Further to the update which we published in December last year, concerning the Amendment to the Securities Law, recently regulations have been promulgated under this new law. These regulations concern the concessions in favour of companies whose shares will be included in the Tech-Elite Index of the Tel-Aviv Stock Exchange (hereinafter: the "Index") and they will enter into force when published in the Official Publication. The concessions are designed to grant companies whose shares will be included in the Index, which was launched in May 2014, the chance to file their reports in the English language. The concession also applies to companies who will in the future offer shares within a first public offering, and who have received approval in principal from the Exchange that their shares will be included in the Index after being registered for trade (hereinafter: "New Tech-Elite Entity"). To that end, the entity has to provide for this in the prospectus for the first public offering. An entity which is already traded on the Index can move to reporting in English subject to the approval of the meeting of the holders of each class of security, by a majority of the holders of the securities (excluding controlling parties).
According to a notice from the Securities Authority on this matter, a New Tech-Elite Entity will receive additional concessions. Thus, for example, the period in respect of which a New Tech-Elite Entity will be required to include comparative details in the part describing the business of the entity as well as in the annual financial reports, will be shortened from three years to two. Likewise, a New Tech-Elite Entity which meets the conditions provided for in the Regulations will be entitled to prepare its quarterly and annual financial reports in accordance with US GAAP.
In addition, a New Tech-Elite Company can apply the concessions of a 'small entity' as provided for in Regulation 5D of the Reporting Regulations, even if it does not meet the definition of a small entity. These concessions are available for a period of 5 years from the first public offering. So for example, the concessions as to whether to attached an extremely material valuation and as to the disclosure of market risk will apply.
Additional innovations in the Regulations include the concession with respect to the preparation of a report concerning the effectiveness of the internal audit on the financial reporting and on disclosure as well as concessions relating to quarterly reporting. For a period of 5 years from the first public offering, a New Tech-Elite Entity will not be required to attach to the periodic report an annual report as to the Board of Directors and Management evaluation of the efficiency of the internal audit on the financial reports and on the disclosure and declarations of the CEO and the most senior office in the financial field. Also, such an Entity will not be required to attach to the quarterly financial reports details such as an update on information in the periodic report concerning material changes in the business of the Entity; reports on any affiliate; brief information concerning any affiliate; Board of Directors' Report. Instead of this, the Entity can prepare a separate report, signed by the Chairman of the Board of Directors and the CEO, containing the major developments in its state of affairs, both for the relevant quarter and also the cumulative period from the end of the last reporting year through to the date of the report.
Reference: Securities (Reports of Entity whose Shares are included in the T"A Tech-Elite Index) Regulations, 5776-2016
