On February 10, 2016, the amendment to the Israeli Joint Investment in Trust Law, allowing foreign funds to offer units to Israeli investors, entered into force.
Under the amendment, the Regulations governing the public offering of foreign funds in Israel were approved. According to the Regulations, the Israeli Securities Authority may permit a foreign fund manager to offer foreign fund units to the Israeli public if it is proved that certain criteria are met.
The main criteria that must be met include all of the following:
- The total value of assets managed by the fund manager shall be greater than USD 20 Billion;
- The fund manager manages no less than five foreign funds whose units are offered to the public for at least five years, and the total value of assets held in each of such funds was no less than USD 500 Million during a period of two years prior to the day on which the fund manager submitted an application to offer foreign fund units in Israel;
- The fund manager has provided guarantees and deposits, as specified in the Regulations;
- The prices of the foreign fund units are continuously published on an internet website to which the public has access at no cost;
- The net asset value of the foreign fund shall be at least USD 50 Million, and the foreign funds' units have been offered in Europe or in the United States for a period of not less than six months prior to the initiation of the offering of its units to the public in Israel;
- The foreign fund must operate under the U.S. Investment Company Act or the European directive UCITS;
- If the Fund is publicly traded in Israel, the Units must also be listed for trade on a foreign stock exchange; and
- The foreign manager of the Fund must appoint a representative in Israel to serve as liaison between such manager and the ISA and between such manager and the unit holders in Israel.
The Regulations have not been published in the Official Gazette. Please see the Hebrew version that was brought before the Knesset for its approval.
The Regulations form a regulatory framework allowing foreign fund managers to offer units in Israel to the general public. This is a very significant step towards further increasing competition in the mutual funds market in Israel, and enabling Israeli investors to gain access to the world's leading investment houses.
Our office has accompanied the legislative changes in the field from the beginning. We invite you to consult with us regarding the ramifications and procedures necessary in order to operate under these Regulations.