Dual-Listing Rules
Who can Dual-List on the TASE?
- Companies traded on the U.S. stock exchanges NYSE, NASDAQ, or NYSE MKT, or on the LSE Main Market, and High Growth Segment for at least one year. Companies traded on these markets for less than one year may dual-list, under the Dual-Listing Law, provided their market capitalization is greater than $150 million. Companies on the NASDAQ Capital Market list (formerly Nasdaq Small Cap) that have traded for at least one year are additionally required to have a minimum market capitalization of approx. $38 million at the listing date.
- For companies listed on the above mentioned or on other stock exchanges, but that do not meet the rules specified above, there are separate rules for listing on the TASE.
- All companies are required to have only one type of share in their issued capital.
How to Dual-List on the TASE
- Publish a listing form, including only technical information about the company and its issued securities.
- For companies listed on U.S. stock exchanges – enclose the most recent periodic financial report submitted in the U.S., and a copy of disclosures published since the periodic report. (If the company has not yet been required to publish a periodic report, it should attach the prospectus used for the IPO in the U.S.). If a prospectus was published during the year preceding the year of the periodic report, or after the date of the periodic report, it should be enclosed as well.
- For companies listed on the LSE – enclose the most recent periodic report published in the UK and the most recent prospectus approved by the UK Listing Authority (or a later report that includes disclosures that are identical in essence to the disclosures in the prospectus approved by the UK Listing Authority). Also enclose a copy of disclosures published since the publication of the most recent periodic report.
- No translation into Hebrew is required for documents submitted abroad.
- Open an account with one of the four banks’ Nominee Companies.
- Trading begins three trading days after publication of the registration document.
- Exemption from listing fees and annual fees for the first year.
After Listing – What are the Reporting Requirements?
- Financial statements and all other disclosures submitted abroad are also submitted in Israel, in exactly the same format (no translation into Hebrew required).
- Financial statements are submitted according to the schedule that applies abroad. Immediate reports required abroad are submitted in Israel according to the schedule specified in Israeli regulations.
- A copy of reports, received by the company, concerning changes in holdings of interested parties must be submitted in Israel as well.
Private Placements to Employees and Others
- For employees – the rules applicable abroad apply.
- In other private placements, if a disclosure was published abroad, it must be submitted in Israel as well.
- Exemption from TASE requirements regarding private placements.
Delisting - Company’s Initiative
Shares can be delisted from the TASE with a three months' notice.
Listing of Companies not incorporated in Israel
Options for Employees in Dual Companies
As a rule, the adjustment index for calculating the value of the real benefit upon exercise of options allocated to employees is the consumer price index. In certain cases, the Israel Tax Authority has permitted only for companies traded abroad that the adjustment index would be the change in the representative exchange rate of foreign currency.
In recent years there has been a continuous decline in the exchange rates of foreign currencies in general and of the dollar in particular in relation to the shekel. This decline created a situation where upon the sale of shares of dual-listed companies, listed for trade on both the TASE and on the stock exchange outside Israel, and whose exchange rates are also denominated in foreign currency, the use of the consumer price index increased the value of the real benefit, classified as labor income, in some cases, and as a result, employee tax liability increased.
In response to the TASE's request to compare the status of dual-company employees to the status of employees of Israeli companies traded abroad only, on June 21, 2010, the Israel Tax Authority issued a directive permitting dual companies to choose the representative exchange rate of the foreign currency in which the share price of the company's share is listed on the stock exchange outside of Israel, as the adjustment index for implementing the provisions of Section 102 of the Ordinance, instead of the Consumer Price Index.
The choice of the foreign currency index by a dual company is made subject to compliance with the conditions specified in Section 4 of the directive. The directive distinguishes between shares / options allotted / allocated under option plans submitted to the tax assessor prior to the publication of the directive and shares / options that will be allocated in future new options plans.
- Shares and / or options allotted / allocated according to option plans submitted to the tax assessor's approval: The dual company must, within 45 days of publication of the directive, apply to the professional division in the Israel Tax Authority and receive its advance approval that the adjustment index for the calculation of the tax liability accruing to employees on the exercise date of the shares will be the relevant foreign currency index.
- New programs: The dual company should attach a notice regarding the chosen adjustment index, as part of the documents submitted to the assessment officer for approval of the allocation plan.
The directive relates to companies that are currently traded abroad only, and to companies that intend to dual list on the TASE, in the relevant sections.
