Corporate and Commercial Law

In order to help your business navigate the Israeli legal system, this guide serves as a blueprint for foreign entities. We break down the legal milestones and expectations required by local authorities. This guide will talk about company structuring, investment protections, commercial contracts, and rules regarding Israeli labor laws. Our law firm’s goal is to help your business achieve maximum potential in the vibrant Israeli economy.

Yes, foreign citizens and international corporations can legally own an Israeli company and complete the registration process with the Israeli Corporations Authority. However, a company that’s not owned by any Israeli shareholder, will be required to appoint a local representative at the tax authority.

Israel is known as being a global center for innovation, technology, and entrepreneurship. This attracts foreign investment and international business activity. From startups to multinational corporations, companies operating in Israel benefit from a dynamic commercial environment, a highly skilled workforce, and access to global markets. Companies also have to maintain a deep understanding of the legal framework required to operate a successful business. 

In addition, many different sources praise Israel highly amongst other countries when it comes to business and economic opportunity. The US News top countries report in 2026 has Israel as the 12th best country for economic development and 28th for opportunity. Within those categories, business formation and income are scored very highly. The US News also gives Israeli Research and Development a perfect 100 score, ranking it the highest in the world. Many other websites and reports also show that Israel can compete with anyone. In 2024 the World Population Review had Israel as the fourth most entrepreneurial country. 

There are countless reasons that are backed up by data to show how strong and promising the Israeli economy is. Not only is Israel great for existing companies, it is also phenomenal for entrepreneurs looking to build their own company. However, it is important to remember that strong legal guidance is necessary for creating your dream business in Israel. That is where our law offices in Tel Aviv and Jerusalem come into play.

When starting a business, or establishing a subsidiary in Israel, entrepreneurs and investors are faced with the decision of choosing appropriate legal structure. In most cases, businesses operate through a private company. This provides shareholders protection while allowing flexibility in management and ownership. 

Establishing a company requires registration through the Israeli Companies Registrar at the Ministry of Justice and compliance with legal and regulatory requirements.

In addition to company formation, businesses must maintain proper corporate governance throughout all operations. This refers to rules, procedures, and decision-making processes that govern how a company is managed. Corporate governance also establishes the rules between company operatives and the company’s obligations under Israeli law. 

Internal compliance involves strict annual obligations. Once a year, an Israeli company is legally required to pay annual fees and submit a annual report to the Companies Registrar. Additionally, businesses must submit an annual financial report to the Israeli tax authorities. This process that is completed with the professional assistance of a Certified Public Accountant.

Watching over a business is extremely important because it helps reduce risk, maintain regulatory compliance, and avoid disputes among shareholders and management. Companies should also make sure that everything is documented. Having information and transactions written down will help make sure no disputes arise. If a business has multiple shareholders, it could be beneficial to have a shareholder agreement. This could contain information on voting rights, ownership transfers, management authority, and what to do during a dispute. In addition, an Israeli company must submit bylaws to the registrar when establishing their business. 

Decker, Pex, & Co can assist clients with all of their needs when starting or maintaining a business. We work closely with entrepreneurs, investors, and established businesses to make sure that their corporate framework supports legal compliance and long-term goals. 

As mentioned, Israel is a hotspot for foreign investment, especially in technology. Foreign investors have the option to invest in startups or purchase shares in existing companies. Regardless of what the investor chooses to do, there are many legal and regulatory requirements that apply to these investments.

For American citizens looking to take an active role in their business, Israel offers a unique pathway via the B-5 Investor Visa. The B-5 Visa is a permit that allows American citizens to make a substantial financial investment to reside and legally manage their business directly within Israel. In order to qualify for the visa, a U.S. investor must hold at least 50% ownership of the Israeli company and show that the business will continue to operate in the local economy. This is typically through generating revenue and employing Israeli citizens. 

The B-5 is initially granted for a two-year window but can be extended as long as the company remains fully optional. It also allows the primary investor to sponsor essential American employees.

One important step in an investment is conducting due diligence. Before investing, investors should review company records, contracts, rights, and any other important information to make sure there aren’t any ongoing issues. Identifying issues at an early stage can help in the future by avoiding disputes after the investment is made.

