The following translation is intended solely for the convenience of the reader. This translation has no
legal status and although every effort has been made to ensure its accuracy, the ISA does not assume
any responsibility whatsoever as to its accuracy and is not bound by its contents. Only the original
Hebrew text is binding and reader is advised to consult the authoritative Hebrew text in all matters
which may affect them.
SECURITIES REGULATIONS
(UNDERWRITING) 5767-2007
By virtue of my powers under sections 55A and 56(c) of the Securities Law 57281968 (hereafter: the Law), upon a proposal by the Authority, in consultation with the
Minister of Justice under section 30 of the Budgetary Principles Law 5745-1985, and
with approval by the Knesset Finance Committee, I make these regulations:
CHAPTER ONE: INTERPRETATION
Definitions
1.
In these regulations –
"profit sharing life insurance" – as defined in the Insurance Business Control
Regulations (Particulars of Report) 5758-1998;
"bank" – a company that received a bank license under section 4 of the Banking
Law;
"related body" – a controlling member of a body corporate or whoever is
controlled by the body corporate or by its controlling member;
"high investment rating" – each of the following:
(1) long term investment rating –
(a) local rating – a rating of (AA) and up by Maalot Rating or a rating
that corresponds to it according to the conversion table in Schedule
Two of the Securities Regulations (Particulars of Prospectus, Its
Structure and Form) 5729-1969 (in this definition: the conversion
table);
(b) an international rating (A) and up by S&P or a corresponding rating
according to the conversion table;
(2) short term investment rating –
(a) local rating – a rating of (A1, A1+) and up by Maalot Rating or a
corresponding rating according to the conversion table;
(b) an international rating (A2) and up by S&P or a corresponding
rating according to the conversion table;
(3) in this definition, "Maalot" and "S&P" – as defined in Schedule Two of
the Securities Regulations (Particulars of Prospectus, Its Structure and
Form) 5729-1969;
"non-uniform offering" – within its meaning in regulation 11 of the Securities
Regulations (Manner of Offering Securities to the Public) 5767-2007;
"foreign company" – a company registered as a foreign company under section
346 of the Companies Law;
"Banking Law" – the Banking (Licensing) Law 5741-1981;
"Companies Law" – the Companies Law 5759-1999;
"investment advising" and "portfolio management" – as defined in the
Regulation of Investment Advice, Investment Marketing and Portfolio
Management Law 5755-1995;
"insurer" – as defined in the Control of Financial Services (Insurance) Law
5741-1981;
"index" – the Consumer Price Index that the Central Bureau of Statistics
publishes;
"ID number" – the identity number with the Registrar of Companies, and if
there is none – the identity number of the holding or management company with
the Registrar of Companies, as the case may be;
"officer" – as defined in the Companies Law;
"Provident Fund" – a Provident Fund or a management company, as defined in
the Control of Financial Services (Provident Funds) Law 5765-2005;
"trust fund" – a joint investment trust fund, within its meaning in the Joint
Investment Trusts Law 5721-1961;
"auditing auditor" – within its meaning in section 154 of the Companies Law.
CHAPTER TWO: QUALIFICATIONS AND REGISTRATION OF
UNDERWRITERS
Underwriter
2.
(a) A person shall not serve as underwriter, unless it is a company
incorporated in Israel that meets the conditions prescribed in this Chapter
and is registered in the register that the Authority shall keep (hereafter:
Underwriters Register), or an underwriter that is a company incorporated
in a foreign state, for which all the following hold true (hereafter: foreign
underwriter):
(1) it is a foreign company;
(2) its main activity in the field of underwriting takes place abroad;
(3) its business is controlled and managed from abroad;
(4) it has the right to serve as underwriter for a public offering of
securities that are listed on a Stock Exchange abroad or will be
listed there for trading immediately after the offering;
(5) in the foreign country in which the Exchange abroad operates
(hereafter: country of origin) there is a body with powers of
implementation and enforcement in respect of the underwriter's
activity in its main place of business and in Israel;
(6) it was not convicted of offenses enumerated in regulation 8;
(7) it delivered to the Authority an advocate's reasoned opinion,
addressed to the Authority, in respect of all the following:
(a) reference to the Law provisions that regulate the underwriter's
activity in the country of origin, including reference to the
following:
(1) the existence of monetary resources for the underwriter
to meet its obligations, including possible claims in
connection with its liability under section 31 of the Law;
(2) the corporate governance of the underwriter, including
provisions that relate to the officers and to possible
conflicts of interest in the underwriter;
(3)
(b)
requirements about the underwriter or its officers not
having been convicted;
(b) certification of the fact that the Laws of the country of origin
make it possible to enforce a verdict adjudged in Israel against
the underwriter in its country of origin or at its place of
business;
(c) certification that conditions prescribed in paragraphs (1) and
(4) to (6) have been met.
