{"id":112030,"date":"2025-09-11T09:26:39","date_gmt":"2025-09-11T09:26:39","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=112030"},"modified":"2025-09-11T09:26:39","modified_gmt":"2025-09-11T09:26:39","slug":"israel-alternative-investment-funds","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/israel-alternative-investment-funds\/","title":{"rendered":"Israel: Alternative Investment Funds"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-112030","comparative_guide","type-comparative_guide","status-publish","hentry","guides-alternative-investment-funds","jurisdictions-israel"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">S. Horowitz &amp; Co<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/09\/s.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">S. Horowitz &amp; Co<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2020\/09\/s.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Alternative Investment Funds laws and regulations applicable in Israel<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the principal legal structures used for Alternative Investment Funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Privately offered Alternative Investment Funds (\u201cAIFs\u201d) are established in Israel in accordance with local Israeli legislation. These funds are most frequently structured as limited partnerships (\u201cLPs\u201d).<\/p>\n<p>It is also common for AIFs that are formed under the laws of other countries, such as the Cayman Islands, Luxembourg, the United States, Malta, and the British Virgin Islands, to be marketed in Israel. For the purposes of this survey, the focus will be on the relevant Israeli laws regarding the establishment, structure, and operation of AIFs offered within Israel. Further, we will refer solely to private investment funds and not to mutual funds or other investment funds that are offered to the public through a prospectus.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a structure provide limited liability to the investors? If so, how is this achieved?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to Israeli law, provided that an investor does not participate in the management or operations of an AIF, such investor shall be subject to limited liability. Typically, the governing agreement of an AIF stipulates that investors shall not have any rights with respect to the day-to-day management or operations of the fund. Nevertheless, certain restrictions apply when investing through a limited partnership structure (for example, a fund investing in real estate in Israel may be established as a private limited liability company). Consequently, the maximum exposure of a passive investor in an AIF is limited to the aggregate amount of such investor\u2019s capital contribution to the fund.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a market preference and\/or most preferred structure? Does it depend on asset class or investment strategy?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>An Israeli LP is the customary and predominant legal vehicle for establishing AIFs in Israel across various asset classes and investment strategies, except in cases where as a result of certain tax consequences (mostly relevant to Israeli real estate) or certain regulatory requirements (may be relevant to infrastructure investments) a fund may be established as a private limited liability company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the regulatory regime distinguish between open-ended and closed-ended Alternative Investment Funds (or otherwise differentiate between different types of funds or strategies (e.g. private equity vs. hedge)) and, if so, how?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No. An AIF may be structured as either open-ended or closed-ended, with such structure set forth in its organizational documents.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limits on the manager\u2019s ability to restrict redemptions? What factors determine the degree of liquidity that a manager offers investors of an Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No statutory limitations apply. The primary determinant of an AIF\u2019s liquidity profile is the nature of the underlying asset portfolio held by the fund. Israeli law does not impose restrictions on the extent to which investor redemptions may be limited for an AIF.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are potential tools that a manager may use to manage illiquidity risks regarding the portfolio of its Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No statutory limitations apply. The primary determinant of an AIF\u2019s liquidity profile is the nature of the underlying asset portfolio held by the fund. Israeli law does not impose restrictions on the extent to which investor redemptions may be limited for an AIF.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on transfers of investors\u2019 interests?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Transfers of investors\u2019 interests carry the risk of being considered as a public offering that must include a prospectus approved by the Israeli Securities Authority. Therefore, generally, the GP imposes transfer restrictions within the AIF\u2019s governing agreement to mitigate this risk.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other limitations on a manager\u2019s ability to manage its funds (e.g., diversification requirements)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No restrictions exist other than those specified in the AIF\u2019s organizational documents or the operating agreement with shareholders or limited partners. Provided that the AIF is managed for accredited investors, that is investors whose investments are exempt under the Israeli Securities Law, 1968 (the \u201cSecurities Law\u201d) or under the Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (the \u201cInvestment Advice Law\u201d), there are no limitations on the manager\u2019s authority to manage the fund, subject only to standard restrictions under general law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the local tax treatment of (a) resident, (b) non-resident, (c) pension fund and (d) sovereign wealth fund investors (or any other common investor type) in Alternative Investment Funds? Does the tax status or preference of investors or the tax treatment of the target investments primarily dictate the structure of the Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the case of an investment in a foreign (non-Israeli) private equity fund, the taxation of Israeli investors will be determined according to the classification of the income (dividend, interest, capital gain) and the standard tax rates applicable to this type of income (15%-30% for individuals, in general, before surtax that may apply at the rate of 5%; corporate-investors are subject to corporate tax at the current rate of 23%). Investors may benefit from a tax credit for tax withheld at source abroad, in accordance with the provisions of the relevant tax treaty.