Securities Regulations (Annual and Financial Statements), 2010
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The following translation is intended solely for the convenience of the reader. This translation has no legal
status and although every effort has been made to ensure its accuracy, the ISA does not assume any
responsibility whatsoever as to its accuracy and is not bound by its contents. Only the original Hebrew text
is binding and reader is advised to consult the authoritative Hebrew text in all matters which may affect
them.
Securities Regulations (Annual Financial Statements), 20101
By virtue of my authority under section 36 of the Securities Law, 5728-1968, on the
recommendation of the ISA and with the approval of the Knesset Finance Committee, I
hereby enact the following regulations:
Chapter A:
General Provisions
Definitions:
[Amended: 2006(2)]
1. In these regulations, -
‗Notes,’ ‘owner of the parent ,’ ‘a statement of financial position,’ ‘a statement of
comprehensive income’ ‘a statement of changes in equity,’ ‘a statement of cash flows,’
‘consolidated statements,’ ‘comprehensive income,’ ‘earnings per share,’
‘corporation’s investment in an associate,’ ‘contingent liabilities,’ ‘non controlling
interests,’ ‘proportionately consolidated company,’ ‘finance lease,’ ‘operating lease,’
‘retained earnings,’ ‘date of transition to IFRS,’ ‘grant date,’ ‘operating cycle’ ‘non-
current assets,’ ‘financial assets,’ ‘function based expenses classification,’ ‘nature
based expenses classification,’ ‘gains or losses relating to discontinued operation ,’
‘profit or loss attributable to owners of the parent,’ ‘equity method,’ and ‘joint control,’
shall have the meanings given them in the generally accepted accounting principles;
‗Principal shareholder’ in a corporation - according to the meaning thereof in paragraph
(1) of the definition of ‗principal shareholder‘ in a corporation, in section 1 of the Law;
‘Financial statements’ or ‘reports’ – a full set of financial statements as defined in the
generally accepted accounting principles;
‗Auditor‘ — one of the following:
(1) An auditor;
(2) A party who is licensed in the country in which the party operates to audit
financial statements that are of the type of financial statements that are
produced by the foreign issuer;
‗Continuing contract‘ – a contract dealing with compensation, rental payments, etc.
1 Kovetz HaTakanot (Collection of Regulations) 6861, 5770 (25 January 2010), p. 662 (Draft Regulations
in Kovetz HaTakanot (Collection of Regulations) 6865, 2010.
Securities Regulations (Annual and Financial Statements), 2010
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‗Company’ – including a partnership, joint venture, cooperative society or any other
corporation;
‗associateAssociate‘ – as defined in the generally accepted accounting principles, and a
company in which the corporation holds joint control and which is treated in accordance
with the equity method;
‗Consolidated company‘ – a company whose reports are consolidated with the
corporation‘s reports, except for a company which is proportionately consolidated;
‗Held company‘ – a consolidated company, a proportionately consolidated company or
an associate;
‗Credit card company‘ – an auxiliary company that issues a debit card or which settles
payments that were made through it; for this purpose, the terms ―issues‖ and ―debit card‖
shall have the meanings and definitions given to them in the Debit Card Law - 1986, as
relevant; and the term ―auxiliary company‖ will have the term given to it in the ―Banking
Law (Licensing) – 1981;
‗Generally accepted accounting principles‘ – international financial reporting standards;
‗United States generally accepted accounting principles’ ("US GAAP") – the generally
accepted accounting principles in the United States as they may be from time to time,
with respect to companies listed for trading on stock exchanges in the United States,
including the rules and standards published by the Financial Accounting Standards Board
(FASB), and the rules adopted by that FASB;
‗Insurer’ - within the meaning thereof in the Supervision of Insurance Business Law -
1981;
‘Foreign issuer’ – an issuer which was incorporated outside of Israel and regarding
which the following conditions were met at the time of its initial public offering:
(1) More than 50% of its revenue is not received in Israel;
(2) Control of the issuer is not held by permanent residents of Israel; for this
purpose, the holding or purchase of securities together with other shall
exclude the holding thereof together with a permanent resident of Israel;
‗Supervisor of Banks‘ – as defined in the Banking Ordinance -1941;
‘Accountant’ – including those who have been authorized to work as accountants outside
of Israel;
‗Corporation‘ – the corporation that prepared the reports, other than a joint investment
trust;
Securities Regulations (Annual and Financial Statements), 2010
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‗Date of the approval of the reports’ – the date on which the corporation‘s board of
directors approved the reports;
‗Compensation‘ – as defined in regulation 21 of the Periodic and Immediate Reports
Regulations;
‗Periodic and Immediate Reports Regulations‘ – the Securities Regulations (Periodic
and Immediate Reports) -1970;
‗American auditing standards‘ – the accepted auditing standards in the United States
with respect to companies listed for trading on stock exchanges in the United States,
including the auditing standards published by the American Auditing Standards Board of
the American Institute of Certified Public Accountants (AICPA);
‗Foreign auditing standards‘ – accepted auditing standards that are not Israeli accepted
auditing standards and are not international auditing standards;
‗International Financial Reporting Standards‘ ("IFRS") – Standards and interpretations
published by the International Accounting Standards Board (IASB);
‗International auditing standards‘ – the international auditing standards published by
the International Federation of Accountants;
Application of the regulations
2. The provisions of these regulations shall apply to the preparation of a corporation‘s
financial statements, excluding:
(1) The financial statements of a banking corporation or a credit card company that
are prepared in accordance with the directives and guidelines of the Supervisor of
Banks, and excluding information in the financial statements of a corporation that
has consolidated or proportionately consolidated a banking corporation or a credit
card company, or information in the financial statements of a corporation for
which the banking corporation or credit card company is an associate, to the
extent such information relates to the banking corporation or credit card company;
(2) The financial statements of an insurer which are prepared in accordance with the
Insurance Business Control Regulations (Particulars of Report) -1998, and
excluding information in the financial statements of a corporation that has
consolidated or proportionately consolidated an insurer, or information in the
financial statements of a corporation for which an insurer is an associate, to the
extent such information relates to the insurer;
(3) Information in the financial statements of a corporation which has
consolidated or proportionately consolidated a corporation which is subject to
the provisions of Chapter 5C of the Law or information in the financial
Securities Regulations (Annual and Financial Statements), 2010
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statements of a corporation for which such a corporation is an associate, to the
extent such information relates to such corporation and is not required to be
disclosed pursuant to the foreign law that applies to such corporation.
