Finance C'tee deadlocked over pyramid companies

By
May 22, 2013 22:55

Multi-level subsidiary companies face Knesset Finance C'tee limitations on number of layers of subsidiaries.

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Yesh Atid leader Yair Lapid at a faction meeting, February 18, 2013.

Lapid at faction meeting 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

The Knesset Finance Committee was deadlocked on Wednesday over the issue of how much to limit so-called pyramid companies, in which subsidiaries own subsidiaries that can own further subsidiaries, as part of a package of market-concentration reforms.

At issue is whether to limit companies to two levels, which would prevent any subsidiary from owning further companies, or three levels, which would allow a company to own a subsidiary that owns a subsidiary.

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On Monday, government advisers reportedly sought a compromise that would enact a two-level limit but make an exception for “bond companies”– those that issue bonds but not stocks. That exception, however, would shield a significant amount of the major pyramid companies in Israel, including IDB Holdings.

The Movement for Quality Government in Israel denounced the proposal, saying it undermined the effectiveness of the legislation. It also cited a study saying that 160 corporate-board members sit on three or more boards, showing another way in which corporate power was concentrated.

Despite holding three separate hearings in the past two weeks and postponing an expected vote, Finance Committee members on Wednesday requested further discussions on the matter.

“This is a very complex issue, and there are many topics in which we are not sufficiently proficient,” Meretz MK Zahava Galon said, urging the committee to hear from more academics and independent organizations.

“There are a variety of opinions, and it is worth hearing them all.”

Likud-Beytenu MK Reuven Rivlin, having already changed his position on the matter once, expressed fear that a misstep would lead to the “collapse of the capital markets.”

“Sometimes I hear someone and I think he’s right, then later I hear another source and he also sounds right.” he said.

Finance Committee chairman Nissan Slomiansky (Bayit Yehudi) said discussions could not continue indefinitely, adding that the public demanded action on the concentration bill.

Finance Minister Yair Lapid is set to address the committee next week.


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