The following document, which took effect in 2022, details the process by which the Israeli government conducts national security reviews of foreign investments. This document strengthens and expands the scope of earlier foreign investment screening rules that the Israeli government adopted in 2019.

The Hebrew source text is available online at: https://www.gov.il/BlobFolder/pmopolicy/dec41b-2022/he/Gov_Dec_b41121022.pdf

An archived version of the Hebrew source text is available online at: https://perma.cc/J7EN-YRBT

The Government Secretariat

Unclassified

Resolution No. B/41 by the Ministerial Committee on National Security Affairs (Political-Security Cabinet) dated October 12, 2022.

41/b Establishment of a Process and Mechanism for Evaluating National Security Aspects of Foreign Investments

Decision, further to Resolution No. B/372 of October 30, 2019, of the Ministerial Committee on National Security Affairs, that concerns “Establishment of a Process and Mechanism for Evaluating National Security Aspects of Foreign Investments” (hereafter – Resolution No. B/372),¹ recognizing that that the State of Israel has a developed market economy that is open to foreign investments and to capital flow; understanding the importance of foreign investments to advancing Israel’s economy and international cooperation, and the role of foreign investments in realizing the economic potential of the Israeli market; and, understanding the need to provide a response to national security that could be relevant to these investments:

Definitions

“Foreign Entity” – An entity for which one of the following applies:

1. For an individual – A person who is not an Israeli citizen or a resident of Israel.
2. For a group of persons – A case where control is in control the hands of someone who is not a citizen or resident Israel, or if at least 20% of the means of control are in the hands of someone who is not a citizen or resident of Israel, and, and in unusual cases where the advisory committee presumes that there is reason for concern that there could be significant harm to the interests related to the national security aspects, someone who is not a citizen or resident of Israel who is a Stakeholder in the group of persons.

“Means of control” and “control” – as defined in the Banking (Licensing) Law, 1981 (5741).

“Stakeholder” – as defined in the Companies Law, 1999 (5759).

“Regulator” – The parties authorized by law to approve foreign investments in the Bank of Israel, the Securities Authority, the Capital Market Authority, Insurance and Savings Authority, the Ministry of Finance, the Ministry of Transportation and Road Safety, the Ministry of Communications, and the Ministry of Energy, including the Government Water and Sewerage Authority, the Electricity Authority, and the Natural Gas Authority.

“Approval” – A permit for controlling or holding a concession, possession, or licensing.

“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:

1. 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. When examining this issue, the scope and characteristics of the investments by a foreign entity in Israel can also be considered.
2. Preventing the exposure or disclosure of information to a foreign entity that could harm national security or 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

1. The Ministry of Finance will operate an advisory committee to examine the national security aspects of foreign investments (hereinafter: the advisory committee) headed by the chief economist in the Ministry of Finance or a senior representative on their behalf. The committee’s members will include senior representatives from the National Security Council (hereinafter: National Security Council), the Ministry of Foreign Affairs, and the Ministry of Defense. The advisory committee’s duties are set forth in Sections 3-6 below.

For rest of this translation, download the PDF below.

1. Translator’s note: For an English translation of the 2019 version of the “Establishment of a Process and Mechanism for Evaluating National Security Aspects of Foreign Investments” document, see: https://cset.georgetown.edu/publication/israel-foreign-investment-national-security-evaluation-2019/.