Israel Electric Corporation Ltd.

Transcription

1 Israel Electric Corporation Ltd. The Company Shelf Prospectus By virtue of this shelf prospectus, the Company will be able to issue, according to the provisions of the law, non-convertible bonds, option warrants which can be exercised into bonds, and commercial securities (all these will henceforth be together named: Securities Included in the Prospectus or the Offered Securities ). The offering of the securities included in the prospectus will be executed according to the provisions of section 23A(f) of the Securities Law, 968, by means of shelf offering reports, in which all the unique details of that offer will be completed, including the composition of the offered units and the remainder of the terms of the offered securities and the manner of their offer, according to the provisions of all laws (including the provisions of the regulations of the Tel Aviv Stock Exchange Ltd. and the directives thereunder), as will be at the time. The following risk factors have a major impact on its operation and business results: Macro risks: () compliance with the law; (2) regulation and new legislation; (3) preparation and management of security events; (4) natural disasters and management of emergency events; (5) explosions and fire; (6) market risks (currency and interest); (7) information security systems and cyber; (8) telecommunications; Sectorial risks: () determining electricity rates; (2) debt raising and management; (3) fuels; (4) environmental protection; (5) management of acquisition and engagements (without fuels); (6) safety and occupational health management; (7) project management; Risks unique to the Company: () liquidity risks; (2) submission of audited financial statements according to profit centers; (3) competition; (4) delivery system (transmission and transformation) development plan; (5) structural change; (6) asset arrangements; (7) legal; (8) customer system management; (9) labor relations; (( liabilities with respect to the pension fund; () generation system and technical failures management; (2) electricity grid risk management; (3) embezzlements and frauds; (4) communications management; (5) business development and entrepreneurship; (6) electricity system management (system management unit, private electricity producers); (7) human capital and internal organizational change. For details of the above detailed risk factors see section 28 in Chapter A of the Company s 27 annual report, which was published on March 5, 28 (reference no ) (the 27 Annual Report ), and the information included in it is included in this prospectus by way of reference.

2 In the opinion of the auditor of the financial statements of the Company as of December 3, 27, our attention was directed (without any restriction of the opinion) to the following matters:. The content of Note (e) with respect to the extension of the generation licenses and the restructuring process and implementation of the reform in the electricity sector. As stated in that note, at the date of the report, the actual restructuring has not been started, and there is material uncertainty regarding the final format of the restructuring, the date of its implementation, and its implications on the Company s financial position and results. 2. The content of Note (f) with respect to the asset arrangement concerning material uncertainty of the implementation of this arrangement and its impact on the Company s financial position and results. 3. The content of Note 34 (b) and 4 (t) with respect to class action and other material actions filed against the company. 4. The content of Note (g) with respect to resolutions of the Minister of Energy (hereinafter: the Minister ) regarding the transfer of the coal powered units -4 at the Orot Rabin site to preservation, and regarding policy under which preference will always be given to the generation of electricity by natural gas over generation by coal while operating the coal powered units at minimal load. As of the date of the report, the Company is unable to reliably estimate the possible implications of the resolutions on the Company's financial position and results. For details of the Company's agreements with the State of Israel, its controlling shareholder, see Chapter 8 of the Prospectus and Note 33 to the annual financial statements. A copy of the Prospectus is available for viewing by the public on the Israel Securities Authority website at and on the Tel Aviv Stock Exchange Ltd. website at Prospectus Date: April 27, 28.

