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The Israel Securities Authority Launches an Electronic Voting System


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Over 58% of the public who own securities do not exercise their voting rights in shareholders’ meetings. More than one third of the decisions were adopted in meetings in which less than 30% of these companies’ public shareholders voted.

Prof. Shmuel Hauser, ISA Chairman, states: “The Electronic Voting System creates access to shareholders’ meetings for the public who owns securities, and allows them to easily participate in various meetings. It is important for the public who owns securities to be able to play an active role and exercise his rights as a partner in public corporations”

Nathan Hershkovitz, director of the ISA IT department says, “The Electronic Voting System has a user-friendly interface that allows all securities owners to participate in voting in a clear, simple manner. This is an important system that will change the voting patterns in public corporations.”


The ISA has launched a public campaign concerning the new Electronic Voting System that was designed to promote the protection of investors’ interests. The system makes it possible for securities holders to vote electronically in various meetings, and will make it unnecessary for them to physically attend such meetings in order to vote. ISA’s IT department, headed by Mr. Nathan Hershkovitz, is responsible for the system’s development.

The ISA notes that shareholders in public companies are potentially given a significant role in corporate decision making processes. The Companies Law states that a wide range of decisions adopted by a board of directors requires shareholders’ approval. In some of these decisions — those that involve potential conflicts of interest between the controlling owners and the public shareholders — the individuals who have no personal interest in approving such a transaction or decision have the final right of approval.

Such transactions and decisions include, among others, irregular transactions with controlling owners, terms of appointment and employment of controlling owners or their relatives, approval of a chairperson to serve as a CEO, and appointment of external directors.  The significance of this legal provision is that the investing public, who has no affiliation to the controlling owner or any personal interest in such decisions, plays a critical role in making significant corporate decisions.

To date, voters had three options if they wished to exercise their voting rights: physically attended a meeting, voting by power of attorney (by proxy), or by voting ballot. Nonetheless, public shareholders do not typically participate in voting procedures. One of the reasons is the bureaucracy involved — the need to actively contact a TASE member to receive a certificate of ownership of the shares, then take the trouble to complete the voting ballot (or appoint a proxy) and send it to the company at least 72 hours before the vote. As a result, public shareholders rarely participate in voting, and have left the field wide open for the institutional investors who are required by law to vote in every meeting in which they (potentially) have a decisive say.

According to data collected by the ISA on voting between 2012 and 2015, based on the voting results of 3,700 decisions that were on company agendas and required approval of the public shareholders (shareholders without a personal interest), 58% of the public in these companies on average never exercised their right to vote. It should be stressed that the 42% who did exercise their right include the institutional investors that are required by law to vote, which means that an even  lower proportion of the public shareholders chose to be involved in decision making.

Another interesting figure is that one third of these decisions (approximately 1,400), were made when less than 30% of the public shareholders in those companies participated in the voting.

The Electronic Voting System is expected to change “the rules of the game”. The system will make voting accessible through the website from anywhere, even from an investor’s home. The system will make it possible for the public to vote without forcing people to obtain ownership certificates from a bank and without going through the trouble of faxing or mailing a voting ballot, and all within just a few hours before a scheduled meeting. The ISA believes that now, with the Electronic Voting System and the ease that it introduces for participating in meetings, participation will be more appealing and the investing public will play a more active, influential role in general shareholders’ meetings.

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