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Israeli regulator outlines new guidelines for boards of financial firms

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Israeli regulator outlines new guidelines for boards of financial firms

Israel's Capital Markets, Insurance and Savings Authority set out new corporate governance guidelines for financial companies that would see a controlling shareholder in such a firm barred from chairing the company's board, among other proposed changes, Globes reported, citing a draft circular.

The proposed changes, which do not need to be approved by Israel's legislature, the Knesset, as they are in the form of a circular and not regulations, are aimed at "bolstering" the independence of boards in general and the independence of directors in particular, according to the March 4 report.

In cases where the controlling shareholder already serves as board chairman, however, the individual will be given a nine-year grace period before having to step down, the report noted.

The authority also proposed that independent directors be appointed only through an independent committee and serve for six successive years rather than the existing three-year terms. It also proposed that boards of holding companies and financial institutions they hold, particularly insurance firms, should be separated with no directors in common.

The authority also called for the number of directors on company boards and board committees to be reduced to make boards more effective and for the majority of directors on a board to have "an affinity to Israel" and to know Hebrew, the report said.