ISRAEL: Israeli investment market open to foreign investment funds

Wednesday August 27 2014

The Israeli Securities Authority (ISA) published a recent amendment to the Joint Investment Trust Law, 1994 which was passed on July 30 2014.

The Amendment will create a route to allow foreign fund managers who satisfy certain criteria to offer units in Israel to the general investing public without the need to issue a prospectus in Hebrew which must then be approved by the ISA.

The regulations, while not final, include the following main requirements;

• The foreign fund must operate under the US Investment Company Act of 1940 or the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) and have received a permit from the regulatory authority in its country of origin.
• The net asset value of the foreign fund must be at least US$50 million and its units must be available for purchase in the EU or US.
• The total value of the foreign fund’s assets and client portfolios managed by the fund manager, a person controlling it or a company controlled by such person must be at least US$20 billion.
• The foreign fund manager must manage no fewer than five funds who units are offered to the public for at least years, and the total value of assets held in each fund for the past two years must be at least US$500 million.
• Unit prices of the fund must be published and regularly available to the public.
• The foreign fund must not specialise in investments in Israel.
• The foreign fund manager must deposit a bank guarantee issued by a bank in Israel for at least NIS 1 million (or equivalent value thereof in securities) for the benefit of the ISA or, in lieu of a bank guarantee, a deposit in an account at a bank in Israel.
• The foreign fund manager must deposit in an account at a bank in Israel a certain sum calculated on the basis of the value of units held by Israeli distributors in a cash deposit or in a securities account.
• The manager of the foreign fund must appoint a representative in Israel to serve as liaison between itself and the ISA and between itself and the unit holders in Israel.
• If the fund is a traded fund, the offered units must be listed for trading on a foreign stock exchange.
• The rights of unit holders or shareholders of a foreign fund purchased in Israel are identical to the rights of any unit holder or shareholder of the foreign fund.

The amendment is a step towards increasing competition in the mutual funds market in Israel.

Click on the above link for further details.