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What are the legal duties of a CEO of an Israeli company?

The general manager (menahel klali) of an Israeli company is responsible for day-to-day management within the policy set by the board, under Sections 119 to 122 of the Companies Law 5759-1999. The role also makes the holder an office holder (nose misra), which imports the duty of care in Section 253 and the fiduciary duty of loyalty in Section 254. Those duties are owed to the company itself and not to the shareholder or parent group that chose the appointee. A public company must have a general manager, while a private company may operate without one.

The board appoints and dismisses the general manager and fixes the framework the role operates within. Day-to-day authority is broad by default, covering everything not reserved by law or by the articles to the board or the general meeting, and the general manager may delegate powers downward with board approval. Reporting runs upward at intervals the board sets, and the board may instruct the general manager on any matter at any time. The duty of care measures conduct against a reasonable office holder in the same position, which includes gathering information before deciding. The duty of loyalty is stricter: act in good faith for the company's benefit, avoid conflicts of interest, refrain from competing with the company, and refrain from taking a business opportunity that belongs to it.

Two points matter most for a foreign group running an Israeli subsidiary. A company may indemnify and insure its office holders, and may exempt them in advance from liability for negligence where the articles allow, but Section 263 prohibits any advance exemption from liability for breach of the duty of loyalty. The general manager's name is also not filed with the Companies Registrar, unlike directors, so the appointment lives in the board minutes and needs to be properly documented before banks or counterparties will rely on that person's signature. Our guide to directors and corporate governance in Israel explains how these duties are enforced in practice.

⚖ In Practice
  • Governing law: Sections 119–122 and 252–254, Companies Law 5759-1999
  • Competent authority: Companies Registrar (Rasham HaChavarot) for corporate filings; the Economic Division of the Tel Aviv District Court for office-holder litigation
  • Scope of authority: every management power not reserved by law or by the articles to the board or the general meeting
  • Non-waivable duty: Section 263 bars a company from exempting an office holder in advance from liability for breach of the duty of loyalty
  • Protection available: indemnity, insurance and advance exemption for negligence are permitted under Sections 258 to 262 where the articles provide for them
  • Registration: director changes must be filed with the Companies Registrar within 14 days; the general manager is not filed, so board minutes are the evidence of authority

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

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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