On July 15, 2015, the Israel Securities Authority ("the ISA") published an opinion on whether foreign investors are included under the limitation in section 15A (a) (1) of the  Securities Act 1968 (the "Securities Law"), which limited the number of investors to 35. The  opinion was issued in response to a request from a company by the name of Nano- Dimension Company Limited (the "Company").

  1. Main points regarding the Company's request:

1.1. The Company is an Israeli public company listed on the Tel-Aviv Stock Exchange Ltd. In February, 2015, the Company was involved in a private placement of a significant part of  its shares (the "private placement"). Among the offerees in the private placement, were four  foreign investors. Two of the investors stated that there are no restrictions preventing them from  participating in the private placement. The other two foreign investors, US citizens, stated that  they are "sophisticated investors" as defined under the US securities laws, and that there are no   restrictions  which  would  prevent  them from  participating in  the  private placement.

1.2. In light of the statement of the four investors, and in accordance with Section  15A (b)  (2)  of  the  Securities  Law,  the  Company  classified  its  foreign  investors  as  investors incorporated abroad . In addition, the Company intends to raise additional capital in exchange for the allocation of additional securities to American investors. The Company noted that to the best of its knowledge, the other American investors are "sophisticated investors" as defined under the US securities laws.

1.3. In view of the above, the Company requested the ISA's position on whether foreign investors  are included under the limitation as to 35 investors as set out in section 15A (a) (1) of the  Securities Law. The Company's position was that in light of the provisions of section 15A (b) (2)  of the Securities Law, which excludes a body corporate incorporated abroad from the limitation  stated in section 15 (a) (1), and since the foreign investors are "investors incorporated abroad",  that have the ability to receive information which they need in order to make a decision to invest  in shares of the Company, they should not be included in the limitation of 35 investors, as set out  in regulation 2 to the Securities Regulations (details regarding sections 15A to 15C of the Law),  2000 ("the Regulations").

  1. The ISA's position:

2.1. The ISA rejected the Company's position regarding the recognition of foreign investors as  investors who belong to the investors listed in Section 15 (b) (2) of the Securities Law, for the  following reasons:

2.1.1.  The ISA clarified that it possesses the sole authority under Section 15A (b) (2) of the Securities Law, to determine that an investor incorporated outside of Israel will not be  counted among the limitation of 35 investors under section 15A (a) (1) of the Securities Law.  Accordingly, the Company cannot on its own, classify a foreign investor as an investor under  Section 15A (b) (2) of the Securities Law.

2.1.2. The ISA distinguishes between two types of foreign investors: (i) a single foreign investor  and (ii) a foreign corporation. Accordingly, the classification granted under Section 15 (b) (2) of  the Securities Act is limited to foreign corporations. The ISA is not authorized under this section  to recognize foreign individuals as foreign investors that will not be counted as part of the 35  investors as set out in the Securities Law and Regulations. Consequently, in order for a single  foreign investor to be regarded as a sophisticated investor and not to be counted among the 35 investors, such an investor is required to comply with the terms of  Section 15A (b) (1) or (3) of the Securities Law which apply to an individual investor.

2.1.3. The  ISA  determined  that  in  the  matter  of  foreign  corporations,  the Company did not set out the factual criterion for the investors to obtain the information they  needed in order to make a decision to invest in the Company's securities, such as the foreign  corporation’s characteristics, and being eligible in accordance with the First Schedule of the  Securities Law. The ISA stated that the fact of the Company being a public company, does not  constitute evidence that the foreign investors have the ability to receive all the information they  need, as required under Section 15A (b) (2) of the Securities Law.

2.2. In addition, the ISA clarified that with respect to all foreign investors, it is not  sufficient that they have declared or will declare that they are included in the First Schedule.  Accordingly, the Company is required to take reasonable steps to verify this statement, as  specified in the Legal Staff Position 103-35: private placement to sophisticated investors.1

For the full version of the Company's request - click here

For the full version of the ISA's response -click here