Tel-Aviv Stock Exchange grants an activity period exemption to infrastructure investment companies

Tel-Aviv Stock Exchange (TASE) has published a proposal to grant an activity period exemption to companies engaged in infrastructure investment.

At present, the activity period exemption that is required under Alternative B in TASE’s listing alternatives is granted to a company that is a real estate investment trust (REIT) fund.

TASE believes that a company whose sphere of business is infrastructure investment should be granted an activity period exemption, similar to the exemption granted to REIT funds. The grant of said exemption should be subject to establishing terms and conditions to ensure that the business objective will indeed be this sphere, thereby avoiding the creation of a company devoid of content, even if it does not have projects that it has invested in at the time of its listing. The company will undertake to fulfill certain terms and conditions to ensure that the company will in fact engage in the infrastructure sector and also that it is a relatively large company.

The terms and conditions prescribed for receiving the aforesaid exemption:
Activities that will be considered as business in the infrastructure sector:

  • Water production, purification and improvement; desalination; sewage treatment; and waste collection, sorting and treatment.
  • Roads and parking; mass transportation and modes of transport; and seaports and airports.
  • Electricity generation; transmission and distribution of energy products; production of refined oil products; and storage facilities for energy products.
  • Franchised (PPP-Public-Private-Partnership) construction, including buildings erected through public-private sector collaborations.
  • Logistics, including logistic centers serving activities in the aforesaid infrastructure sectors (as itemized in paragraphs 1-4 above), as well as the franchising and operation of logistic centers for the public sector.

In addition, two conditions have been stipulated that are similar to the conditions stipulated in the Income Tax Ordinance tor REIT funds:

  1. The value of the company’s assets that are infrastructure assets, debentures, securities traded on TASE, assets that are to be included in the “trade receivables” item in accordance with generally accepted accounting principles, deposits and cash will not be less than 95% of the total value of all its assets.
  2. The value of the company’s assets that are infrastructure assets and issuance and consideration assets will not be less than 75% of the total value of all its assets. Issuance and consideration assets will be defined similarly to the meaning given to this term in the Income Tax Ordinance in regard to a REIT fund.

An additional condition is that the value of the company’s shares will be at least NIS 200 million (after the money), as prescribed in Alternative C1 (“large companies”) in TASE’s listing alternatives.

An additional proposal is that it be specified that the company will give an undertaking in its prospectus that, during a period of at least four years from the date of its listing, its investment policy will be to engage in making investments in the infrastructure sector, as stated.

The public is invited to submit its comments to the proposal until January 8 2018. Subsequently and taking into consideration the comments received, the proposal will be brought before TASE’s board of directors for approval.

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