Rules for preparing the reports
3. (a) The reports will be prepared according to the generally accepted accounting
principles and will present, accurately and faithfully, the corporation‘s financial
condition, its operations and its cash flows, and the changes in its business
condition and in its equity in the reported years.
(b) The required disclosure will be prepared according to the generally accepted
accounting principles and according to these regulations; the details required
pursuant to these regulations will be provided in the notes, unless, under the
circumstances, they are not material.
(c) The corporation shall include, in its financial statements, an express and
unqualified certification regarding full compliance with the International
Financial Reporting Standards; the certification will also indicate that the
financial statements including the additional disclosure required pursuant to these
regulations.
Non-conformity between the provisions of the regulations and the generally
accepted accounting principles
4. If the Chairman of the ISA or whoever has been authorized for such purpose in
writing is persuaded that there is a provision in these regulations that makes it
impossible to implement the generally accepted accounting principles or does not
enable that which is permitted pursuant to such regarding the submission of a
particular report, the Chairman will direct that such provision will not apply to the
submission of that particular report.
Financial statements of a foreign issuer
5. (a) Notwithstanding the provisions of regulation 3, the financial statements of a
foreign issuer may be prepared in accordance with either the generally accepted
accounting principles, the United States generally accepted accounting principles
or the International Financial Reporting Standards as adopted by the European
Union in the framework of Regulation (EC) of the European Parliament and the
Council 1606/2002.
(b) The financial statements of a foreign issuer may be audited pursuant to the
international auditing standards or pursuant to the American auditing standards,
in accordance with the type of rules or standards according to which they were
prepared, in accordance with sub-regulation (a).
Securities Regulations (Annual and Financial Statements), 2010
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(c) Regarding the financial statements of a foreign issuer that are prepared as
described in sub-regulation (a) and which are audited as described in sub-
regulation (b), the following provisions shall apply:
(1) If a foreign issuer has prepared its financial statements in accordance with the
United States generally accepted accounting principles, the reports shall
include a note regarding adjustments to the generally accepted accounting
principles; for this purpose, ―adjustment‖ shall mean – adjustment of the
profit or loss for the period and of the amount of the comprehensive income
for the period which is attributed to the owner of the parent, adjustment of the
profit or loss for the period which is attributed to the non-controlling
interests, and of the amount of the comprehensive income for the period
which is attributed to the non-controlling interests and of the amount of the
equity attributed to the owner of the parent and of the amount of the equity
attributed to the non-controlling interests;
(2) The reports may be written in a language other than Hebrew, provided that
they are accompanied by a translation into Hebrew and a certification from
the translator concerning the accuracy of the translation and the translator‘s
consent to having the translation and the certification included in the reports;
(3) If the reports are presented in a currency other than those listed in the
Schedule, the reports will be presented in terms of shekel values, and the
translation of the financial statements into shekel values shall be prepared in
accordance with the accounting rules according to which the said reports
were prepared, as described in sub-regulation (a); if a translation into Hebrew
has been attached to such reports pursuant to paragraph (2), the translation
shall present the shekel values;
(4) The auditor will, in his opinion, indicate the accounting rules according to
which the reports were prepared and the auditing standards according to
which they were audited;
(5) The auditor‘s opinion may be prepared in a language other than Hebrew,
provided that it is accompanied by a translation into Hebrew and a
certification from the translator concerning the accuracy of the translation
and the translator‘s consent to having the translation and the certification
included in the reports;
(6) In addition, the auditor or accountant shall provide his opinion as to whether
the financial statements include the additional disclosure requirements
established in these regulations.
Currency in which the reports are presented
6. If a corporation‘s reports are not presented in a currency that is one of those listed in
the Schedule, the corporation shall also attach to its reports a translation into shekel
Securities Regulations (Annual and Financial Statements), 2010
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values of the amounts appearing in the reports, which has been prepared in
accordance with the generally accepted accounting principles.
Comparative reports
7. (a) A parallel amount that was reported in the statement of financial position for the
previous reporting year will appear alongside each amount in the statement of
financial position.
(b) A parallel amount from each of the two preceding fiscal years will appear
alongside each amount in the statement of comprehensive income - whether such
amount is presented in a single statement or in two statements that separately
present the components of the profit or loss in one statement and the other
components of comprehensive income in a different statement - in the statement
of changes in equity and in the statement of cash flows.