In this paragraph – "Law" includes Stock Exchange rules abroad, as
well as provisions prescribed by whoever has that authority in the
foreign underwriter's country of origin;
(8) it certified that the conditions enumerated in paragraphs (1) to (7)
hold true for it, as well as the attachment of an officer's affidavit that
certifies that those conditions hold true;
(9) it is registered in the Underwriters Register under regulation 3(b).
Banks and insurers shall not be underwriters, but a company controlled by
a bank or by an insurer may be an underwriter.
Registration
3.
(a) Whoever wants to be an underwriter (hereafter: the applicant) shall submit
to the Authority an application for its registration in the Underwriters
Register, in which shall be included or to which shall be attached the
particulars and certifications specified below, and which shall be reported
and signed according to the provisions of regulation 11(b), mutatis
mutandis:
(1) particulars and a special report, as specified in regulations 12 to 14,
mutatis mutandis, and – in respect of regulation 14 – the application
must be submitted at the latest within three days after the date on
which the auditor's special report was signed;
(2) the applicant's certification that all the qualifying conditions under
this Chapter hold true for it, with the attached affidavit of an officer,
certifying that those conditions hold true;
(3) certification that the registration fee said in regulation 4 has been
paid;
(4) if the applicant, an interested party in it or a body corporate
controlled by either was previously registered in the Underwriters
Register, acted as underwriter or was an interested party in an
underwriter, those facts shall be spelled out, as well as the name of
that underwriter and the circumstances under which its activity
ceased.
(b) If the Authority Chairman concluded that all the requirements of this
Chapter have been complied with, the Authority shall register the
applicant in the Underwriters Register and give him certification of his
said registration; the Underwriters Register shall be open for inspection by
the public and it shall be posted on the Authority's internet site.
(c) Notwithstanding the provisions of subregulation (b), if the applicant is a
foreign underwriter, if the certifications, opinion and declaration required
under regulation 2 were submitted and the Authority concluded that all the
requirements of this regulation have been complied with, subject to
subregulation (a)(1) being read as if "12 to 14" had been replaced by "12"
(d)
(e)
(f)
(g)
(h)
and without the condition prescribed in subregulation (a)(3), the Authority
shall register the applicant in the Underwriters Register as a foreign
underwriter and give him certification of its said registration.
The registration of an underwriter in the Underwriters Register does not
constitute verification of the particulars that appear in the Register or
proof that the underwriter meets the statutory requirements.
If an underwriter terminated its activity, it shall so inform the Authority
within seven days by a notice in which it shall state the date on which the
activity ceased and the date of the last prospectus that it underwrote; upon
receipt of the notice the Authority shall update the date of the termination
of activity in the Underwriters Register and transfer it to the "inactive"
status.
At the end of four years that began on January 1 of the year that follows
the date on which the underwriter was transferred to "inactive" status, the
Authority shall erase the underwriter from the Underwriters Register.
If the underwriter wants to resume activity, whether it is in the "inactive"
status or was erased from the Underwriters Register, it shall have to be
registered anew in the Underwriters Register and the provisions of this
regulation shall apply to it.
If the Authority learned that the conditions prescribed for registration said
in subregulations (b) and (c) no longer hold true, it may transfer an
underwriter to the "inactive" status after it gave it an opportunity to
present its case; if the said conditions again come to hold true for the
underwriter, he may apply to be registered anew in the Underwriters
Register and the provisions of this regulation shall apply to it.
Registration fee
4.
An applicant shall pay a fee of NS 3,015 to the Authority for registration in the
Underwriters Register (hereafter: registration fee).
NOTE: The above amount is in effect from January 1, 2014, according to a
notice in KT 5774, p.341
Liability insurance
5.
An underwriter shall insure its liability under Chapter Five of the Law by
insurance that shall apply as long as seven years have not passed since the date
of the last prospectus that it underwrote; the extent and terms of the insurance
shall be at a level that suffices, in the opinion of the underwriter's Board of
Directors, to insure the said liability fully, taking the extent of its activity into
account.
Mandatory deposit
6.
(a) An underwriter shall invest an amount of not less than NS 3,015,000 in
debentures traded on the Exchange and issued by the Government, such as
are not convertible into securities that give a right of participation or
membership in a body corporate, or in debentures traded on the Exchange
that are rated at a high investment rating (hereafter: the deposit).
NOTE: The above amount is in effect from January 1, 2014, according to a
notice in KT 5774, p.341
(b) The underwriter shall place the deposit with a bank or with an Exchange
member in the name of an advocate or auditor who shall be trustee for the
deposit (hereafter: the trustee); the trustee shall manage the deposit under
the provisions of this regulation for the benefit of plaintiffs to whom the
underwriter owes – under a Court judgment or under an arbitrator's
decision – because of its liability under Chapter Five of the Law
(hereafter: the trust account); the trust account shall not be liable to
attachment or withdrawal, except on instructions from the trustee and
when one of the following holds true:
(1) the underwriter is registered in the Underwriters Register as
"inactive" or was removed from the Underwriters Register, three
years have passed since the date of the last prospectus that it
underwrote and no action was brought against it for liability under
Chapter Five of the Law;
(2) the underwriter is in insolvency proceedings and the amount of the
deposit is required in order to execute a Court judgment or an
arbitrator's decision that was approved by the Court in an action said
in paragraph (1); in this paragraph, "insolvency proceedings" –
liquidation or receivership proceedings under the Companies
Ordinance [New Version] 5743-1983, or proceedings under section
350 of the Companies Law.
