The following document, which took effect in 2019, details the process by which the Israeli government conducts national security reviews of foreign investments.
The Hebrew source text is available online at: https://www.gov.il/BlobFolder/pmopolicy/dec372_2019/he/372.pdf
An archived version of the Hebrew source text is available online at: https://perma.cc/3JAL-63RP
The Government Secretariat
Resolution No. B/372 by the Ministerial Committee on National Security Affairs (Political-Security Cabinet) dated October 30, 2019.
372/b Establishment of a Process and Mechanism for Examining National Security Aspects of Foreign Investments
Decision, following Resolution No. B/331 dated November 28, 2018, of the Ministerial Committee on National Security Affairs (hereafter – the Cabinet), recognizing that the State of Israel has a developed market economy that is open to foreign investment and capital flows, and understanding the importance of foreign investment for the advancement of the Israeli economy and international cooperation, understanding the role of foreign investment in realizing the economic potential of the Israeli economy, while understanding the need to respond to national security aspects that may be relevant to such investments:
“Foreign entity” – An entity fulfilling one of the following, whichever relevant:
- For an individual – A person who is neither an Israeli citizen nor a resident of Israel.
- For a group of persons – A case in which control is not in the hands of an Israeli citizen or resident of Israel, including a company incorporated outside of Israel which does not have a controlling stake and in which no Israeli citizen or a resident of Israel holds 25% ownership or more. For this purpose, “control” has the same meaning as in the Banking (Licensing) Law, (5741) 1981.
“Regulators” – The parties authorized by law to approve foreign investments, that is, the Bank of Israel, the Securities Authority, the Capital Market Authority, Insurance and Savings Authority, the ministers and parties of the Ministry of Finance, the Ministry of Transportation and Road Safety, the Ministry of Communications, and the Ministry of Energy, including the Israel Water and Sewerage Authority, the Public Utilities Authority (Electricity), and the Israel Natural Gas Authority.
“Approval” – A permit for controlling or holding a franchise or license.
“Foreign investment” – A transaction or activity by a foreign entity whose execution requires the approval of the regulators in accordance with the law.
“Interests related to National Security Aspects” – The interests listed below:
- Preventing the creation of a position of substantial influence on the object of the foreign investment by a foreign party that might harm the state’s security or its foreign relations.
- Preventing the exposure or disclosure of information, the exposure or disclosure of which to a foreign entity might harm the state’s security or its foreign relations, to the extent that these interests affect the national security of the State of Israel.
“Defense, Foreign Affairs, and Cybersecurity Authorities” – the Israeli Security Agency, Israeli Secret Intelligence Service and Special Operations, Ministry of Defense, Ministry of Foreign Affairs, and the National Cyber Directorate.
Advisory Committee Headed by the Ministry of Finance
- To establish, at the Ministry of Finance, an advisory committee for the purpose of evaluating national security aspects of foreign investments, led by the Chief Economist in the Ministry of Finance or a senior representative on its behalf, with participation of a senior representative from the National Security Council (hereafter – the “The National Security Council”) and a senior representative from the Ministry of Foreign Affairs and a senior representative from the Ministry of Defense (hereinafter – the “Advisory Committee”), whose duties are set forth in Sections 5-2 below.
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