(c) Notwithstanding the provisions of sub-regulation (b), a corporation whose
securities have been delisted from trading on a foreign stock exchange during the
course of the reporting year – as described in section 35AA of the Law – may
establish that the transition date to IFRS was the beginning of the reporting year
preceding the reporting year during which its securities were delisted from
trading on the foreign stock exchange, and may present in its financial statements
for the reporting year, alongside each amount in each of the statements listed in
sub-regulation (b), the parallel amounts for only the preceding reporting year; if
such a corporation did not publish financial statements for the last reporting year
throughout which its securities were traded on a foreign stock exchange in
accordance with section 35EE of the Law, the provisions of this sub-regulation
shall not apply and the provisions of sub-regulation (b) shall apply.
(d) The statements shall indicate any amount that has been re-stated or re-classified.
Period of the operating cycle
8. The corporation‘s operating turnover period shall be indicated.
Indication of amounts
9. Amounts shall be included for any detail that can be quantified, including amounts
that can be quantified through reasonable estimates.
Additional information
10. In addition to all the details required pursuant to the generally accepted accounting
principles and pursuant to these regulations, the reports shall present any detail,
information or clarification in the absence of which the reports will not be in full
compliance with the requirements of regulation 3(a).
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Signatures and date
11. Alongside the signatures of the reports‘ signatories, there will also be an indication of
their names and of their positions at the corporation and an indication of the date of
the approval of the reports; if the board of directors have authorized a director to sign
in the name of the chairman of the board of directors, the CEO or the most senior
corporate officer dealing with finance, as provided in regulation 9(e) of the Periodic
and Immediate Reports Regulations, the notes shall indicate the matter of such
authorization and the reasons therefor.
Chapter B: Details regarding the statement of the corporation’s financial
position
Presentation format for the statement of financial position
12. If the statement of the corporation‘s financial condition is not presented on the basis
of a distinction between current assets and liabilities and non-current assets and
liabilities, as defined in the generally accepted accounting principles, the presentation
format that was used shall be indicated, along with the reasons for such presentation.
Customer receivables, debtors and current credit balances
13. (a) Customer receivables shall be described according to the following two groups:
(1) Open debts;
(2) Checks receivable;
(b) The amounts of the provisions for doubtful debts shall be specified; the amounts
of the provisions that have been deducted from the customer receivable balances
shall be indicated separately.
Financial assets
14. (a) For each of the groups of financial assets that are required to be disclosed
pursuant to the generally accepted accounting principles, the types of substantial
investments in such group and the amount thereof shall be specified; for the
purpose of this regulation, the term ―financial asset‖ shall mean a financial asset
included in International Accounting Standard 39, or in any other standard that
may replace it.
(b) The expected dates for the realization of any investment amounts will be
disclosed, according to each type described in sub-regulation (a).
(c) The assets will be classified and specified in groups according to currencies and
according to the form of linkage, and at least according to –
(1) Assets denominated in a foreign currency or which are linked to a foreign
currency, with each significant currency being specified separately;
unlinked shekel amounts and shekel amounts that are linked to an index
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will be presented separately, with a separate presentation of each
significant type of index;
(2) Assets that are linked to a different base, with each significant linkage base
being specified separately;
(d) If amounts that were invested in a company that is not a held company (in this
sub-regulation – an invested company), combined with the amounts of any
guarantees given for its liabilities by the corporation or by corporations it
controls or which are under its joint control, exceed five percent of all the assets
in the statement of the corporation‘s financial condition, the following details
will be presented:
(1) The name of the company in which the investment was made;
(2) The amount of the investment in the company as of the date of the of the
statement of financial position;
(3) Details of the guarantees given for the company‘s liabilities;
(4) The income from dividends and other income from the company.
Real property rights
15. If the corporation has rights in real property, the following provisions will apply:
(1) The rights will be specified, with a distinction being made between ownership
rights and leasehold rights;
(2) Leasehold rights will be specified, with a distinction being made between finance
leases and operating leases, with an indication of the remaining lease period, and
with a distinction being made between capitalized leases and non-capitalized
leases.
(3) If any real property rights in Israel have not been registered in the corporation‘s
name or in the name of its subsidiary at the Land Title Registry, the reason for
such non-registration shall be indicated.
(4) If any real property rights outside of Israel have not been registered in the
corporation‘s name or in the name of its subsidiary at the registry which is
maintained by law in the country in which such real property is located, the reason
for such non-registration shall be indicated.
Type of indexation for liabilities
16. A corporation‘s liabilities will be categorized and specified in groups, according to
the type of currency or the type of indexation, and at the least, according to –
(1) Non-linked shekel liabilities;
(2) Index-linked shekel liabilities, with each type of significant index being specified
separately;
(3) Foreign currency or foreign currency-linked liabilities, with each type of
significant currency being specified separately;
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(4) Liabilities that are linked to another base, with each type of significant linkage
base being specified separately.
Conditions on which liabilities are contingent
17. (a) If a material liability of the corporation or of its held company is contingent on
the fulfillment of any conditions whatsoever, such conditions will be specified
and an indication will be provided as to whether such conditions have been met
as of the date of the statement of financial position, with a distinction being made
between the corporation‘s liabilities and those of its held companies.
(b) If, during the reporting year, circumstances have arisen which could accelerate
the payment of the liabilities, such circumstances and the amount of such
liabilities will be specified, with a distinction being made between the
corporation‘s liabilities and those of its held companies.
