Israel India | Business Guide | 2017

096 > Services > Joint Ventures Israel-India > Business Guide > 2017 ‏ I nternational companies entering the Israeli market often do so by way of a joint venture with an Israeli partner.  Joint ventures are common in a range of industries, such as hi-tech,infrastructure,and energy ventures. ‏ Joint Ventures (“JVs”) are not recognized in Israel as particular legal entities and,therefore, there are no specific regulations that apply to them. Most legal structures that are applicable in Israel can be used for the purpose of forming a JV, so that a JV may be formed by organizing a Company ("JV Company") or a Partnership - general or limited - ("JV Partnership"), or without incorporating a new entity, as in the case of a Contractual Engagement ("Contractual JV").  ‏ Any of the foregoing structures can be formed for any legal purpose.  JVs can operate in any sector,subject to applicable regulations, licenses and permits.  To the extent a JV operates in a regulated sector,such as banking, electricity, or energy, the applicable laws in such sector will apply. ‏ Contractual JVs and Partnerships ‏ A Contractual JV is not required to be registered, as no separate legal entity is established.  Parties firmup their cooperation through a contract that may bemade for any purpose,and for any time frame – limited or Joint Ventures in Israel Legal framework involved in establishing JVs Adv. Raz Tepper and Adv. Eran Yaniv otherwise.  The contractual engagements are subject to Israeli contract laws and enable the parties to define their engagement and their internal relationshipwith very few limitations. ‏ JV Companies are subject to Israeli companies laws,and must be registered with the Israeli Companies Registrar. JV Partnerships are subject to Israeli partnership laws.  There are two forms of partnerships: General Partnership ("GP"), which is an unlimited liability partnership,and Limited Partnership ("LP").  Registration with the Partnerships Registrar is a constitutive requirement for the establishment of a LP.  A GP is required to be registered with the Partnerships Registrar; such registration,however,is only a declarative requirement that does not affect the existence of the GP. ‏ Parties to a JV sometimes prefer a Contractual JV over a JV Company or a JV Partnership as it enables them to retain control over their assets and business,as these are not transferred to a separate legal entity. A Contractual JV is subject to fewer procedural requirements as registration is not required. It is easier to terminate the Contractual JV than a JV operating through a separate legal entity, and a Contractual JV has no effect on direct taxation of the parties thereto. ‏ It should be noted that Israeli laws (such as the Law for the Encouragement of Capital Investment and the Law for the Encouragement of Industrial R&D) encourage foreign investment in Israel by offering several benefits to local businesses such as grants, reduced tax rates, tax exemption and other tax-related benefits. The authors are partners in FBC See page 99. Adv. Raz Tepper Adv. Eran Yaniv