Officers of the underwriter
7.
(a) No fewer than five Directors shall serve on the Board of Directors of an
underwriter; one third of the Directors, but not fewer than two of them,
shall be independent Directors; for this purpose, "independent Director"
– a person who meets the conditions prescribed for an outside Director in
section 240(b) of the Companies Law, mutatis mutandis; however, in
respect of an underwriter in which a bank or an insurer holds 10% or more
of the issued share capital, of the voting rights or of the right to appoint
Directors, section 240(b) of the Companies Law shall be read as if, after
to a controlling member", it said "or to a bank or insurer that holds 10% or
more of the issued share capital, of the voting rights or of the right to
appoint Directors".
(b) As officer of an underwriter shall not serve –
(1) whoever was convicted of one of the offenses enumerated in section
226(a)(1) to (3) of the Companies Law or whoever was convicted of
an offense said in regulation 28(a) and the prescription period, as
defined in the Criminal Register and Rehabilitation Law 5741-1981,
has not passed;
(2) whoever was declared bankrupt and three years have not passed
since he was discharged.
(c) If the underwriter is a related body of a bank or of an insurer, Directors or
employees of the bank, of the insurer or of a body related to them, as the
case may be, shall not serve as officers of the underwriter, except as
Directors; for this purpose, "employee" – a person employed by the bank
or by the insurer, who was not lent to the underwriter or is not on leave
without pay.
(d) Whoever serves as officer of or is employed by a body related to the
underwriter and whose work is liable to create conflicts of interest
between his said responsibility and his responsibility in the underwriter
shall not serve as employee or officer of the underwriter, except as
Director; for the purposes of this subregulation a person who engages in
(e)
(f)
investment portfolio management, investment advising, investment
marketing, trust fund management or provident fund management shall be
deemed a person whose work creates said conflicts of interest.
Subregulations (a), (c) and (d) shall not apply to an underwriter, the status
of which is "inactive".
The provisions of this regulation shall also apply to an individual who
serves on behalf of a body corporate that is a Director of the underwriter.
Underwriter convicted of an offense
8.
(a) An underwriter that was convicted of an offense enumerated in section
226(a)(1) to (3) of the Companies Law or in regulation 28(a) shall report
that to the Authority, shall be transferred to "inactive" status and shall not
assume any underwriting obligation within five years after the day on
which it was convicted; if the said five years have passed and the
underwriter wants to resume activity, it shall have to register again in the
Underwriters Register and the provisions of regulation 3 shall apply to it.
(b) An underwriter who was convicted of an offense enumerated in regulation
28(b) shall report that to the Authority, shall be transferred to the
"inactive" status and shall not assume any underwriting obligation within
one year after the day on which it was convicted; if, when the said year
has passed, the underwriter wants to resume activity, it shall have to
register again in the Underwriters Register and the provisions of
regulation 3 shall apply to it.
Professional knowledge of officers
9.
(a) One third of an underwriter's Directors and at least two of them, including
at least one of the Independent Directors, mutatis mutandis, and all the
underwriter's other officers that engage in underwriting shall have
professional knowledge.
(b) In this regulation –
"professional knowledge" – each of the following:
(1) at least a master's degree from a recognized institution in
accounting, economics or business administration, with
specialization in accounting, banking or finance;
(2) a bachelor's degree from a recognized institution in economics,
business administration, law, industrial and management
engineering or in accounting, or an auditor's license with at least two
years professional experience;
(3) at least four years of professional experience;
"recognized institution" – as defined in regulation 14 of the Investment
Advice. Investment Marketing and Portfolio Management Regulations
(Application for a License, Examinations, Internship and Fees) 57571997;
"professional experience" – work at one of the following, including
similar activity abroad: investment portfolio management, investment
advising, investment portfolio analysis, analysis of the economic
profitability of investments or activity as an officer engaged in
underwriting in an underwriting company, other than in the position of
Director, activity of an advocate who specializes in company law or
securities law, activity as auditing auditor of a reporting body corporate or
(c)
activity of a financial manager or chief accountant of a reporting body
corporate.
The provisions of this regulation shall not apply to an underwriter in an
"inactive" status.