<\/p>\n<p>In the case of investing in Israeli private equity funds, there are accepted tax arrangements with the tax authorities to ensure the manner in which the fund and the investors are taxed (which requires the fund to meet certain conditions). Typically, the fund itself is exempt from taxation, and taxation is imposed at the investor level. Israeli resident investors in such a fund are also taxed in this case according to the type of income (dividend, interest, etc.) and the type of investor (there is a difference in tax rates between an individual investor and a corporate investor), with the tax withheld at source. Non-resident Investors are usually taxed at a lower tax rate (in accordance with the provisions of the relevant tax treaty that applies to specific income). Investors who are public institutions (Israeli and foreign) are generally exempt from tax for their income from investment in the fund.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rights do investors typically have and what restrictions are investors typically subject to with respect to the management or operations of the Alternative Investment Fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, investors do not have control over the daily management or operational decisions of an AIF. That said, some AIFs\u2019 governing documents may allow investors, under specific conditions and following a majority vote, to suspend the investment period (key man provisions). remove the fund\u2019s manager (mostly for cause), halt further capital contributions, or wind up the fund. Additionally, consistent with the fiduciary obligations usually outlined in the AIF\u2019s governing agreement, an investment adviser is often required to obtain advance approval from investors or an advisory committee representing investors before proceeding with transactions or arrangements that might present a conflict of interest or that deviate from the investment restrictions that are included in the AIF\u2019s governing documents.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Where customization of Alternative Investment Funds is required by investors, what types of legal structures are most commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If it becomes necessary to create a distinct vehicle designed to meet the specific requirements of investors, such a vehicle is typically established as a feeder fund, a parallel fund, or a special purpose vehicle. Depending on the particular circumstances, this vehicle may take the form of a separate legal entity, such as an LP or a private limited liability company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are managers or advisers to Alternative Investment Funds required to be licensed, authorised or regulated by a regulatory body?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, managers or advisers of AIFs are generally required to be licensed, authorized, or regulated by the relevant regulatory body. Specifically, under the Investment Advice Law and the regulations enacted thereunder, any party wishing to provide investment advice or investment marketing services in Israel must hold a license. The law defines \u201cinvestment advice\u201d broadly, as including the provision of advice as to the merit of investing, holding, buying, or selling securities or financial assets. Investment marketing is similarly regulated.<\/p>\n<p>However, exceptions to this requirement exist for certain types of investors, such as those classified as \u201cQualified Clients\u201d under the Investment Advice Law. Additionally, services may be exempt from licensing under the reverse solicitation exception, where a client initiates contact without the service provider\u2019s active or passive solicitation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are Alternative Investment Funds themselves required to be licensed, authorised or regulated by a regulatory body?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, under Israeli law, AIFs themselves are generally required to be regulated. Specifically, the offer or sale of fund units to Israeli investors is subject to regulation under the Securities Law and the Joint Investment Trusts Law, 1994. For a public offering, a prospectus must be issued and approved by the Israeli Securities Authority.<\/p>\n<p>However, AIFs can be exempt from this requirement in certain cases, such as when the offer is made to Accredited Investors under the Securities Law or a limited number of investors (no more than 35 in any 12-month period). Additionally, foreign AIFs can offer their units in Israel based on a foreign prospectus if they meet specific criteria laid out by the Israel Securities Authority, including that they operate under the U.S. Investment Company Act of 1940 or the European UCITS directive.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the Alternative Investment Fund require a manager or advisor to be domiciled in the same jurisdiction as the Alternative Investment Fund itself?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there local residence or other local qualification or substance requirements for the Alternative Investment Fund and\/or the manager and\/or the advisor to the fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What service providers are required by applicable law and regulation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Israeli law does not mandate that AIFs retain service providers. However, in practice, it is common for AIFs to appoint an auditor, valuation agents, an investment manager, and an administrator.