Contingent liabilities
18. If there is only a slight possibility that there will be a negative cash flow upon
discharge of a contingent liability, but the maximum liability or loss could put into
question the corporation‘s continued operation in its current format, a summary
description of the contingent liability will be provided.
Guarantees
19. (a) The report will include an indication of the total of the amounts that the
corporation, or that a consolidated company or a proportionately consolidated
company has guaranteed, including notes that have been assigned, with a
distinction being made between debts of consolidated companies, debts of
proportionately consolidated companies, debts of included companies, debts of
principal shareholders and other debts.
(b) If the corporation, or one of its consolidated companies or a company in which it
holds joint control has given a guarantee which is unlimited in amount, or a
guarantee the exercise of which could put into question the corporation‘s
continued operation in its current format - other than a guarantee given to a
consolidated company or to a proportionately consolidated company - the report
shall provide the following details, with a distinction being made between
guarantees given by the corporation and guarantees given by a consolidated
company or by companies of whom it has joint control:
(1) The name of the guaranteed party;
(2) The name of the creditor;
(3) The scope of the guarantee;
(4) The total of all the liabilities guaranteed as of the date of the statement of
financial position;
(5) The security received with respect to such guarantees;
(6) The corporation‘s expenses and income with respect to such guarantees.
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(c) The corporation will attach to its reports the audited financial statements of any
companies that are the beneficiaries of guarantees such as are described in sub-
regulation (b), if the guarantee given is such that its exercise could put into
question the corporation‘s continued operation in its current format, or if the
guarantee is one which is unlimited in amount; the chairman of the ISA may
exempt a particular corporation from the requirement to attach the reports of a
company that is the beneficiary of such a guarantee, and he may condition the
grant of the exemption on the provision of details regarding such company.
(d) If the corporation has given very substantial guarantees to cover a liability of a
principal shareholder, the details listed in sub-regulations (b)(1) through (6) will
be provided, and the reports of a company that is the beneficiary of such a
guarantee will be attached as described in sub-regulation (c); the chairman of the
ISA may exempt a particular corporation from the requirement to attach the
reports of a company that is the beneficiary of such a guarantee, and he may
condition the grant of the exemption on the provision of details regarding such
company.
(e) The financial statements of a guaranteed company that are required to be
attached pursuant to this regulation shall be prepared in accordance with
generally accepted accounting principles.
(f) Notwithstanding the provisions of sub-regulation (e), the reports of a guaranteed
company may be attached even if they are not prepared in accordance with
generally accepted accounting principles, provided that the following conditions
are met:
(1) The set of accounting rules according to which the guaranteed company‘s
reports were prepared is a comprehensive one;
(2) The content of the information in the guaranteed company‘s reports is similar
in the main part to that which is required pursuant to the generally accepted
accounting principles;
(3) The guaranteed company‘s reports, or the corporation‘s reports, include a
note providing adjustments to the generally accepted accounting principles; if
the guaranteed company has subsidiaries, such data shall be provided with a
distinction being made between the data attributable to the owner of the
parent and the data attributable to non-controlling interests; for this purpose,
the word ―adjustment‖ shall mean – adjustment of the profit or loss for the
period and of the amount of the comprehensive income for the period, and of
the total equity.
(g) The provisions of sub-regulation (c) will not apply to the reports of a guaranteed
company to which section 36 of the Law applies.
(h) In this regulation, ―guarantee‖ shall also include an undertaking to compensate
and the granting of a lien to secure the debt of another.
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Special contractual relationships
20. Details shall be provided regarding contractual relationships that are special because
of one of the following:
(1) The scope of the contractual relationship;
(2) The duration of the contractual relationship;
(3) The importance of the contractual relationship;
(4) The fact that the contractual relationship deviates from what is standard in the
corporation during its ordinary course of business.
Liens and collateral 21. (a) The report will indicate the amounts of the corporation‘s liabilities and the
amounts of other parties‘ liabilities which are secured by liens on any of the
corporation‘s assets or for which the corporation has given any collateral
whatsoever to secure their payment. The report will include a description of the
asset under the lien and the type of the lien or of the collateral given, whichever
is relevant, with a distinction being made between the corporation‘s assets on
which liens have been given or which have been provided as collateral and the
assets of its held companies on which liens have been placed or which have been
provided as collateral.
(b) If a lien or collateral such as is described in sub-regulation (a) has been
exercised, or if during the reporting year or after the date of the reports and
before the date of their approval, proceedings have been initiated for the exercise
of such lien or collateral, the report will disclose such and will specify the
circumstances of the exercise or of the initiation of proceedings, whichever is
relevant, with a distinction being made between liens or collateral given by the
corporation and those given by its held companies.
Chapter C: Details regarding the corporation’s held companies
Investments in held companies
22. (a) The report will provide, in a table format, the following specifics regarding each
directly held company, with a distinction being made between consolidated
companies, companies under joint control and included companies –
(1) The held company‘s name and the country in which it was incorporated;
(2) The corporation‘s rights in the held company, with a distinction (if such a
distinction exists) being made between equity rights and voting rights, and
with a specification of securities held by the corporation that can be
converted into rights to capital and those that can be converted into voting
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rights in the held company, with a distinction being made between securities
that are immediately convertible and those that are not immediately
convertible; the report will also indicate the amounts of loans and guarantees
given by the corporation to each held company;
(3) The size of the investment in the held company, calculated as the net sum -
based on the consolidated reports - of the total of all assets less the total of
liabilities attributable to the owner of the parent company, which present in
the corporation‘s consolidated statement additional financial information for
the held company, including goodwill;
(4) Regarding investments in held companies whose securities are listed for
trading on a stock exchange - the stock exchange on which the held
company‘s securities are listed for trading and the value on the exchange of
the corporation‘s rights in the held company;
(b) If the financial statements of a held company have been consolidated in the
corporation‘s financial statements and the corporation holds less than half of the
company‘s voting rights, the report shall indicate such and the reasons for such
will be specified.
