The dual listing arrangement entered into force in Israel with the enactment of Chapter Five "C" of the Securities Law 1968 (hereinafter, “the Law”). Basically, this arrangement permits listing in Israel of securities that are traded on specific foreign exchanges (NASDAQ, NYSE, London Stock Exchange - Main Market). In such cases, this arrangement exempted companies listed for trade in Israel from reporting requirements pursuant to the Israeli Securities Law and permitted them to continue to report exclusively according to the foreign law that applies to them (US or UK security laws, including the directives of the relevant stock exchanges); In these cases, the regulator’s supervision relies on the foreign regulator (the SEC and the FSA) in those respective countries.
Behind the development of Chapter Five "C" of the Law was the assessment that the foreign law affords proper protection to investors as a result of multiple “circles” of protection, mainly the quality of disclosure requirements, the quality of the foreign regulator, and market discipline.
The intention of Chapter Five "C" was to allow a company to benefit from dual listing only if its securities are simultaneously listed on two stock exchanges (in different countries). When the dual listing arrangement was enacted, it was designed to apply to shares listed for trading on two stock exchanges.
The arrangement also permits dual-listed companies to issue securities to the public in Israel without these securities being listed on the foreign stock exchange. Within such an issue, the company may obtain an exemption from provisions related to the form and structure of the prospectus and the details it contains, and such exemptions may be made contingent upon certain conditions. Until 2013, bond issues to the public in Israel by dual-listed companies did not affect the companies’ dual listing status and these companies were not required to meet any additional disclosure requirements beyond those prescribed in the relevant foreign law.
In 2013, the ISA decided that dual-listed companies that issue bonds that are listed only in Israel will be subject, as long as said bonds are held by the public, to the same reporting requirements that apply to companies that issue bonds in Israel and report according to Israeli law, in addition to their being subject to the requirements of the relevant foreign laws.