3 A- ISRAEL ELECTRIC CORPORATION LTD. (the Company ) Chapter - Introduction.. General The Company was incorporated in Israel on March 29, 923 as a private limited liability share company, pursuant to the Companies Ordinance 92, and was registered under the name of the Palestine Electric Corporation Ltd. In 96, the Company was renamed to its current name. The Company is engaged in the generation, transmission, distribution, sale and supply of electricity to the majority of the consumers in Israel. The shares of the Company were traded for a certain period on the Tel Aviv Stock Exchange Ltd. (the Stock Exchange ), but following a purchase offer to the shareholders of the Company which was published by the State of Israel on September 3, 986, and which was accepted by a majority of the shareholders of the Company at the time, trading of the Company s shares on the Stock Exchange was ceased and, as of the date of the Prospectus, the State of Israel holds approximately % of the Company s issued and paid up capital, and accordingly, the Company is a Government company as this term is defined in the Government Companies Law 975. In addition, the Company is defined as a public company, as this term is defined in the Companies Law 999. As of the date of the Prospectus, some of the Company s bonds are traded on the Stock Exchange, pursuant to prospectus of the Company of May 27, 25 and its amendment (the 25 Prospectus ), and pursuant to a shelf offering prospectus published under the Company s shelf prospectus of November 27, 25. Positions, estimates or opinions of the Company are presented in this Prospectus and they are the Company s alone. They do not represent any positions, estimates or opinions of the State of Israel or of any of its authorities and these positions, estimates or opinions do not restrict the State, or of any of its authorities, from acting and/or deciding and/or expressing an opinion in a manner which is different from the Company s positions, estimates or opinions as set forth. The Company presently has no information as to the date and manner in which its shares were offered to the public in the past.

4 A-2.2. Permits and approvals.2.. The Company has received all the permits, approvals and licenses required under any law for the publication of the Prospectus. This prospectus is a shelf prospectus as it is defined in Section 23A of the Securities Law, 968 (the Securities Law ), and the offering of securities pursuant to it will be performed pursuant to a shelf offering report, in which the unique details of that offer will be completed The permit from the Securities Authority to publish the Prospectus does not constitute verification of the details therein or confirmation of their reliability or completeness, nor does it constitute an opinion as to the quality of the Offered Securities The Stock Exchange has granted its approval in principle which relates to listing the bonds which are not convertible, option warrants which can be exercised into Company bonds, and commercial securities (the Offered Securities, which will be offered through a shelf offering report (the Approval in Principle ). The granting of the Approval in Principle does not constitute approval for listing the Offered Securities and the listing of the Offered Securities will be subject to obtain of approval for listing pursuant to a shelf offering report which will be submitted in accordance with the Securities Law and the Securities Regulations (Shelf Offering of Securities) Granting the Approval in Principle does not constitute a commitment to grant an approval for listing the Offered Securities pursuant to the shelf offering report. The approval of the application for listing the Offered Securities pursuant to the shelf offering report will be governed by the provisions of the Stock Exchange Regulations and the directives thereunder as will be in effect at the time of submission of the application for listing as stated. The Stock Exchange s Approval in Principle should not be considered as constituting approval of the details presented in the Prospectus or their reliability or completeness, and does not constitute an expression of opinion regarding the Company or the quality of the Offered Securities which will be offered pursuant to this prospectus through shelf offering reports or the price at which they will be offered.

5 A-3.3. Share capital, funds and surplus.3.. The registered and issued share capital of the Company, at nominal values, as of the date of the Prospectus: Share type Quantity of shares Registered capital in NIS Issued and paid-up capital in NIS Ordinary shares of NIS. nominal value each Class B ordinary shares of NIS. nominal value each Undefined shares of NIS. nominal value each , ,3 3,3 8 Total

6 A The composition of the Company s equity as of December 3, 27, is as follows: As of December 3, 27 (in NIS millions) Paid-up share capital 98 Capital funds 636 Remeasurement capital fund (,384) Surplus 2,633 Total capital equity 2, Bonds in circulation As of the date of the prospectus, there are four bonds Series that have been issued by the Company and are in circulation - bonds (Series 26), bonds (Series 27), bonds (Series 28), and bonds (Series 29). Their details are as follows:.4.. Description of bonds (Series 26) Series Bonds (Series 26) (Initial) date of issue Total nominal value as of the (initial) date of issue Total nominal value of the bonds issued by way of expansion of the series Nominal value shortly before the date of the Prospectus, not including linkage Nominal value revalued pursuant to the linkage terms shortly before the date of the Prospectus June 7, 25, pursuant to the prospectus of the Company of May 27, 25 NIS 436,978, nominal value NIS,822,42, nominal value NIS 2,23,834,2 nominal value NIS 2,23,834,2