CHAPTER THREE: RESTRICTIONS ON THE
ACTIVITY OF AN UNDERWRITER
Restrictions
10. (a) An underwriter shall not assume an underwriting obligation greater than
15% of the total of underwriting obligations given for a public offering,
and in each of the following cases it shall not serve as lead underwriter for
a public offering that is not an offering of shares included in the Tel Aviv
25 Index:
(1) a public offering of securities of the underwriter's group;
(2) a public offering of securities, if one of the following held true at
any time shortly before the date of the prospectus:
(a) the issuer's or the offeror's balance of debt – according to their
last consolidated financial reports – to one or several members
of the underwriter's group constitutes more than 15% of the
issuer's or the offeror's total financial obligations according to
their last consolidated financial reports;
(b) an officer of the underwriter is an officer or employee engaged
in the field of credit in influential bodies, to one or several of
which the issuer or the offeror is indebted as said in
subparagraph (a);
(3) a public offering of securities, if more than 25% of the consideration
for the offered securities is intended for the payment of debts to the
underwriter's group.
(b) An underwriting obligation in connection with a public offering that is not
an offering of shares included in the Tel Aviv 25 Index by an issuer or
offeror that has a debt balance to an influential body or to several bodies
together as specified in subregulation (a)(2)(a), requires advance approval
by a Board of Directors committee of the underwriter, most members of
which are Independent Directors; the count of the majority shall include
the votes of the majority of Independent Directors present at the
discussion; if the influential body is a body that is not a bank or an
insurer, the conditions prescribed in section 240(b) of the Companies Law
shall hold true for the Independent Directors, and it shall be read as if
"controlling member" were followed by "or influential body".
(c) Paragraphs (2) and (3) of subregulation (a) and also subregulation (b)
shall not apply to a foreign underwriter, the equity of which or of the body
corporate that consolidates the foreign underwriter's reports in its financial
reports is US$10,000 million or more; in this subregulation, "equity" –
also according to foreign accounting rules, foreign accounting standards,
international accounting standards and bookkeeping rules accepted in the
United States, as defined in Securities Regulations (Preparation of Annual
Financial Reports) 5753-1993.
(d) For the purposes of this regulation all the underwriting obligations of
members of whoever belongs to a related group or of a related company
shall be considered a single underwriting obligation.
(e) (1) If securities were sold by public offering by a body related to the
underwriter, also through a distributor that is a body related to the
underwriter, the underwriter shall be responsible toward purchasers
under the offering for disclosure of the said connection and its
nature;
(2) the responsibility under paragraph (1) shall not apply to an
underwriter that proved that it took all appropriate steps to ascertain
the purchaser's awareness, as said in that paragraph;
in this regulation –
"influential body" – the underwriter's group, but in it the definition of
"connection" shall be read as if it said holding at the rate of 10% or more;
"holding" – without derogating from the provisions of the definition of
"holding" in the Law, holding a certain portion of the nominal value of the
issued share capital or of the power to vote, or of the right to appoint a certain
portion of the Directors;
"financial obligation" – within its meaning in accepted accounting principles
and in accepted reporting principles;
"Tel Aviv 25 Index" – as defined in the Stock Exchange By-laws and in the
Stock Exchange guidelines, within their meaning in section 46 of the Law;
"related group" – an underwriter and a body related to it;
"underwriting group" – a related group, as well as any person with a
connection to it or to whom it has a connection; for this purpose, "connection"
– holding at the rate of 25% or more, or holding at a lower rate but higher than
10%, if the body corporate does not have one controlling member.
CHAPTER FOUR: REPORTING
Reporting obligation
11. (a) The underwriter shall submit an annual report to the Authority and to the
Exchange not later than three months after the end of the fiscal year or
within three months after the special report by the auditing auditor was
signed under regulation 14, whichever was earlier (hereafter: report date).
(b) The report shall be approved by the underwriter's Board of Directors and
shall be signed in the underwriter's name by the chairman of the Board of
Directors or by a Director whom the Board of Directors authorized to sign
the said reports as of a certain date, and also by the underwriter's general
manager or by an additional Director; the signatories' names and their
positions in the underwriter shall be specified next to their signatures on
the report.
(c) An underwriter that did not underwrite any prospectus since the beginning
of the fiscal year that ended four years before the report date shall give the
Authority notice thereof not later than two months before the report date
and shall be exempt of submitting annual reports under this regulation
until a year in which it underwrites a prospectus.
Particulars of Part One of the Annual Report
12.
