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Joint Ventures
Israel-India
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2017
I
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
Joint
Ventures
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