Start-Up Law in Israel

Abstract

This is a chapter on Israel in a forthcoming book on start-up law in several jurisdictions. Israel is a world-renowned leader in innovation and entrepreneurship. The country’s legal environment is an important basis for this success. It allows foreign investors to invest freely and repatriate funds without currency controls, and offers tax exemptions, a legal system based on common law, and an independent judiciary.

The law permits a variety of investment structures, including equity investments, debt financing, and combinations of the two. Entrepreneurs can also apply for public funding. In addition, the law provides strong protections for trade secrets, patents, copyright, trademarks, trade dresses, and designs. Commercial entities in Israel commonly enter into licensing agreements, including in-licensing agreements, cross-licensing agreements, and technology dispositions.

The law charges a company’s board of directors with supervision of management. Companies reduce the exposure of their directors and officers to liability using exculpation, indemnification, and insurance.

Finally, the law contemplates various scenarios for distressed companies, including voluntary liquidation, court-ordered liquidation, court-supervised voluntary liquidation and reorganization.

Keywords: Start-ups, Startups, Israel, Law, Finance, Corporate Governance, Tax, Intellectual Property, Venture Capital

JEL Classification: G24, G34, H25, K34, M13, O31, O32, O34