Definition of an association in Israel

General definition

An association is defined in Article No. 1 of Israel's Associations Law. חוק העמותותis defined as an organization founded by 2 or more people, operating for a legal purpose, not intended to distribute profits to its members, and whose main objective is not to make a profit.

The 3 main characteristics of an association are :

1. Prohibition on distributing profits.
2. The association's activity must be solely within the scope of the objectives that have been validated by the association. (Ex: Politics, Sport, Education, Religion, Arts etc...)
3. Membership of an association is a personal right, and cannot be transferred to a third party.

Israel's Associations Law requires associations to create 3 main bodies:

1. A general meeting - אסיפה כללית. (As for a classic company).
2. An Executive Committee - ועד מנהל. (The corporate equivalent of the Board of Directors).
3. An Audit & Control Committee - ועדת ביקורת. (This committee can be formed by an accounting firm, accredited by the Chamber of Associations in Israel).

An association has the right to create additional bodies. In this case, it must define the role and constitution of these additional bodies in its by-laws, which must then be validated by the Chamber of Associations in Israel.

Obligation to appoint a chartered accountant

Under Israel's Associations Law, any association whose sales exceed 1 million Shekels (this sum is updated every year in line with cost-of-living indexation) is obliged to appoint a Chartered Accountant to audit the association's balance sheets. See also Why appoint a chartered accountant? Are you planning to set up an association in Israel? Our firm can advise you and help you set up your association. Do not hesitate to contact us.