As part of the ongoing effort by the Israel Securities Authority (ISA) to improve corporate governance and to reinforce transparency at Israeli publicly traded companies, on June 15 and July 6, 2008 new amendments to the securities regulations under the Israeli Securities Law, 1968, were published.

Broadening disclosure requirements with respect to compensation of senior officers and interested parties.

The amendment requires reporting corporations (corporations required to file with the ISA) to issue an immediate report for any compensation of a senior officer or any transaction involving an interested party (generally, a holder of five percent or more of the shares of a company or its voting power, or someone entitled to appoint one or more of its directors or its general manager). The amendment requires the company to describe the relationship between the amount of compensation received by a senior officer or interested party, the contribution made by such person to the company, the information presented to the corporate bodies approving the transaction, and whether the compensation is reasonable. In addition, companies are now required to disclose the cumulative compensation of their five most highly paid individuals, including those of its subsidiaries. Previously, companies often provided higher compensation to officers of their subsidiaries without disclosing such compensation.

In addition, the disclosure requirements were broadened with respect to a private offering of securities to a senior officer or to an interested party and compensation granted to a senior officer or to an interested party, who is also a controlling shareholder, or any compensation in which a controlling shareholder has a personal interest. Previously, only general information was required to be reported with respect to these transactions, and now the requirements are much more detailed.

Reporting obligations regarding any transaction with a controlling shareholder:

Reporting corporations are now required to report any transaction between the company and a controlling shareholder or any transaction in which a controlling shareholder has a personal interest - even if the relevant transaction is not an extraordinary transaction and no General Meeting is required to approve the transaction, unless the transaction is negligible.

Reporting changes in shareholdings of senior officers

This amendment requires companies to report any change in the shareholdings of senior officers in the company, in addition to the existing requirement to report any change involving interested parties.

Changes in the definition of “Senior Officer”

The previous definition of a Senior Officer generally included a director, general manager, assistant general manager, deputy general manager, comptroller, internal auditor and any person filling any of these positions even if (s)he holds a different title and also any employee in another position who holds 5% or more of the outstanding shares or voting power. The definition of “Senior Officer" has been broadened to include any officer subordinate to the general manager, a substitute director, a signatory and any senior officer in a company controlled by a reporting corporation who has a significant influence on the reporting corporation. The purpose of this amendment is to require companies to provide greater disclosure regarding compensation and shareholdings of, and transactions involving, senior officers and the others added to the definition.