Global Fund Managers Time to Rethink Your Strategy in Israel

Under Israeli law, any offering of financial products to investors in Israel requires the publication of a prospectus approved by the Israel Securities Authority (“ISA”). However, there are several exceptions to this requirement, one of which is the private placement exemption. This exemption allows offerings to a limited number of offerees (35) within a rolling 12 months period without triggering the prospectus obligation. Importantly, when counting these 35 offerees, “Sophisticated Investors” – those who meet the criteria specified in the First Schedule to the Securities Law – are excluded.

Over the years, the ISA has published several positions clarifying how offerees should be counted and how their qualifications must be verified. These developments have contributed to the growth of a broad market for offering financial products in Israel under the relevant exemption.

In the past year, however, the ISA has taken significant steps that affect how global issuers of financial products may raise capital in Israel.

The direction is clear: the ISA is encouraging global players to “come through the front door” – by means of licensing, dual listings, and formal marketing channels. In contrast, the regulatory window for relying on exemptions is rapidly narrowing.

Recent Regulatory Developments

• In May 2025, the ISA issued a position that further limits the information global fund managers can share with potential investors under private placement exemptions.

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• In April 2025, the ISA published a report detailing the findings from audits conducted on private placements of securities and funds. The report emphasizes the need for strict adherence to regulatory requirements, including real-time tracking of offerees, proper classification of investors, and oversight of third parties. It highlights the importance of maintaining structured protocols and comprehensive

documentation to ensure compliance, as well as the potential liabilities for companies and their management in the absence of such measures

• In January 2025 the updated threshold for classifying individuals as Sophisticated Investors were published – These amounts increased significantly from the amounts set three years prior.

• On November 18, 2024, the ISA published a circular outlining its new position on collective investment schemes (mainly Funds). The circular emphasizes limits on the number of retail unitholders and the responsibility of all parties involved in the offering to ensure compliance with these limits. It also clarifies that objective advisers may be considered offerors, even if they do not receive compensation from the fund. Additionally, referring investors to advisers could be seen as providing investment advice, requiring a license.

Additionally, enforcement efforts are increasing. We are seeing more investigations and audits targeting fund issuers as well as third parties.

involved in distribution – including marketers, distributors, and finders.

Strategic Recommendations

1. Registering funds in Israel according to the shortened tracks offered to global fund managers. For more information, click here. Please note that currently BlackRock, iShares, Invesco, Franklin Templeton and other global fund managers officially registered funds in Israel. For information click here, here and here.

2. Implementing internal compliance and enforcement procedures aligned with the ISA’s guidance (particularly as detailed in the April 2025 report).

If you are distributing, managing, or raising capital for global funds in Israel, now is the time to reassess your regulatory strategy – before the exemption door closes.

We advise clients on these evolving requirements and help tailor solutions to their specific needs. We would be happy to assist you with navigating complex regulatory challenges.