Foreign investors should also think about how the investment will be structured. Voting rights, shareholder protections, exit strategies, and dispute resolutions should all be clearly addressed before making an investment final. 

When entering the Israeli market, businesses must decide whether to establish a local subsidiary, register a branch office, or choose a different investment structure. Which option a business chooses depends entirely on the investor’s goals. Careful planning and making the right choice can protect the investment and lay the foundation for future growth. 

Our law firm regularly assists foreign investors and international companies with investments in Israel. We advise clients on structuring their investments, how to perform due diligence, and drafting and negotiating agreements. We also stay with our clients throughout their investment process to ensure that they are properly supported. In addition, we work closely with Certified Public Accountants (CPAs) who can provide expert counsel regarding international taxation implications, corporate tax structure, and double-taxation treaties. At Decker, Pex & Co we make sure that your best interests will always be protected.

Commercial agreements form the foundation of most business relationships. Whether hiring service providers, working with distributors, or creating a partnership, a drafted agreement helps define each party’s responsibilities and rights. Agreements also help reduce the risk of disputes in the future. 

Israeli businesses commonly use agreements such as service agreements, distribution agreements, licensing agreements, NDAs, partnership agreements, and joint venture agreements. All of these contracts should address issues such as payment terms, performance standards, ownership rights, liability limitations, termination procedures, and ways to handle disputes. Failure to complete agreements can create costly legal conflicts.

For foreign companies doing business in Israel, it is important to ensure that commercial agreements completely comply with Israeli law. Drafted agreements that were used in another jurisdiction may not provide proper protection when applied to business activities conducted in Israel. Legal review can help identify potential risks and make sure that a contact is enforceable.

When an international business expands into Israel, it needs to hire local employees or manage remote talent. This is an area where foreign employees can get caught up in legal issues if they do not know and adapt to local rules. 

Unlike many places in the United States, Israeli employment is not “at-will”. The Israeli legal system features highly protective labor laws, mandatory benefits, and extension orders that apply automatically to all workers.

A foreign company cannot abruptly dismiss an Israeli employee. Doing so can lead to crushing financial penalties and lawsuits in labor courts. 

Before a termination decision can be finalized and processed, the employer must issue a formal “Notice of Hearing”. The document has to list the exact reason why a termination is being considered for the employee. 

A formal hearing must then be held. During the session, the worker has the right to review the claims, present a defense, and attempt to persuade the employer.

Employers in Israel must pay social benefits that cannot be waived by an employment contract. These benefits include pension contributions, convalescence pay, paid leave, and severance allocations. 

Our law office in Tel Aviv in Jerusalem works closely with corporate clients to draft employment contracts. We guide foreign managers through the proper hiring and termination steps to help your business avoid financial penalties.

Commercial disputes can arise even with the most carefully drafted agreements. Because traditional courtroom litigation in Israel can be a long, grueling process, commercial contracts usually include a structured dispute resolution clause to solve disputes more easily. 

Most resolution clauses agree that parties should first attempt to resolve the dispute through mediation. This is when a third-party mediator works with both companies to find a mutually beneficial compromise in a confidential setting. 

If mediation fails, some agreements mention moving to arbitration. This process acts as a private court, where an expert (often a retired judge or experienced attorney) hears both sides of the case. He then issues a legally binding rule, which is typically much faster than the public court system. 

If both of these resolutions fail, formal litigation becomes a certainty. For international transactions, agreements will typically contain a clause explicitly stating that the competent courts in Tel Aviv hold geographic jurisdiction. Then, the agreement will be interpreted under Israeli substantive law. 

Expanding your business operations overseas is a major milestone. It is important to not let regulatory confusion slow down your business’ momentum. Our lawyers at Decker, Pex & Co will act as your legal shield to protect your company so it can flourish. 

We also understand that discussing extremely important cross-border corporate issues is easiest in your native language. To prevent any miscommunication and ensure total clarity, our law office provides services in many languages, including English, Hebrew, Russian, French, Dutch, Arabic, Ukrainian, and Spanish. 

Whether you need assistance with company formation, investments, or commercial contract drafting, our team is here to help. Contact an experienced attorney at our Tel Aviv or Jerusalem office today for dedicated legal support.