The Israel Securities Authority is preparing a bill on the basis of the Procaccia committee recommendation, chaired by Prof. Uriel Procaccia, for defining alternative capital markets. The Securities Authority proposed redefining “stock market” to include mediation or meeting arenas, said Securities Authority chairman Moshe Tery during a seminar on the subject. He said the reform in trading arenas would change all capital market trading practices, and might lead to the import of foreign trading arenas.
These alternative trading arenas will be allowed to operate as stock markets, subject to certain conditions: the company, controlling shareholder and company officers will not have been convicted of any serious crime; the company will meet requirements for shareholders’ equity, insurance, and professional qualifications of its officers; and the company must demonstrate that it possesses the technical skills to ensure its activity.
The bill proposes that alternative trading arenas, including the stock market, will be allowed to operate as for-profit corporations, which will encourage competition as “stock market companies”. The bill also proposes that, in view of the stock market’s characteristics, and even though it might be a private company, the Securities Authority will require it to operate according to the criteria that apply to government companies. For example, the company must comply with material conditions, such as a majority of the board of directors must be external directors, have an audit committee, auditor, company officers and controlling shareholders will have fiduciary duty towards investors; and establish company bylaws.
Published by Globes [online], Israel business news - www.globes.co.il - on March 4, 2007
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