Embracing Digital Transformation: Israel's Registrar Of Companies Goes Paperless

• Law Firm: TMF Group BV
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, Inward/ Foreign Investment, Corporate and Company Law
• Author: Diana Grosz
• Published date: 07 August 2023

In a significant move towards digitalisation, the Israeli Registrar of Companies has introduced mandatory paperless communication with all companies formed after June 2022. This amendment to Israel's company laws aims to enhance efficiency, simplify compliance, and bolster the country's reputation as the 'Start-Up Nation'. What do these changes mean for businesses looking to set up and operate in the country?

On 27 June 2022, Israel's legislature, The Knesset, passed an important revision to the Companies Act, making electronic communication mandatory between government departments and Israeli businesses. One key change, Amendment 35, introduced the requirement for paperless communication between the Israeli Registrar of Companies (IRoC) - a department of the Ministry of Justice - and companies established after the aforementioned date. This transition to digital communication aligns with Israel's commitment to maintaining its reputation as a leading hub for innovation and entrepreneurship.

Israel's business-friendly environment

Renowned for its skilled workforce, advanced technological environment, and robust infrastructure, Israel is already ranked as one of the world's least complex countries to do business in. Israel is ranked 63rd (out of 78) in TMF Group's newly-published Global Business Complexity Index 2023, according to the complexity of its business environment.

The country's favourable business environment has attracted numerous market entrants from overseas, and substantial foreign direct investment (FDI). According to World Bank statistics, Israel witnessed a net inflow of FDI totalling USD27.76bn in 2022, positioning the country among the top 20 FDI host nations globally. Furthermore, Israel boasts the highest number of start-ups per capita and hosts over 350 R&D centres belonging to multinational corporations.

For several years Israel has been making a conscious shift towards digital communication, with government bodies, to simplify and enhance the provision of public services and improve efficiency. Alongside providing faster and more streamlined services to businesses and residents, the transition to digital communication is projected to save the state approximately NIS820m annually. What is more, the environmental impact of reducing the need for printing and delivering physical letters and forms is significant - estimated to save around 30,000 trees and mitigate 18,634 tons of greenhouse gas emissions each year.

Understanding the...