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are local resident directors \/ trustees required?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rules apply to foreign managers or advisers wishing to manage, advise, or otherwise operate funds domiciled in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, there are no specific regulations that apply exclusively to foreign managers or advisers solely because of their foreign status.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the common enforcement risks that managers face with respect to the management of their Alternative Investment Funds?\u00a0<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Israel Securities Authority regularly issues position papers and guidelines addressing areas it considers higher risk. These include topics such as the marketing of investment funds to non-accredited investors, failure to properly distribute returns, incorrect allocation of fees or interest, misappropriation of funds, and information security, among others.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the typical level of management fee paid? Does it vary by asset type?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Market management fee rates for AIFs vary based on the fund\u2019s size and investment strategy. Typically, these fees range from approximately 1.0% to 2.0% of the AIF\u2019s NAV.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is a performance fee or carried interest typical? If so, does it commonly include a \u201chigh water mark\u201d, \u201churdle\u201d, \u201cwater-fall\u201d, \u201cpreferred return\u201d or other condition? If so, please explain.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Due to differing tax considerations, performance-based compensation may be structured as a performance fee, performance allocation, or carried interest. In practice, such fees generally range between 15% and 20% of the net profits of the AIF.<\/p>\n<p>Closed-ended AIFs typically apply carried interest through a distribution waterfall mechanism. Under this structure, proceeds from realized investments are allocated between investors and the sponsor according to a priority sequence outlined in the AIF\u2019s governing documents. This sequence usually includes a preferred return that guarantees investors receive a minimum return prior to the sponsor earning any carried interest.<\/p>\n<p>Open-ended AIFs commonly impose a performance fee or allocation annually, calculated on both realized and unrealized gains. It is standard for this performance compensation to be subject to a high water mark provision, which requires that fees are only payable when the AIF\u2019s value exceeds its previous highest level. Additionally, sponsors often set a hurdle rate, such as 6-8% of net asset value, which must be surpassed before the performance fee is triggered.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are fee discounts \/ fee rebates or other economic benefits for initial investors typical in raising assets for new fund launches?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Fee discounts and similar arrangements are common for certain AIFs where sponsors aim to improve fundraising prospects. It is often implemented through a separate investor class or side letters.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are management fee \u201cbreak-points\u201d offered based on investment size?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Management fee rates may be reduced depending on factors such as the size of the investment, the existence of a strategic relationship, or the timing of an early investment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are first loss programs used as a source of capital (i.e., a managed account into which the manager contributes approximately 10-20% of the account balance and the remainder is furnished by the investor)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical terms of a seeding \/ acceleration program?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Sponsors launching an AIF frequently secure long-term seed investments from large institutional investors, offering these investors substantial fee discounts in return. An acceleration program operates on a similar basis but applies to an existing AIF aiming to expedite asset growth.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What industry trends have recently developed regarding management fees and incentive\/performance fees or carried interest? In particular, are there industry norms between primary funds and secondary funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Recently, there has been downward pressure on the traditional 2.0% management fee and 20% incentive or performance fee, including carried interest, charged by primary AIFs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What restrictions are there on marketing Alternative Investment Funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally speaking, marketing or promotional activity regarding specific AIFs, if it goes beyond general market surveys or brand promotion, would be considered investment advice or investment marketing, both of which attract a licensing requirement under the Investment Advice Law.<\/p>\n<p>However, there are exceptions to the licensing requirement. Specifically, marketing of AIFs can be made without a license to persons classified as Accredited Investors and Qualified Clients, who can receive such materials and advice without the need for the advisor to hold a license under the Investment Advice Law. It is advisable, though, that prior to providing any materials regarding an investment in an AIF the potential investor provides an Accredited Investor Statement that is certified by an accountant or an attorney.