Can a company serve as a director of an Israeli company?

The corporate director sits on the board in its own name, but everything the board actually does is done through the individual it nominates. That individual must clear the standard disqualification tests in Sections 226 and 227 of the Companies Law, which cover matters such as certain criminal convictions and undischarged bankruptcy. The duty of care in Section 252 and the duty of loyalty in Section 254 attach to the person exercising the function, and Israeli law does not allow a company to contract out of them by inserting a corporate layer. A change of the nominated individual is a filing event: the company must notify the Registrar of Companies, and until it does, the register continues to show the previous nominee.

Foreign investors typically want this structure so that a board seat belongs to the fund or holding company rather than to a named employee who may move on. That works well and survives staff turnover without a shareholder resolution each time. It does not, however, create anonymity. The corporate director's identity and its nominee both appear on the public register, and a foreign corporation appointed as director must file certified incorporation documents, apostilled and translated into Hebrew. Expect Israeli banks, and bodies such as the Israel Innovation Authority, to still ask for named individual signatories on their own forms. Set out in the shareholders agreement who may nominate and replace the individual, and on what notice.

From the full guide: Directors & Corporate Governance in Israel: Duties, Liabilities & Best Practices

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