According to Section 15 of the Securities Law (the "Law") it is prohibited to offer or sell securities to the public other than under a prospectus, the publication of which has been permitted by the Securities Authority, or under a draft prospectus which was duly approved and signed. At the same time, Section 15A sets a list of actions which shall not be regarded as offerings to the public, allowing bodies seeking investments to publish, market and recruit investors without a prospectus, under the limitations of the law.

Accordingly, for instance, securities can be offered to a limited number of up to 35 offerees during a period of 12 consecutive months without a prospectus. Securities can also be offered without a prospectus to eligible investors as this term is defined in the First Addendum of the Law ("Eligible Investors”).

Additionally, it is permitted to address the public through a general announcement regarding the intention to offer securities, provided that the announcement does not include financial data or details of the offer, including price, interest, and yield, and provided that the securities are offered and sold to no more than 35 investors or to qualified investors.

In April 2025, the Securities Authority published data arising from examinations conducted by it in connection with the compliance by investment ventures which did not apply to the Authority for a permit to publish a prospectus with the conditions set forth in section 15A of the Securities Law (the "Report”).

The Report specifies failures in the documentation, supervision and control mechanisms of investment ventures in connection with making securities offerings to potential investors, affecting the compliance of said investment ventures with the provisions of the Securities Law, thus exposing them to enforcement acts by the Authority.

In the context of the examination report, the authority clarifies that a company engaged in raising funds from investors and offering securities to potential investors is required to adopt proper operational procedures and ensure their implementation.

Furthermore, such a company is required to conduct ongoing supervision of the offering of securities by its employees and marketers, and to ensure that there are no deviations from the exceptions set forth in the Securities Law.

In addition, to secure compliance with the provisions of the Securities Law concerning the limitations imposed on offerees and investors, the Authority emphasizes that the companies are obligated to ensure that any investment offering to potential investors is fully and accurately documented, as such documentation enables the companies to ensure that they comply with the limitations of the Securities Law.

The ISA further clarifies that according to the Law providing objective financial data regarding the potential results of the investment does not fall within the definition of "general publication" even when it relates to data external to the activity of the venture.

 For the full finding of the Audit (in Hebrew), Click here.

Note: This overview provides concise information for informational purposes only. It does not constitute legal advice and should not be relied upon as such.