Jerusalem, 21 December 1999

Finance Ministry to Submit Amendments to Investments Law

(Communicated by Finance Ministry Spokesman)

Finance Minister Avraham Shohat today (Tuesday) 21.12.99, submitted to the Ministerial Committee on Legislation a draft proposal for an amendment to Article 15 of the Securities Law regarding the offering of stock options to employees.

According to the Finance Minister, the Law’s current formulation has caused an imbalance between Israeli companies trading solely abroad – which offer stock options to their employees and must publish a company prospectus in Israel in addition to their prospectuses abroad – and foreign companies that make identical offers to their employees in Israel but which do not have to issue such prospectuses.

The proposal differentiates between types of corporations offering stock options to their employees in Israel. Instead of registering a corporation by its country of incorporation, it will be registered according to its place of registration of trade. A corporation reporting in accordance with the Securities Law will be exempt from issuing a prospectus, but must publish a description detailing the issue and stocks being offered, based on its last period report. A corporation that does not report in accordance with the Securities Law will be exempt from issuing a prospectus under certain conditions. This arrangement is intended to permit the issue of stock options to employees which are not intended to raise capital but are in the area of labor-relations.