(c) Regarding any company that is an associate as described in regulations 23 and
24, the report will indicate the amount of the goodwill resulting from its
purchase; amounts that have been recognized as declines in the value of the
corporation‘s investment in the associate will also be specified.
Attachment of an associate’s reports 23. (a) The financial statements of an associate for the reporting year will be attached to
the corporation‘s reports, as described in sub-regulations (d) through (i), if one of
the following is true:
(1) The corporation‘s investment in the associate constitutes, in its absolute
value, 20 percent or more of the total assets in the corporation‘s statement
of financial position;
(2) The amount included in the profit or loss due to the corporation‘s
investment in the associate constitutes, in its absolute value, 20 percent or
more of the absolute value of the corporation‘s profit or loss;
(3) The associate has significant importance for the corporation‘s business or
operations in their existing formats, or in the formats planned for them in
the future;
(4) One of the conditions described in paragraphs (1) or (2) was met in the
previous reporting year and it is expected that one of the conditions in
those paragraphs will be met in the coming reporting year as well;
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(5) The company became the corporation‘s associate after the date of the
statement of financial position, and the condition described in paragraph
(3) is true.
(b) Notwithstanding the provisions of sub-regulation (a), the associate‘s financial
statements will not be included in the corporation‘s reports if one of the
following is true:
(1) The associate‘s reports are insignificant in relation to the corporation‘s
reports;
(2) None of the conditions described in sub-regulations (a)(3) through (5) are
met, and neither of the conditions described in sub-regulations (a)(1) or (2)
were met during the previous reporting year, and it is not expected that the
conditions in these paragraphs will be met in the coming reporting year
either;
(3) After the date of the statement of financial position, the company ceased to
be the corporation‘s associate.
(c) The names of all the included companies whose reports have been attached to the
corporation‘s reports will be listed; if the reports of an associate have not been
attached because of the provisions of sub-regulation (b), the name of such
associate shall be given and the reasons for the non-attachment of its reports will
be provided.
(d) The attached reports of an associate will be prepared in accordance with the
generally accepted accounting principles.
(e) With regard to the format for the attachment, notwithstanding the provisions of
sub-regulation (d), the reports of an associate may be attached even if they are
not prepared in accordance with the generally accepted accounting principles,
provided that the conditions specified in regulation 19(f) are met;
(f) If an associate‘s reports are not presented in the same currency as the
corporation‘s reports, the exchange rate between the currency of the associate‘s
reports and the currency of the corporation‘s reports will be specified, as of the
date of the statement of financial position, and any change that has taken place in
such rate during the reporting year will be indicated.
(g) An associate‘s reports shall be audited in accordance with Israeli accepted
auditing standards, or in accordance with the international auditing standards or
in accordance with a set of comprehensive foreign auditing standards.
(h) An auditor‘s report shall be attached to the associate‘s reports. The auditor‘s
report shall indicate the accounting rules in accordance with which the reports
were prepared and the auditing standards in accordance with which the reports
were audited.
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(i) If the associate‘s reports are not written in either Hebrew or English, a translation
of the reports into Hebrew shall be attached, as well as a certification from the
translator concerning the accuracy of the translation and the translator‘s consent
to having the translation and the certification included in the reports. If a
properly signed translation into Hebrew of the report has been attached, there is
no need to attach a copy of the reports in the original language; for this purpose,
the term ―reports‖ refers to the auditor‘s report as well.
(j) The chairman of the ISA may exempt a particular corporation from the
requirement to attach the reports of a company regarding which the conditions of
sub-regulation (a) have been met, and he may condition the grant of the
exemption on the provision of details regarding such company.
(k) The provisions of this regulation will not apply to an associate which is itself a
reporting corporation or which is a corporation to which the provisions of
Chapter 5C of the Law apply.
(l) In this regulation, the term ―profit‖ shall mean the corporation‘s profit or loss
attributable to owners of the parent, less the gains or losses relating to
discontinued operation and less any amounts that were charged to profit or loss
due to the effect of a change in accounting policy, to the extent that the generally
accepted accounting principles provide that the change will be charged to profit
or loss during the reporting period.
Attachment of summarized information regarding included companies
24. (a) The corporation‘s reports shall include summarized information relating to any
associate for each of the periods included in the corporation‘s consolidated
financial statements – such information to be divided into summarized
information about the associate‘s financial condition as described in sub-
regulation (b), and summarized information about the results of its operations as
described in sub-regulation (c) - if any of the following conditions are met:
(1) The corporation‘s investment in the associateassociateconstitutes, in its
absolute value, ten percent or more of total assets in the corporation‘s
statement of financial position;
(2) The amount included in the profit or loss due to the corporation‘s investment
in the associate constitutes, in its absolute value, ten percent or more of the
corporation‘s profit or loss, in its absolute value;
(3) One of the conditions described in paragraphs (1) or (2) was met in the
previous reporting year and it is expected that one of the conditions in those
paragraphs will be met in the coming reporting year as well;
(4) The fulfillment of the conditions specified in this sub-regulation shall be
tested with regard to the corporation‘s consolidated financial statements.
