The Committee for the Advancement of Investments in Public R&D Companies
The Chairman of the Israeli Securities Authority has nominates the Committee for the Advancement of Investments in Public Companies Operating in the Research and Development Field (Ministry of Finance and Ministry of Justice). The goals of such committee include, in addition to support of the Hitech sector, maintaining Israeli Hitech companies in Israel and turning the Tel Aviv Stock Exchange into a Hitech center. The committee has recently submitted its interim recommendations, where it sets the target for attraction to TASE on Hitech companies, the market value of which is NIS 250M or the annual sales rate of which is NIS 80M, and that wish to raise significant capital.
The Committee Recommendations
To achieve the above goals, the committee provides for several recommendations.
- To encourage Hitech companies as aforesaid to IPO with TASE, TASE shall create a new listing and index named "Tech Elite" that will include currently traded Hitech companies worth at least NIS 400M and the new Hitech companies. The new companies will enjoy beneficial regulatory treatment in some respects, relief of certain corporate governance matters and tax benefits to investor therein.
- Enabling the foundation of traded venture capital funds as trust funds that will be allowed to invest part of their funds in Israeli private Hitech companies and the remainder of their funds in Hitech companies traded in the TASE. The funds and investors therein will enjoy certain tax benefits.
- Ex-exchange financing for seed Hitech companies: croudfunding and sophisticated investor clubs.
This reform may, to some extnet, assist the Israeli Hitech sector with the financing challenges it is currently facing. With respect to grown companies, I am not sure how many of them will elect TASE for their IPO even after the proposed reliefs and benefits; and any regulatory easing at this time should be carefully thought through. However, any attempt to increase financing to Israeli startups, which are the ones that suffer most from limited financing opportunities, is blessed, especially since some of the proposed mechanisms are already implemented in other countries.
What do you think? Will the proposed reform be beneficial?