7 A- Amount of interest accrued shortly before the date of the Prospectus Fair value thereof as included in the latest financial statements Stock Exchange value of the bonds shortly before the date of the Prospectus Type of interest (fixed or variable) and interest rate NIS,32,72 NIS 2,464,72,346 NIS 2,45,666,98 Fixed annual interest at a rate of 4.8% Dates of payment of principal Eight (8) unequal annual payments payable on October 2 of each of the years 26 through 223 (inclusive) Dates of payment of interest October 2 and April 2 of each year as of October 2, 25 up to October 2, 223 Linkage basis Are the certificates of obligation convertible to another security? The corporation s right to perform early redemption or forced conversion of the certificates of obligation to other securities, insofar as it exists, and the terms for exercise thereof Has a guarantee been given for payment of the Corporation s undertaking pursuant to a deed of trust? Pledged assets Rating Are not linked to any linkage basis (principal and interest) No The Company will be permitted to call in the bonds for early redemption (in full or in part) pursuant to the provisions detailed in the deed of trust, all subject to the directives of the Securities Authority and the provisions of the Stock Exchange Regulations and the directives by virtue thereof, as will be at the relevant time No There is a floating charge on existing and future assets of the Company which are subordinated to other floating charges in favor of the trustee of the bonds Hermetic Trust (975) Ltd. Yes, see below

8 A-7 Fulfillment of the terms of the bonds (Series 26) As of the date of issue of the bonds (Series 26) and as of the date of the Prospectus, the Company met all the terms and obligations pursuant to the deed of trust for the bonds (Series 26), and there has been no cause to call in the bonds (Series 26) for immediate repayment, and the Company has not received notice from the trustee for the bonds (Series 26) regarding its non-compliance with the terms and obligations under the stated deed of trust. Rating of the bonds (Series 26) by a rating company Series Rating Rating Rating Additional ratings determined for the series between the company determined determined date of issue of the series and the date of the Prospectus as of the for the initial date series as of Date Rating of issue of the date of the series the Prospectus Bonds (Series 26) Midroog Aa3.il, positive outlook Aa2.il, stable outlook Ma alot S&P ilaa, stable outlook ilaa+, stable outlook ilaa, developing outlook.4.2. Description of bonds (Series 27) Series Bonds (Series 27) (Initial) date of issue Total nominal value as of the June 7, 25, pursuant to the prospectus of the Company of May 27, 25 NIS 43,595, nominal value

9 A-8 (initial) date of issue Total nominal value of the bonds issued by way of expansion of the series Nominal value shortly before the date of the Prospectus, not including linkage Nominal value revalued pursuant to the linkage terms shortly before the date of the Prospectus Amount of interest accrued shortly before the date of the Prospectus Fair value thereof as included in the latest financial statements Stock Exchange value of the bonds shortly before the date of the Prospectus Type of interest (fixed or variable) and interest rate Dates of payment of principal NIS 2,373,428, nominal value NIS 2,72,482,54 nominal value NIS 2,72,482,54 NIS,64,9 NIS 3,37,33,747 NIS 3,327,556,72 Fixed annual interest at a rate of 3.85% Thirteen (3) unequal annual payments payable on April 2 of each of the years 27 through 229 (inclusive) Dates of payment of interest October 2 and April 2 of each year as of October 2, 25 and up to April 2, 229 Linkage basis Are the certificates of obligation convertible to another security? The corporation s right to perform early redemption or forced conversion of the certificates of obligation to other securities, insofar as it exists, and the terms for Linked (principal and interest) to the Consumer Price Index published on May 5, 25, with respect to the month of April, 25 No The Company will be permitted, at any time, to call in the bonds for early redemption (in full or in part) pursuant to the provisions detailed in the deed of trust, all subject to the directives of the Securities Authority and the provisions of the Stock Exchange Regulations and the directives by virtue thereof, as will be at the relevant time

10 A- exercise thereof Has a guarantee been given for payment of the Corporation s undertaking pursuant to a deed of trust? Pledged assets Rating No There is a floating charge on existing and future assets of the Company which are subordinated to other floating charges in favor of the trustee of the bonds Hermetic Trust (975) Ltd. Yes, see below Fulfillment of the terms of the bonds (Series 27) As of the date of issue of the bonds (Series 27) and as of the date of the Prospectus, the Company met all the terms and obligations pursuant to the deed of trust for the bonds (Series 27), and there has been no cause to call in the bonds (Series 27) for immediate repayment, and the Company has not received notice from the trustee for the bonds (Series 27) regarding its non-compliance with the terms and obligations under the stated deed of trust. Rating of the bonds (Series 27) by a rating company Series Rating Rating Rating Additional ratings determined for the series between the company determined determined date of issue of the series and the date of the Prospectus as of the for the initial date series as of Date Rating of issue of the date of the series the Prospectus Bonds (Series 27) Midroog Aa3.il, positive outlook Aa2.il, stable outlook