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(b) The summarized information regarding the associate‘s financial condition shall
include all of the following items, as defined in the generally accepted
accounting principles, or as defined in accounting rules that satisfy the provisions
of regulation 19(f); such information may include data that are based on different
classifications and a different presentation, if the associate‘s business
necessitates such and this fact is indicated by the corporation:
(1) Current assets;
(2) Non-current assets;
(3) Current liabilities;
(4) Non-current liabilities;
(5) Equity attributed to the owner of the parent;
(6) Equity attributed to non-controlling interests.
(c) The summarized information regarding the associate‘s results of operations shall
include all of the following items, as defined in the generally accepted
accounting principles, or as defined in accounting rules that satisfy the provisions
of regulation 19(f); such information may include data that are based on different
classifications and a different presentation, if the associate‘s business
necessitates such and this fact is indicated by the corporation:
(1) Income;
(2) Gross profit or loss;
(3) Operating profit or loss;
(4) Profit or loss from continuing activity;
(5) Profit or loss attributable to the owner of the parent;
(6) Profit or loss attributed to non-controlling interests.
(d) Notwithstanding the provisions of sub-regulation (a), a corporation will not be
required to provide summarized information regarding an associate in the
following cases:
(1) The associate‘s reports have been attached to the corporation‘s reports in
accordance with regulation 23(a);
(2) The conditions listed in regulation 23(b)(1) or 23(b)(3) have been met with
regard to the associate.
(e) If the corporation is required to provide summarized information in accordance
with sub-regulation (b), the generally accepted accounting principles will be
applied with regard to the information that is provided.
(f) Notwithstanding the provisions of sub-regulation (e), the corporation may
provide summarized information regarding which the generally accepted
accounting principles have not been applied, provided that the conditions
specified in regulation 19(f) have been met.
Securities Regulations (Annual and Financial Statements), 2010
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(g) If the summarized information that is provided is presented in a currency which
is different than the currency used in the corporation‘s reports, the exchange rate
between the currency in which the summarized information is presented and the
currency of the corporation‘s reports shall be specified, as of the date of the
statement of financial position, and any change that has taken place in such rate
during the reporting year shall be indicated.
(h) The provisions of this regulation will not apply to an associate which is itself a
reporting corporation or which is a corporation to which the provisions of
Chapter 5C of the Law apply.
(i) In this regulation, the term ―profit‖ shall have the definition given to it in
regulation 23.
Dividends from held companies 25. The report will indicate the amount of any dividend received, or which the
corporation was entitled to receive during the reporting year. The amounts will be
indicated separately for dividends from consolidated companies, dividends from
proportionately consolidated companies and for dividends from included companies.
Chapter D: Details regarding the corporation’s equity
Dividends and the distribution thereof
26. (a) The report shall indicate the amount of any dividend regarding which there is a
right to receipt, and which has not yet been paid as of the date of the report.
(b) If the distribution of surpluses and funds that can be distributed as cash has been
restricted, the report shall indicate such restriction and the amount thereof.
Allotment of securities to employees 27. If the corporation‘s securities have been allotted to employees or to service
providers, the following details shall be indicated:
(1) The consideration received for such securities or which will be received when
they are exercised, and the manner of its payment;
(2) The corporation‘s share prices on the grant date and on the date of the allotment
of the securities;
(3) The amounts of any loans given by the corporation for the purchase of the
securities and the terms thereof;
(4) If the corporation will bear a tax burden with respect to the allotment of the
securities or to the exercise thereof, the report shall indicate that fact and will
specify the tax amounts borne by the corporation, and if possible the total of all
the tax amounts that are expected to be imposed;
(5) Other terms relating to the allotment.
Securities that are convertible into shares
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28. If securities that are convertible into shares in the corporation have been allotted or if
another contractual relationship has been entered into, to which the corporation is a
party, and which confers the right to purchase shares in the corporation – including a
contractual relationship that confers a right to purchase securities that are convertible
into shares in the corporation – the report shall specify the terms and amounts
received for such securities or rights, with a separate specification for each such type
of security or of contractual relationship.
Bonus shares
29. If bonus shares have been distributed or if such a distribution has been proposed by
the date of the approval of the reports, the reports will indicate the number of shares
that were distributed or which were the subject of the proposal, their class and their
nominal value; it will not be necessary to provide details regarding a distribution that
was included in a period prior to the reporting year and a planned distribution out of
the profits of a period which is after the date of the statement of financial position.
Chapter E: Details regarding the corporation’s statement of comprehensive income
Statement of comprehensive income 30. The disclosure requirements included in this chapter will apply to a corporation
whether or not it presents the details of income and expenses that were recognized in
the reporting period in a single statement of comprehensive income, or in two reports
which present the profit and loss components separately in one report and the other
comprehensive income components in another report.
Format for the analysis of expenses recognized in the profit and loss calculation
31. The report shall indicate the format for the analysis of expenses recognized in the
profit and loss calculation – i.e., whether it is according to a classification method
based on a nature based expenses classification nature of the expenses or according
to a function based expenses classification. If a classification method based on a
nature based expenses classification has been chosen, the report shall indicate the
reasons for the choice of the analysis method.
