Conditions for Amutot and PBCs to Engage with Israeli State Institutions

Barnea Jaffa Lande & Co.

Up until today, pursuant to an Israeli government resolution dating back to 2001, NPOs (such as Amutot and public-benefit companies) that did not possess a certificate of proper management could not engage with government entities.

A certificate of proper management is a certificate issued to Amutot and PBCs by the Registrar of Amutot and Endowments after receiving an organization’s annual report (in conformity with the statutory requirements and the registrar’s instructions). It is valid for one year (or for two years, for Amutot and PBCs that fulfill particular criteria).

Amutot and PBCs are not obligated by law to hold a certificate of proper management. However, without this certificate, they are ineligible to receive government resources (support, funding, or purchase services).

Amutot and PBCs can obtain a certificate of proper management if they fulfill a number of criteria, including consecutive activity for at least two years.

In practice, fledgling Amutot that have operated for less time than this are ineligible to receive a certificate of proper management. Consequently, until now, they were also ineligible to engage with state institutions (or submit bids to tenders). This essentially created inequality in terms of NPO’s eligibility to engage with state institutions, since ordinary commercial companies are not subject to this same precondition.

Various authorities have examined this issue over the years, and a government resolution was recently passed revising the decades-old resolution. The requirement that Amutot and PBCs must possess a certificate of proper management was replaced by a more lenient requirement that they possess a certificate of the submission of documents. This is a certificate issued to a fledgling NGO/PBC, which attests that the Amutah/PBC has appointed the internal institutions it is required to appoint by law, has submitted reports to the extent required by law, and has completed the requisite actions to commence its activities.

We note that within this context a certificate of the submission of documents constitutes a sort of precursor to a certificate of proper management.

This new government resolution provides significant relief to many fledgling Amutot /PBCs. Many of them can now benefit from the possibility of engaging with state institutions, and thus significantly and extensively advance their activities.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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