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Corporate Governance in Israel 2011

image of Corporate Governance in Israel 2011
The Review of Corporate Governance in Israel was prepared as part of the process of Israel’s accession to OECD Membership. The report describes the corporate governance setting including the structure and ownership concentration of listed companies and the structure and operation of the state-owned sector. The Review then examines the legal and regulatory framework and company practices to assess the degree to which the recommendations of the OECD Principles of Corporate Governance and the OECD Guidelines on Corporate Governance of State-Owned Enterprises have been implemented.

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Assessment and Recommendations

The Israeli corporate governance landscape is characterised by ownership concentration and family control of a significant number of listed companies. Recent research has estimated that three-quarters of Israeli listed companies (of a total of 640) are controlled by family or individual interests. Institutional investors accounted for 18% of market capitalisation, foreign investors for 17% while government ownership accounted for only 1% of market capitalisation. While the role of the state in capital markets has been on the decline, the role of institutional bodies has grown. The free float on the Tel-Aviv Stock Exchange (TASE) is limited (31% in 2007), despite efforts to increase it. The tendency toward a concentrated ownership structure applies to even the largest listed companies.

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