Specification of details included in the statement of comprehensive income 32. The report shall specify the main components of each income or expense item
included in the statement of comprehensive income, in accordance with the
circumstances of the case.
Cost of sales, work and services
33. If the corporation has presented a statement of comprehensive income using a
function based expenses classification, the report shall specify the amounts of cost of
sales, work and services, regarding each type of income which is disclosed pursuant
to the generally accepted accounting principles; the cost of sales, work and services
will be specified according to its components, in accordance with the circumstances
of the particular case.
Securities Regulations (Annual and Financial Statements), 2010
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Sales including credit transactions
34. If the company has sales transactions that include financing transactions as well, the
report will indicate the accounting policy implemented with regard to such as well as
the financing component involved in such transactions; the report will also disclose
the manner in which the corporation separates its income from sales and its income
from financing.
Very long term entrepreneurial projects 35. (a) Regarding very long term entrepreneurial projects, the following details will be
specified:
(1) The total of income recognized during the reporting period and the total
accumulated income as of the end of the reporting period;
(2) The total of costs recognized during the reporting period and the total
accumulated costs as of the end of the reporting period;
(3) The total provision for losses that was recognized during the reporting period
and the total accumulated provisions for losses as of the end of the reporting
period;
(4) The number and total amount of sales contracts entered into during the course
of the reporting period;
(5) Regarding projects the construction of which was not yet completed by the
end of the reporting period – even if the sales thereof have been completed –
or regarding projects the sales of which have not been completed by the end of
the reporting period, even if their construction was completed: the number and
total amount of the sales contracts into which the corporation has entered, in
an accumulated amount as of the end of the reporting period;
(6) If the sales in a substantial project have been completed during the reporting
period or if the construction of a substantial project has been completed during
the reporting period and the sales in such project were completed in the past,
the report shall indicate that fact.
(b) The details specified in sub-regulation(a) will be classified according to their
circumstances, including according to the following classifications:
(1) Residential construction;
(2) Construction for industry and commerce;
(3) Infrastructure projects;
(4) Other – grouped separately according to each substantial type of project.
Shared expenses 36. If others have shared expenses with the corporation, the amounts of such other
participation shall be included within the appropriate items, with such amounts being
indicated separately.
Securities Regulations (Annual and Financial Statements), 2010
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Sale of non-current assets
37. The report will specify the corporation‘s profits or losses from the sale of substantial
non-current assets, with such amounts being indicated separately for each asset.
Income tax
38. (a) The report will indicate the tax rate to which the corporation is subject.
(b) If the corporation is entitled to a tax exemption or to a tax easement – the details
of such exemptions or easements shall be indicated, including the dates on which
they begin and on which they end; if the exemption or easement is dependent on
the fulfillment of certain conditions – the conditions shall be described and the
report will indicate whether the corporation was in compliance with them through
the date of the approval of the reports.
(c) The report shall indicate the last year for which the corporation and its
subsidiaries have received final tax assessments.
Chapter F: Corporation transactions with principal shareholders and with
controlling shareholders
Corporation’s liability to a principal shareholder
39. Information regarding the corporation‘s and its consolidated companies‘ and its
proportionately consolidated companies‘ liabilities to a principal shareholder in the
corporation will be collected and presented in a note according to the following
details:
(1) Amounts of long-term liabilities before deduction of current maturities, in groups
according to circumstances. Interest rates and linkage bases must be indicated,
along with payment dates and the other main conditions of such liabilities; the
amount of all current maturities will be indicated separately.
(2) Current liabilities, excluding current maturities of long-term liabilities. Interest
rates and linkage bases will be indicated.
Corporation’s investment in a principal shareholder
40. Information on the corporation‘s and its consolidated companies‘ and proportionately
consolidated companies‘ investments in a principal shareholder of the corporation
will be collected and presented in a note according to the following details:
(1) The investments in the principal shareholder or in a party that was a principal
shareholder when the investment was made, and the party‘s loans and debts,
according to the following details:
(a) Investments in shares, in certificates granting rights to purchase shares, in
certificates of indebtedness which can be converted into shares and other
Securities Regulations (Annual and Financial Statements), 2010
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investments, other than investments in a held company which is a principal
shareholder in the corporation;
(b) The corporation‘s investments in non-convertible certificates of indebtedness;
(c) Amounts of long-term loans and debts of a principal shareholder, before
deducting current maturities of long term loans and debts and the interest
rates, linkage bases, payment dates and other key conditions; the amounts of
all current maturities will be indicated separately;
(d) Amounts of current loans and debts of a principal shareholder at the date of
the statement of financial position, and the highest balance thereof during the
12 month period preceding the date of the statement of financial position.
(2) If the corporation or its held company has guaranteed the debt of a principal
shareholder or of a party that was a principal shareholder at the time the guarantee
was given, or if the corporation or its held company has given liens on any of its
assets to secure such a debt, the following provisions shall apply:
(a) If the guarantee is limited in amount, the report shall indicate the amount of
the guarantee, the collateral received by the corporation or by its held
companies with respect to such guarantees and the debt balances that the
corporation or its held companies have guaranteed, with a distinction being
made between current debts and non-current debts;
(b) If the guarantee is unlimited, the provisions of regulation 19(b), (c) and (e)
will apply, mutatis mutandi;
(c) If the corporation or its held companies hav given liens on any of their assets
to secure the debt of a principal shareholder, the report will indicate the type
of lien, describe the asset under the lien and indicate the debt balance.
