuing and revoking licences, concessions and permits. As such, regulators can include specific conditions, restrictions or approval requirements regarding FDI and subse - quently alter them as they see fit. The exercise of regulatory discretion, as well as any action by a regulator, is subject to the principle of legal - ity, the rules of the administrative process and the principles of judicial review of administrative discretion. Alongside the FDI-related obligations that may be implemented in licences, concessions and permits, contractual regulations have become increasingly common in Israel. FDI conditions can also be found in agreements between public and private entities. 2.4 Antitrust Regulations A transaction requires prior approval from the ICA Commissioner if: • it qualifies as “merger of companies” ; • at least two of the merging parties have a suf - ficient nexus to Israel; and • at least one of the three statutory filing thresholds is met. “Merger of companies” is defined specifically and generally. The specific definition refers to acquiring the target company’s principal assets, or more than 25% of its shares, voting rights, rights to appoint directors or dividend rights. The general definition applies even if these criteria are not met if the transaction creates substantial and ongoing influence between the parties’ deci - sion-making processes. The ICA has increasing - ly focused on this broader interpretation of the “merger of companies” definition.
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