ESTABLISHMENT OF THE NEW NOMINEE COMPANY – FROM JANUARY 2018
The Tel-Aviv Stock Exchange (TASE) is establishing a new nominee company as part of the TASE group.
In a first, the nominee company will end the use of physical certificates and will instead provide digital registration services in line with the accepted global practice.
THE NOMINEE COMPANY’S SPHERES OF OPERATION
The majority of the nominee company’s business is in two main spheres of operation:
- Registering securities in the name of the nominee company in the securities’ registry of the issuing company and their deposit with the clearing house.
The nominee company serves as trustee for the TASE clearing house in all matters pertaining to the inventory management of the securities registered with the clearing house, Inventory management is conducted in accordance with the nominee company’s undertakings toward the clearing house and the issuing company. Moreover, the law establishes an array of controls and accommodations with which the nominee company must comply in its dealings with the both the clearing house and with the issuing company.
The securities’ inventory can change frequently each day due to a large variety of types of transactions, including: deposit of an issuance, deposit of securities that are registered in the company’s registry, withdrawal of securities, exercise of convertible securities, purchase offers, all sorts of repayments, various payments, mergers and corporate actions that necessitate making changes in the securities’ inventory.
- Corporate actions and payments – ongoing handling of the rights relating to the securities. .
The monetary consideration for corporate actions and ongoing payments is paid by the issuing company to the end-holders of the securities. The TASE clearing house sends reports of anticipated payments to the clearing house members and the nominee company and such reports provide the basis for correlating the amount of the payment between the issuing company, the nominee company and the clearing house. Prior to 11 AM on the payment date, the issuing company transfers the payment amount to the bank accounts of the nominee company. When the payment is actually made, the clearing house makes a withdrawal of the appropriate amounts of money from the TASE member with whom the nominee company’s bank account is held, and transfers such sums to the clearing house members. This is done in accordance with the quantity of securities that are entitled to the payment, which are registered in favor of each such clearing house member.
Payments in government bonds and treasury bills – are made directly, without the mediation of the nominee company, to the representatives of the Ministry of Finance and the Bank of Israel.
THE NOMINEE COMPANY’S OPERATING MODEL
As prescribed by the Securities Law and the Companies Law, the registry is to be managed by the company itself. The company is obliged to report any and every change in the registry.
The securities that are issued to the public are to be registered in the name of the nominee company.
The TASE nominee company makes redundant the need to use physical certificates, and custodianship activity is performed by way of digital registration.
The nominee company transfers the payments from the issuing company to the clearing house, while the clearing house acts, through the clearing house members, to transfer the payments to the end-holders.
THE NOMINEE COMPANY’S ADVANTAGES
- Efficiency - the work processes of the issuing companies are made more efficient due to TASE being able to provide them with a variety of “one stop” services: a trade listing, registration with the nominee company and deposit with the clearing house.
- Digitization - ending the use of physical certificates and going over to digital registration using a computerized system.
- Improved control processes - in all matters relating to the records of the issuing companies’ capital, due to the ability to implement automated controls between the capital records of the nominee company and TASE’s core system.
- Cheaper costs - cheaper registration service costs for the issuing companies.
HOW DOES ONE GO ABOUT REGISTERING FOR THE TASE NOMINEE COMPANY’S DIGITAL SERVICES?
- The issuing company will sign engagement documents with the nominee company.
- An annual management fee, as shown on the nominee company’s tariff list, will be paid.
The fees that the nominee company will charge will comprise a fixed payment ranging from NIS 10,000 to NIS 35,000– in accordance with the size of the company, and a variable payment – in accordance with the number of series of securities that the company seeks to register with the nominee company.
- In coordination with the nominee company, the issuing company will apply to make registry changes in the company’s books and to report to MAGNA using the “Status of the Corporation’s Capital and Securities’ Registries and Changes Thereto” form (T087), and to provide the nominee company with the necessary documents pursuant to the TASE clearing house’s bylaws.
Detailed instructions regarding the MAGNA reporting and the provision of the aforementioned documents will be supplied at the time of entering into the engagement.