11 A-, Series Rating Rating Rating Additional ratings determined for the series between the company determined determined date of issue of the series and the date of the Prospectus as of the for the initial date series as of Date Rating of issue of the date of the series the Prospectus Ma alot S&P ilaa, stable outlook ilaa+, stable outlook ilaa, developing outlook.4.3. Description of bonds (Series 28) Series Bonds (Series 28) (Initial) date of issue Total nominal value as of the (initial) date of issue Total nominal value of the bonds issued by way of expansion of the series Nominal value shortly before the date of the Prospectus, not including linkage Nominal value revalued pursuant to the linkage terms shortly before the date of the Prospectus Amount of interest accrued shortly before the date of the Prospectus Fair value thereof as included in the latest financial March 27, 27, pursuant to a shelf prospectus of November 27, 25 NIS 27,429, nominal value NIS 329,79, nominal value NIS 6,58, nominal value NIS 6,58, NIS 3,63,48 NIS 675,5,44

12 A-8 statements Stock Exchange value of the bonds shortly before the date of the Prospectus Type of interest (fixed or variable) and interest rate NIS 663,8,934 Fixed annual interest at a rate of 4.5% Dates of payment of principal One payment on February 28, 22 Dates of payment of interest August 28 and February 28 of each year as of August 28, 27 and up to February 28, 22 Linkage basis Are the certificates of obligation convertible to another security? The corporation s right to perform early redemption or forced conversion of the certificates of obligation to other securities, insofar as it exists, and the terms for exercise thereof Has a guarantee been given for payment of the Corporation s undertaking pursuant to a deed of trust? Pledged assets Rating Are not linked to any linkage basis (principal and interest) No The Company will be permitted, at any time, to call in the bonds for early redemption (in full or in part) pursuant to the provisions detailed in the deed of trust, all subject to the directives of the Securities Authority and the provisions of the Stock Exchange Regulations and the directives by virtue thereof, as will be at the relevant time No There is a floating charge on existing and future assets of the Company which are subordinated to other floating charges in favor of the trustee of the bonds Hermetic Trust (975) Ltd. Yes, see below Fulfillment of the terms of the bonds (Series 28) As of the date of issue of the bonds (Series 28) and as of the date of the Prospectus, the Company met all the terms and obligations pursuant to the deed of trust for the bonds (Series 28), and there has been no cause to call in the bonds (Series 28) for immediate repayment, and the Company has not received notice from the trustee for

13 A- the bonds (Series 28) regarding its non-compliance with the terms and obligations under the stated deed of trust. Rating of the bonds (Series 28) by a rating company Series Rating Rating Rating Additional ratings determined for the series between the company determined determined date of issue of the series and the date of the Prospectus as of the for the initial date series as of Date Rating of issue of the date of the series the Prospectus Midroog Aa2.il, stable Aa2.il, stable outlook outlook Bonds (Series 28) Ma alot S&P ilaa, stable outlook ilaa+, stable outlook AA, developing outlook.4.4. Description of bonds (Series 29) Series Bonds (Series 29) (Initial) date of issue Total nominal value as of the (initial) date of issue Total nominal value of the bonds issued by way of expansion of the series March 27, 27, pursuant to a shelf prospectus November 27, 25 NIS 93,53, nominal value NIS 2,27,98, nominal value