The following particulars shall be presented in Part One of an Annual Report:
(1) the underwriter's name and ID number;
(2) the registered office, telephone and facsimile numbers and E-mail address,
and in respect of a foreign underwriter – also the name and address of the
person in Israel authorized to accept on behalf of the company Court
documents and notices that must be served on the company, and the place
in Israel where reports and notices that it will give may be viewed;
(3) a description of the underwriter's other business;
(4) the particulars said in regulation 33(c) of the Securities Regulations
(Periodic and Immediate Reports) 5730-1970 (hereafter: Periodic and
Immediate Report Regulations) shall be presented in respect of every
party with an interest in the underwriter, and wherever it there says
"position report", read "annual report";
(5) the particulars said in regulation 26 of the Periodic and Immediate Report
Regulations shall be presented in respect of each Director or Deputy
Director of the underwriter, as well as particulars on compliance with the
requirements prescribed in regulations 7 and 9; if a person ceased to serve
as Director or Deputy Director during the report year, the said particulars
shall be stated about him, as well as all the following:
(a) the date on which he ceased to serve;
(b) whether, to the underwriter's best knowledge, the departure involves
circumstances that must be brought to the attention of the public; if
so, those circumstances shall be specified;
(c) how the underwriter made certain that it meets the qualifications
prescribed in regulations 7 and 9 in respect of the minimum number
of Directors in general, and specifically of Independent Directors
and Directors with professional knowledge;
(6) the particulars said in regulation 26A of the Periodic and Immediate
Report Regulations shall be presented in respect of every officer of the
underwriter to whom paragraph (5) does not apply, as well as particulars
on compliance with the requirements prescribed in regulations 7 and 9; if
a person ceased to serve as officer of the underwriter during the report
year, the said particulars shall be stated about him, as well as all the
particulars prescribed in paragraph (5), mutatis mutandis;
(7) if the underwriter, a controlling member thereof or its officer was
convicted of an offense said in regulation 7(b)(1), particulars of the
conviction shall be presented, including its date and the penalty imposed;
(8) a description of the responsibilities and powers of the Board of Directors;
(9) if the underwriter, its officer or a body related to the underwriter
performed any activity that is liable to be in a conflict of interests with
underwriting activity, those activities shall be specified, stating the reason
for suspecting conflicts of interest; if procedures were prescribed to
prevent said conflicts of interest, those procedures shall be described; if no
such procedures were prescribed, that shall be stated and the reasons
therefor specified;
(10) a description of the rules made by the Board of Directors about the
manner of allocating securities to investors in a non-uniform offering;
(11) the names and ID numbers shall be stated of all the bodies, for which the
characteristics specified in regulation 16(a)(5)(c) and (d) hold true in
respect of the underwriter;
(12) the underwriter's opinion on its compliance with the qualifications
specified in Chapter Two during the report year and up to the report date.
Particulars of Part Two of the Annual Report
13. The following particulars shall be presented in Part Two of the Annual Report:
(1) the amount of the deposit as of the report date and with whom it is
deposited;
(2) the terms of the insurance, including the insurer's name, the insurance
period, its amount and the amount of self participation, correct as of the
report date.
Auditor's report
14. To Part Two of the Annual Report shall be attached an opinion, formulated like
an auditor's special report on the correctness of the particulars presented in it
and on the underwriter's compliance with the conditions of regulation 6; the
special report shall bear the date when it was signed by the auditor.
Particulars of Part Three of the Annual Report
15. (a) The following particulars shall be presented in Part Three of the Annual
Report in respect of public offerings in which the underwriter participated
during the last fiscal year and the fiscal year before that:
(1) the name and ID number of the body corporate, securities of which
were offered;
(2) the date of the prospectus;
(3) the date of the supplementary statement, if one was published;
(4) the category and quantity of the securities offered;
(5) the price at which the offered securities were sold; if issue units
were offered, the price shall be divided according to the prices of the
different categories of securities offered, as will be determined in
the first three trading days of those securities; for purposes of these
regulations: "issue unit" – securities offered in units that include
securities of different kinds or on different terms;
(6) the amount of the underwriting obligation of all underwriters, in
proportion to the entire offering;
(7) the ratio of the underwriting obligation assumed by the underwriter
to the total underwriting obligation, and whether he served as lead
underwriter for the offering;
(8) the amount of underwriting obligation that the underwriter assumed,
calculated as the product of the portion of the underwriting
obligation for the whole offering, multiplied by the quantity of
securities offered, at the price at which the underwriter purchased
the securities from the issuer or at which he undertook to purchase
them; if an issue unit was offered, the price shall be divided
according to the prices of the different kinds of securities offered, as
will be determined in the first three trading days of those securities;
(9) the portion of the total public offering purchased by bodies
connected to that underwriter;
(10) the ratio of securities that remained in the underwriter's possession
after the sale under the public offering was completed, to the total
underwriting obligation;
(b)
(c)
(11) the amount paid by the underwriter for the securities that remained
in its possession after the sale under the public offering was
completed;
(12) the portion of the securities that remained in the underwriter's
possession and were sold to related bodies during the report period;
(13) the security's closing quotation on the end of the first trading day, its
closing quotation on the Exchange at the end of three months after
the sale by public offering and its closing quotation on the Exchange
at the end of one year after the said date;
(14) in respect of a non-uniform offering: the proportion of the sale under
the public offering that was sold to institutional investors and the
proportion sold to the public.
The particulars in subregulation (a) shall be presented in two separate
tables, one in respect of a uniform offering and the other in respect of a
non-uniform offering; each datum in the paragraphs of subregulation (a)
shall be presented in a separate column; if several securities were offered
in one offering, the data for each security shall be shown on a separate
line; the column of the total underwriting obligations and the column of
realized underwriting obligations shall be added up and the results shown
at the bottom of each table.
