To view as WordThe Supervisor of Banks and the Commissioner of Capital Markets have formulated a policy regarding the simultaneous terms of directors in a banking corporation, an institutional entity and another capital market entity
The Bank of Israel's Supervisor of Banks, David Zaken, and the Commisioner of Capital Markets, Insurance and Savings at the Ministry of Finance, Prof. Oded Sarig, have formulated a joint policy for simultaneous terms of office of directors at banking corporations, institutional investment entities and other capital market entities. The policy also relates to members of investment and credit committees who are not directors.
Simultaneous positions on a number of boards of directors or committees dealing in areas closely related to the capital market create the potential for conflicts of interest. The policy, which constitutes an additional measure in increasing competition and preventing conflicts of interest in the capital markets in Israel, also reflects considerations of proportionality and takes into account the contribution of directors with financial expertise to various entities. In accordance with these considerations, the policy prohibits simultaneously serving at a banking corporation and at an institutional investment entity or a mutual fund management company, and the corporations controlling them, if they have significant total assets (exceeding NIS 10 billion) under management. In contrast, the policy permits serving simultaneously where none of the entities on which the director serves is defined as a significant entity. At the same time, if one of the entities is significant, it is possible to serve simultaneously at another entity that is relatively small (with less than NIS 2 billion under management).
The policy also sets forth that under circumstances where simultaneous terms of office are permitted, only two directors within the same group may serve simultaneously in another group.
In this regard:
"Institutional entities" refers to insurance companies and companies managing provident funds and pension funds.
"Capital market entities" refers to the manager of a mutual fund, the management company of a provident fund or pension fund, an insurance company, a portfolio manager, an investment advisor or an investment broker, a member of the Tel Aviv Stock Exchange, an underwriter or a company whose main business is in the capital market field.
Each regulator will soon publish individual directives to entities under his supervision in accordance with this policy.
