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Joint Ventures


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nternational companies entering the Israeli

market often do so by way of a joint venture

with an Israeli partner.  Joint ventures are

common in a range of industries, such as

hi-tech,infrastructure,and energy ventures.

Joint Ventures (“JVs”) are not recognized in

Israel as particular legal entities and,therefore,

there are no specific regulations that apply to

them. Most legal structures that are applicable

in Israel can be used for the purpose of

forming a JV, so that a JV may be formed

by organizing a Company ("JV Company")

or a Partnership - general or limited - ("JV

Partnership"), or without incorporating a

new entity, as in the case of a Contractual

Engagement ("Contractual JV"). 

Any of the foregoing structures can be formed

for any legal purpose.  JVs can operate in

any sector,subject to applicable regulations,

licenses and permits.  To the extent a JV

operates in a regulated sector,such as banking,

electricity, or energy, the applicable laws in

such sector will apply.

Contractual JVs and Partnerships

A Contractual JV is not required to be

registered, as no separate legal entity is

established.  Parties firmup their cooperation

through a contract that may bemade for any

purpose,and for any time frame – limited or



in Israel

Legal framework

involved in

establishing JVs

Adv. Raz Tepper and

Adv. Eran Yaniv

otherwise.  The contractual engagements are

subject to Israeli contract laws and enable the

parties to define their engagement and their

internal relationshipwith very few limitations.

JV Companies are subject to Israeli companies

laws,and must be registered with the Israeli

Companies Registrar. JV Partnerships are

subject to Israeli partnership laws.  There

are two forms of partnerships: General

Partnership ("GP"), which is an unlimited

liability partnership,and Limited Partnership

("LP").  Registration with the Partnerships

Registrar is a constitutive requirement for

the establishment of a LP.  A GP is required to

be registered with the Partnerships Registrar;

such registration,however,is only a declarative

requirement that does not affect the existence

of the GP.

Parties to a JV sometimes prefer a Contractual

JV over a JV Company or a JV Partnership as it

enables them to retain control over their assets

and business,as these are not transferred to

a separate legal entity. A Contractual JV is

subject to fewer procedural requirements

as registration is not required. It is easier

to terminate the Contractual JV than a JV

operating through a separate legal entity,

and a Contractual JV has no effect on direct

taxation of the parties thereto.

It should be noted that Israeli laws (such

as the Law for the Encouragement of

Capital Investment and the Law for the

Encouragement of Industrial R&D) encourage

foreign investment in Israel by offering several

benefits to local businesses such as grants,

reduced tax rates, tax exemption and other

tax-related benefits.

The authors are partners in FBC

See page 99.

Adv. Raz Tepper

Adv. Eran Yaniv