Every action brought against the it in connection with offerings for which
it served as underwriter shall be presented, whether concluded in the fiscal
year or not yet concluded, including the name of the Court where the
proceedings are held, the central parties thereto, the facts that are the basis
for the proceeding, the remedy requested and the stage reached;
particulars shall also be presented about any compromise or judgment
with which actions were concluded in the fiscal year.
Issue report
16. (a) A lead underwriter shall submit a report to the Authority and to the
Exchange not later than on the determining date, including the following
particulars:
(1) the underwriter's name and ID number;
(2) the name of the issuer and the name of the offeror if it differs from
that of the issuer, the kind and quantity of securities offered and the
date of the prospectus;
(3) the quantity of securities, in respect of which the underwriting
obligations of all underwriters were given in the public offering and
their percentage of all the offered securities;
(4) the quantity of securities that all the underwriters purchased
according to the public offering, the quantity left in their possession
after the sale was finished and their percentages of all the
underwriting obligations;
(5) in respect of each underwriter separately:
(a) its name and the data specified in paragraphs (3) and (4), and
in paragraph (3), instead of "their percentage of all the offered
securities" read "their percentage of all the underwriting
obligations", and also state whether it served as lead
underwriter;
(b) the quantity of securities ordered by bodies connected to that
(b)
(c)
underwriter that are not included in subparagraphs (c) and (d)
and the quantities of securities that they actually purchased;
(c) the name and ID number of all provident funds, profit sharing
life insurance accounts and of trust funds managed by the
underwriter, by a body related to it, by an associated company
of the underwriter or by a body connected to it that ordered
securities, stating the quantity of securities ordered and the
quantity of securities actually purchased by them;
(d) the name and ID number of each portfolio management
company, investment advising company or investment
marketing company that is a body connected to the
underwriter or to an associated company of the underwriter or
to a body connected to the underwriter, and also the name of
every investment counselor or investment marketer who is an
interested party in the underwriter, who ordered securities
from the public offering for their clients, stating the quantity
of securities ordered and the quantity of securities actually
purchased by them;
(e) what is said in subparagraphs (b) to (d) shall be presented
separately for orders that stem from advance undertakings,
within their meaning in regulation 4 of the Securities
Regulations (Manner of Offering Securities to the Public)
5767-2007 (hereafter: the Manner of Offering Regulations),
and from those that do not stem from said undertakings;
(f) in respect of every commission, the division of which among
the underwriters of the issue was not disclosed in the
prospectus – the amount of commission paid and its
percentage of all commissions paid; if all or some of the
commissions were not distributed by the determining day the
underwriter shall report the supplementary information about
the commissions in a supplementary immediate report within
the time prescribed in regulation 30 of the Periodic and
Immediate Report Regulations in respect of the time of
distribution of all the commissions;
for purposes of this subregulation, "determining day" – one of the
following:
(1) seven days after conclusion of the sale under the public
offering, in which the reporter served as lead
underwriter;
(2) if the underwriter was granted the right to purchase an
additional quantity from the offeror, as said in regulation
12 of the Manner of Offering Regulations (in this
subregulation: the right) – the earlier of these two:
(a) the date on which the right lapses;
(b) the date on which the right is fully realized.
If there is more than one lead underwriter for an offering, the report shall
be submitted by the lead underwriter whose name appears first on the
cover of the prospectus.
Each of the underwriters of an issue shall submit to the lead underwriter
first named on the cover of the prospectus a notice according to the
(d)
(e)
particulars and at the time when the lead underwriter is required to fulfill
its obligations said in subregulation (a).
Not later than three trading days after publication of the issue report, each
of the underwriters of the issue shall submit to the Authority a declaration
report, in which it certifies and verifies the particulars of the issue report
that relate to it; if a supplementary immediate report was submitted under
this regulation, the said declaration shall be delivered within three days
after the supplementary immediate report was submitted.
The lead underwriter must deliver a notice to the offeror according to the
particulars and on the date on which the offeror needs it in order to fulfill
its obligations under sections 30 and 56 of the Law.
Information, reports and corrections on demand
17. (a) An underwriter shall submit a report to the Authority and to the Exchange
about any event or matter that relates to its business, which is liable to be
important for a reasonable investor who purchases or weighs the purchase
of securities under a public offering for which it serves as underwriter,
and that not later than one business day after the underwriter first learned
of the said event or matter; in subregulations (a) and (b), "the
underwriter first learned of the said event or matter" – within the
meaning of the term "the body corporate first learned of an event" in
regulation 30 of the Periodic and Immediate Report Regulations, and the
definition shall be read as if the words "the event" were followed by the
words "or the matter".
