On 13 April, the Ministry of Justice published, for public comment, a memorandum with a draft amendment to the Companies Law (Companies Law (Amendment) (Online Verification of First Shareholders' Signatures on Articles of Association), 2020) ("the Memorandum"), accompanied by a draft of the Companies (Reporting, Registration Details and Forms) (Amendment) Regulations, 2020 ("the Amendment to Reporting Regulations").
The Memorandum and the Amendment to the Reporting Regulations would allow, for the first time, registration of a company by individuals as shareholders without the need to do so via legal counsel equipped with a smart card, by way of use of the government identification system. The effect of such change would be to enable anyone who so wished to incorporate a company from the comfort of their own home.
In addition, the Amendment to the Reporting Regulations would also allow for the incorporation of a company by accountants, since it is often a company’s accountants which are more heavily involved at the start of the company’s life (though the incorporation of a company by an accountant would still require certain verifications by legal counsel).
In a further step, the Amendment to the Reporting Regulations would allow company officers to submit certain reports to the Companies Register online, again by using the government identification system.
These amendments, the aim of which is the reduction of regulatory requirements, take their place alongside a series of other recent measures, the common aim of which is the use of technological means to reduce regulation, physical meetings and the need for paper documents (though most, at least for now, are intended to be in effect for the duration of the emergency period in light of the Corona virus). These measures include the new system launched by the Ministry of Justice allowing for online digital verification of the signature of affidavits, registration of charges by legal counsel via e-mail, online filing of all applications to the Registrar of Companies, online filing of all applications to the Registrar of NGOs and registration of pledges by legal counsel via e-mail.
At this stage, it is not yet known whether the said amendments will take effect in their current form, nor what their longer-term effects might be. It is similarly not known whether such measures, allowing an online interface between legal counsels and the above regulatory authorities, may remain in effect after the Corona period. It is already clear, though, that the trend towards enabling online and speedier interactions with governmental authorities is gaining momentum and seems set to continue.