Compensation and benefits to principal shareholders and transactions with such a
shareholder
41. (a) The report will present, in a note, information regarding any compensation or
other benefit given by the corporation or by its consolidated company or
proportionately consolidated company to a principal shareholder of the
corporation, or regarding any transaction with a principal shareholder, according
to the following details:
(1) Compensation and any other benefit given by the corporation or by its
consolidated company or proportionately consolidated company during the
reporting period, with a distinction being made between a principal
shareholder who is employed by the company or on its behalf and a director
who is not so employed, and another principal shareholder who is not so
employed, and the report will indicate the number of people in each of these
categories; regarding each compensation and other benefit, the report will
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indicate its value, the manner in which its value was determined and the
assumptions used to calculate that value; if compensation or any other benefit
that was given cannot be given a financial value, the terms of such
compensation shall be described.
(2) If there is a contingent liability to pay compensation or to grant any other
benefit for which no provision was made, or if there is a contractual
relationship according to which compensation or any other benefit are to be
given in the future, such liability or contractual relationship and the terms
thereof will be described.
(3) If the corporation will bear a tax burden because of a grant of compensation
or other benefit, the report will indicate such and will specify the tax amounts
that the corporation will bear, and if possible, all the tax amounts that are
expected to be imposed;
(4) The report will indicate any transactions between the corporation, one of its
consolidated companies or one of its proportionately consolidated companies
and a principal shareholder - whether carried out directly or indirectly - with
an indication of the amounts of the transactions, the manner in which prices
were established, the terms of credit and other terms, according to the
circumstances of the case; the report will indicate the impact of the
transactions on the corporation‘s business condition and on the results of its
operations, separately with regard to each transaction;
(5) If there is a contract to carry out a transaction such as is described in sub-
regulation (4) in the future, the details listed in that sub-regulation will be
indicated, mutatis mutandi;
(6) Notwithstanding the provisions of sub-regulations (4) and (5), the
corporation will not be required to provide the details of transactions such as
those described below - excluding an extraordinary transaction as defined in
section 1 of the Companies Law - if one of the following two is true with
regard to the transaction:
(a) The transaction is a negligible one; the corporation must indicate the
types and characteristics of transactions that it has deemed to be
negligible, with a specification of the facts, the reasons and the
explanations for such;
(b) The transaction is not negligible, but the corporation has given a general
description of the transaction, of its characteristics and its scope, and the
scope of all the transactions of this type with the same principal
shareholder.
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(b) The provisions of this regulation will also apply with regard to a party with
whom a controlling shareholder has a personal interest in contracting; in such
cases, the report will also specify the nature of the said personal interest.
Continuing contracts with different consideration
42. (a) If, during the reporting periods included in the reports, or during a later period
which concludes at the time of the signing of the financial statements, the
corporation entered into a continuing contract with a controlling shareholder,
which constitutes a continuation of an earlier continuing contract but with
different consideration, the report will include a note which will provide the
following details:
(1) The corporation‘s profit or loss attributable to owners of the parent, the
retained earnings and the earnings per share, other items in the statement of
comprehensive income, whether presented in a single report or in two
separate reports which present the profit and loss components separately in
one report and the other comprehensive income components relating to the
matter in another report – for each of the reporting periods included in the
financial statements – which reflect the results of the corporation‘s operations
on the assumption that the terms of the previous continuing contract are
identical to those of the continuing contract (hereinafter: ―the pro-forma
data‖); the pro-forma data will be presented alongside the actual results of
operations, as presented in the financial statements;
(2) The assumptions according to which the pro-forma data were determined.
(b) The provisions of this regulation will also apply with regard to a party with whom
the controlling shareholder has a personal interest in contracting; in such cases,
the report will also specify the nature of the said personal interest.
(c) In this regulation, the term ―controlling shareholder‖ of a corporation shall refer to
a controlling shareholder as defined in the law, including a corporation under the
controlling shareholder‘s control; regarding transactions carried out with a
corporation whose securities have not yet been offered to the public, during the
two years preceding the date of the last financial statements included in the
prospectus pursuant to which the securities were issued to the public – also
including a party that was such a principal shareholder in that corporation during
that same period, excluding a party which is a principal shareholder only by virtue
of being a director or CEO, or a party which is such a principal shareholder in the
general manager in a limited partnership, including a corporation under such
principal shareholder‘s control.
Securities Regulations (Annual and Financial Statements), 2010
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Chapter G: Miscellaneous provisions
Revocation
43. The Securities Regulations (Preparation of Annual Financial Statements) – 1993
(hereinafter: ―the Report Preparation Regulations‖) are revoked.
Entry into force
44. These regulations shall enter into force with respect to the financial statements that
are required to be submitted as of 31 December 2009 and onwards.
Transitional provisions
45. Notwithstanding the provisions of regulation 43, during the first two reporting years
after the entry into force of these regulations, a corporation may, with respect to
regulation 23, attach the reports of an associate which is subject to the accounting
standards and accounting rules published by the Israeli Accounting Standards Board,
if they are prepared according to the Report Preparation Regulations.
Schedule
(Regulations 5 and 6)
Currencies for presentation of financial statements:
(1) New Israeli Shekel;
(2) United States dollar;
(3) Euro.
6 January 2010
Yuval Steinitz
Minister of Finance
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