(b) If one of the conditions specified in Chapter Two ceased to hold true for
an underwriter or if it ceased to comply with a said conditions, it shall so
inform the Authority and the Exchange immediately after it first learned
thereof; the notice shall specify the condition that ceased to apply or with
which it ceased to comply and the circumstances under which that
occurred.
(c) An underwriter must submit – on a demand by the Authority or by an
employee that it authorized and within the time set in the demand, which
must not be sooner than the times set in regulation 30 of the Periodic and
Immediate Report Regulations – a report of an event or matter, if they
hold that information about them is important for compliance with
provisions of the Law.
(d) An underwriter or applicant must, on demand by the Authority or by an
employee whom it authorized–
(1) deliver to the Authority within the time set in the demand any
explanation, particular, information and documents in connection
with particulars included in a report, application or notice under
these regulations;
(2) submit, within the time set in the demand, a report that corrects a
report, application or notice submitted under these regulations, if the
Authority or the employee whom it authorized concluded that they
are not as required under these regulations or under paragraph (1);
(3) submit a report that includes an additional certification or the
replacement of a certification included in a report that was
submitted.
Viewing reports and notices
18. Copies of reports and notices submitted under regulations 3(e), 8, 11, 16 and 17
shall be available at the underwriter's office for viewing by whoever so requests
and every person is entitled to copy them.
Electronic reporting
19. Reports, notices or any other document that under these regulations must be
submitted to the Authority or to the Exchange shall be submitted according to
Securities Regulations (Electronic Signature and Report) 5763-2003.
Report to the Authority
20. An underwriter shall report to the Authority anything that was discovered or
that occurred after permission to publish a prospectus was given and before the
period for the submission of orders ended, if awareness thereof would have
caused the Authority – immediately after it learned of the matter – not to permit
publication of the prospectus at all, or to permit it only after substantive changes
had been made in the draft prospectus, as said in section 25 of the Law.
Report of a foreign underwriter
21. The Authority may exempt a foreign underwriter from some or all of the
provisions of this Chapter, if it concluded that doing so is proper under the
circumstances of the case.
Belated report
22. An underwriter who submitted a report under this Chapter more than seven days
later than the last date set for its submission shall not operate as underwriter
until he submits the said report.
CHAPTER FIVE: DISTRIBUTOR
Qualifications of distributors
23. A body corporate may act as distributor within the framework of a public
offering, if it meets the following two conditions:
(1) one of the following:
(a) it has the right to serve as underwriter under the provisions of
Chapter Two;
(b) it is a Stock Exchange member;
(c) it is a banking corporation or an auxiliary corporation within their
meaning in the Banking Law, other than a joint service company;
(2) in respect of whoever is not a foreign underwriter or an Exchange member
with an equity of US$ 10,000 million or more – the conditions prescribed
in regulation 6, but the amount prescribed in subregulation 6(a) shall be
replaced by NS 1,507,000, and the period set in subregulation 6(b)(1)
shall be replaced by one year; in this paragraph, "equity" – as defined in
regulation 10(c).
NOTE: The above amount and the amount said in regulation 24 are in effect
from January 1, 2014, according to a notice in KT 5774, p.341
CHAPTER SIX: MISCELLANEOUS PROVISIONS
Annual fee
24. (a) On August 1 of each year an underwriter shall pay to the Authority an
annual fee of NS 5,310 for each fiscal year.
(b) For the fiscal year in which is the date of registration or the period in
which he ceased to operate, the underwriter shall pay a proportional part
of the annual fee under subregulation (a), equal to the amount of the
annual fee divided by 365 days and multiplied by the number of days
from the beginning of that fiscal year or the registration date, whichever
was later, until the end of that fiscal year; a period of cessation of activity
shall not be included in the said number of days.
(c) If an underwriter's registration date is after August 1, it shall pay the fee
for that fiscal year on January 31 of the following fiscal year.
(d) The provisions of regulation 2(i) and (j) of the Securities Regulations
(Annual Fee) 5749-1989 shall apply to an annual fee that was not paid on
time, and the provisions of regulation 2(k) of the same regulations shall
apply to an annual fee that was paid in excess of its amount for that year.
(e) In this regulation –
"registration date" – the date on which an underwriter was registered in
the Underwriters Register under regulation 3(a);
"period of cessation of activity" – the period that begins on the date on
which the underwriter is registered as "inactive" under regulation 3(f) or
regulation 8 and that ends on the date on which it is registered anew
according to the same regulation.
Updating fees and deposit
25. (a) The amounts of registration fees under regulation 4, of the deposit under
regulation 6(a) and regulation 23(2) and of the annual fee under regulation
24(a) shall be changed on January 1 of each year (hereafter: day of
change), at the rate of change of the new index over the basic index; an
amount changed as aforesaid shall be rounded to the nearest amount that
is a multiple of NS 1,000, but the amounts under regulations 4 and 24(a)
shall be rounded to the nearest amount that is a multiple of NS 5.