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the concept of \u201cpre-marketing\u201d (or equivalent) recognised in your jurisdiction? If so, how has it been defined (by law and\/or practice)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can Alternative Investment Funds be marketed to retail investors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have a particular form of Alternative Investment Fund be that can be marketed to retail investors (e.g. a Long-Term Investment Fund or Non-UCITS Retail Scheme)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the minimum investor qualification requirements for an Alternative Investment Fund? Does this vary by asset class (e.g. hedge vs. private equity)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>All investors in an AIF must generally qualify as Accredited Investors, as checked by the offeror. Under the Securities Law, an accredited Investor is one of:<\/p>\n<ol style=\"padding-left: 0\">\n<li>a mutual trust fund or its managing company;<\/li>\n<li>a provident fund, as defined in the Supervision of Provident Funds Law 1981, or its managing company;<\/li>\n<li>an insurer;<\/li>\n<li>a banking corporation (\u201cBanking Corporation\u201d) or an Auxiliary Corporation, as defined in the Banking (Licensing) Law, 1981 (the \u201cBanking Law\u201d), other than a joint services company, investing for its own account or for entities which fall within this list (\u201cAuxiliary Corporation\u201d means a corporation controlled by a Banking Corporation but which is not a Banking Corporation within the meaning of the Banking Law, the activities of which are limited to activities permitted to the Banking Corporation which controls it);<\/li>\n<li>a portfolio manager, as defined in the Investment Advice Law, investing for its own account or for entities which fall within this list;<\/li>\n<li>an investment advisor or investment marketer, as defined in the Investment Advice Law, investing for its own account;<\/li>\n<li>a member of the Tel Aviv Stock Exchange investing for its own account or for entities which fall within this list;<\/li>\n<li>an underwriter investing for its own account;<\/li>\n<li>a venture capital fund;<\/li>\n<li>an entity which is wholly owned by an entity which falls within this list;<\/li>\n<li>a corporation, other than one formed for the specific purpose of an acquisition pursuant to an offer, whose equity capital exceeds NIS 50 million;<\/li>\n<li>an individual investing for his own account, who meets at least one of the following criteria:\n<ol style=\"padding-left: 5\" type=\"a\">\n<li>the total value of his cash, deposits, financial assets (as defined in the Investment Advice Law) and securities traded on a stock exchange licensed under the Securities Law (together, \u201cLiquid Assets\u201d) exceeds NIS 9,411,809;<\/li>\n<li>his level of income over each of the preceding two years exceeds NIS 1,411,772, or the level of income of his \u201cfamily unit\u201d (i.e., the investor and its family members who live with the investor or who provide for the investor or for whom the investor provides) exceeds NIS 2,117,657; or<\/li>\n<li>the aggregate value of all his Liquid Assets exceeds NIS 5,882,380 and his level of income over each of the preceding two years exceeds NIS 705,885, or the level of income of his \u201cfamily unit\u201d exceeds NIS 1,058,827;<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<p>The amounts set out above are be updated every three years in accordance with any increase in the Israeli Cost of Living Index.<\/p>\n<p>Additionally, the following types of entities can also qualify as Accredited investors:<\/p>\n<ol style=\"padding-left: 0\">\n<li>a company incorporated outside of Israel which, in the opinion of the local regulator, is capable of obtaining the information required in order to make a decision to invest in the securities; and<\/li>\n<li>a controlling member (i.e., a shareholder holding more than 50% of the shares in a company), a general manager or director of a body corporate the securities of which are being offered, or a body corporate under the control of a body corporate the securities of which are being offered.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there additional restrictions on marketing to government entities or similar investors (e.g. sovereign wealth funds) or pension funds or insurance company investors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No. It should be noted that institutional investors in Israel may be subject to specific investment restrictions, which are often addressed through side letters. Such restrictions generally include disclosure requirements, prohibitions on investments in certain geographies, tax related matters, anti-money laundering requirements, limitations on certain asset types and other limitations depending on the type of fund and assets that are managed under the fund.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on the use of intermediaries to assist in the fundraising process?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, as described above, subject to certain exceptions, marketing of financial investments in Israel requires a marketing license in accordance with the Investment Advice Law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the use of \u201cside letters\u201d restricted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any disclosure requirements with respect to side letters?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Israeli law does not impose explicit disclosure requirements regarding side letters. However, from a conflict of interest standpoint, investment advisers should disclose in the AIF\u2019s offering memorandum that side letters may be executed, which could provide certain investors with preferential treatment over others.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most common side letter terms? What industry trends have recently developed regarding side letter terms?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Typical side letter provisions include MFN clauses, fee discounts, confidentiality clauses, enhanced reporting obligations, transfer rights, preferential redemption rights, fee reductions or modifications, and most favored nation clauses.<\/p>\n<p>As noted above, side letters are also commonly used to address specific restrictions applicable to institutional investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3258<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/112030","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=112030"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}