(b) The Authority Chairman shall publish the amounts said in regulations 4,
6(a), 23(2) an 24(a), as changed under this regulation, in a notice in
Reshumot.
(c) In this regulation –
"new index" – the index last published before the day of change;
"basic index" – the index last published before the regulations went into
effect or the index last published before the preceding day of change,
whichever was later.
Collection
26. The Taxes (Collection) Ordinance shall apply to the collection of fees, linkage
differentials and fines under these regulations, as if they were a tax within its
meaning in the said Ordinance.
Keeping documents and documentation
27. An underwriter shall keep documents connected to underwriting business,
including documents connected to the manner of allocating securities in a nonuniform offering and to the identity of offerees and also the estimates given
about quantities that will be ordered at the prices proposed by the underwriter,
and it shall also keep documentation on checks it carried out in respect of the
prospectuses it underwrote, and in respect of non-uniform offerings the
underwriter shall also make a record and keep documentation on the identity of
the purchasers, the quantity of securities sold to them and the sale conditions;
the documents, records and documentation shall be kept for seven years after
the date of the prospectus to which they relate.
Penalties
28. (a) Whoever commits one of the following shall be liable to a fine said in
section 61(a)(1) of the Penal Law 5737-1977:
(1) it acted as underwriter after he was convicted of an offense and was
suspended from underwriting activity, in violation of the provisions
of regulation 8;
(2) it assumed an underwriting obligation in excess of 15% of the total
underwriting obligations incurred or it served as lead underwriter in
a public offering that is not an offering of shares included in the Tel
Aviv 25 index, all in violation of the provisions of regulation 10.
(b) Whoever commits one of the following shall be liable to half the fine said
in section 61(a)(1) of the Penal Law 5737-1977:
(1) it acted as underwriter, not being a company incorporated in Israel
that meets the conditions prescribed in Chapter Two and registered
in the Underwriters Register, or being a company incorporated
abroad, in violation of the provisions of regulation 2;
(2) it insured its liability for an amount of insurance and under
conditions that it knew or should have known to be on a level
insufficient to secure its full liability under Chapter Five of the Law,
in violation of the provisions of regulation 5;
(3) it did not invest the amount said in regulation 6(a) or did not do so
in the manner prescribed in that subregulation;
(4) it charged or withdrew the deposit in violation of the provisions of
regulation 6(b);
(5) being an underwriter, it had Directors, officers or employees not in
compliance with the provisions of regulation 7;
(6) being an underwriter, it had Directors, officers or employees not in
compliance with the provisions of regulation 9;
(7) it did not submit an annual report to the Authority or to the
Exchange or submitted it not according to the provisions of
regulations 11, 12, 13, 14 and 15;
(8) it did not submit an issue report or declaration to the Authority or to
the Exchange or submitted it not according to the provisions
prescribed in regulation 16;
(9) it did not submit a report or notice to the Authority or Exchange
according to the provisions of regulation 17(a) and (b);
(10) it did not submit a report, notice, explanation, particular,
certification, information or documents to the Authority according
to the provisions of regulation 17(c) and (d):
(11) it did not place copies of a report or notice in the underwriter's head
office for viewing by whoever so requests, and it did not make it
possible to copy them according to the provisions of regulation 18;
(c)
(12) it submitted to the Authority or to the Exchange a report, notice or
any other document that must be submitted in violation of the
provisions of regulation 19;
(13) he did not report to the Authority immediately anything that was
discovered or occurred after permission to publish a prospectus had
been given and before the end of the period for submitting orders,
knowledge of which would have motivated the Authority not to
permit publication of the prospectus at all or to permit it only after
substantive changes had been made in the draft prospectus, as said
in section 25 of the Law, in violation of the provisions of regulation
20.
Whoever serves as distributor without having met the requirements of
regulation 23 shall be liable to half the fine said in section 61(a)(1) of the
Penal Law 5737-1977.
Repeal
29. The Securities Regulations (Underwriting) 5753-1993 (hereafter: the previous
regulations) are repealed.
Effect
30. (a)
(b)
(c)
The regulations, other than the regulations enumerated in subregulation
(b), shall go into effect on July 1, 2007 (hereafter: day of effect).
Regulations 11 to 15, other than for the purposes of regulation 3 of these
regulations, shall go into effect on December 31, 2007; however, between
the day of effect and the said date underwriters shall report the annual
report according to the provisions of regulations 14 to 17 of the previous
regulations.
Repealed
Transitional provisions
31. (a) Regulation 9 shall not apply to an officer appointed or hired before the
day of effect during three years after the day of effect.
(b) Whoever reported to the Authority as an underwriter on the day of effect
may continue to serve as underwriter during one year after the day of
effect, even if it does not meet qualifications under Chapter Two, on
condition that within one week after the day of effect it submitted an
application to be registered in the Underwriters Register and that the
failure to meet a qualification – as far as it exists – be stated specifically
and prominently in the body of the application, and also that the applicant
comply with the provisions of Chapter Two of the previous regulations.