14 A-2 Nominal value shortly before the date of the Prospectus, not including linkage Nominal value revalued pursuant to the linkage terms shortly before the date of the Prospectus Amount of interest accrued shortly before the date of the Prospectus Fair value thereof as included in the latest financial statements Stock Exchange value of the bonds shortly before the date of the Prospectus Type of interest (fixed or variable) and interest rate Dates of payment of principal NIS 2,94,484, nominal value NIS 2,956,22,893 NIS 7,737,325 NIS 3,738,332,6 NIS 3,695,92,2 Fixed annual interest at a rate of 4.5% Two equal annual payments payable on February 28 of each of the years 225 through 226 (inclusive) Dates of payment of interest Linkage basis Are the certificates of obligation convertible to another security? The corporation s right to perform early redemption or forced conversion of the certificates of obligation to other securities, insofar as it exists, and the terms for exercise thereof Has a guarantee been given for payment of the August 28 and February 28 as of August 28, 27 and up to February 28, 226 Linked (principal and interest) to the Consumer Price Index published on March 5, 27, with respect to the month of February, 27 No The Company will be permitted, at any time, to call in the bonds for early redemption (in full or in part) pursuant to the provisions detailed in the deed of trust, all subject to the directives of the Securities Authority and the provisions of the Stock Exchange Regulations and the directives by virtue thereof, as will be at the relevant time No

15 A-3 Corporation s undertaking pursuant to a deed of trust? Pledged assets There is a floating charge on existing and future assets of the Company which are subordinated to other floating charges in favor of the trustee of the bonds Hermetic Trust (975) Ltd. Rating Yes, see below Fulfillment of the terms of the bonds (Series 29) As of the date of issue of the bonds (Series 29) and as of the date of the Prospectus, the Company met all the terms and obligations pursuant to the deed of trust for the bonds (Series 29), and there has been no cause to call in the bonds (Series 29) for immediate repayment, and the Company has not received notice from the trustee for the bonds (Series 29) regarding its non-compliance with the terms and obligations under the stated deed of trust. Rating of the bonds (Series 29) by a rating company Series Rating Rating Rating Additional ratings determined for the series between the company determined determined date of issue of the series and the date of the Prospectus as of the for the initial date series as of Date Rating of issue of the date of the series the Prospectus Bonds (Series 29) Midroog Aa2.il, stable outlook Aa2.il, stable outlook Ma alot S&P ilaa, stable outlook ilaa+, stable outlook AA, developing outlook

16 A-4 Details with respect to the trustee for the certificates of obligation - bonds (Series 26, 27, 28 and 29) Name of the trustee: Hermetic Trust (975) Ltd. Name of the person responsible: Adv. Dan Avnon Address: 3, Hayarkon St., Tel Aviv Telephone: Fax: Website:

17 B - Chapter 2 - Details of the Offer of Securities Under this shelf prospectus, the Company will be able to issue, pursuant to the provisions of the law, non-convertible debentures, option warrants exercisable into ordinary debentures of the Company, and commercial securities (the Securities ). The offering of securities pursuant to this shelf prospectus will be made in accordance with the provisions of Section 23A(f) of the Securities Law by way of shelf offering reports in which the details required under Chapter C of the Securities Regulations (Details of the Prospectus,and Draft of the Prospectus - Structure and Form) 969 will be completed, with respect to that offer, including the details and terms of the securities and the composition of the offered units, all according to the provisions of the law and the Stock Exchange Regulations and the Staff Legal Bulletins of the Securities Authority, as will be at the time, and according to the class of securities offered under the stated report.

18 C- 3.. Registered capital Chapter 3 - Capital of the Company As of the date of the Prospectus, the registered share capital of the Company is NIS 2,26,7 divided into 8,6,739 ordinary shares of NIS. nominal value each, 4,5,325 Class B Ordinary shares of NIS. nominal value each, and 3,953 undefined shares of NIS. nominal value each. In the three (3) years which preceded the date of the Prospectus, no change has occurred in the registered capital of the Company Issued capital As of the date of the Prospectus, the issued and paid-up share capital of the Company is NIS 2,2,824, divided into 8,6,499 ordinary shares of NIS. nominal value each and 4,5,325 Class B ordinary shares of NIS. nominal value each. The issued share capital of the Company has been paid-up in full. In the three (3) years which preceded the date of the Prospectus, no change has occurred in the issued and paid-up capital of the Company Interested parties holdings of the Company s securities as of the date of the Prospectus To the best of the Company s and the Company managers knowledge, the interested parties who hold shares and/or securities shortly before the date of the Prospectus are as detailed below: Interested party Share class Nominal value in NIS Number of shares Percentage of holding In capital in voting State of Israel () Ordinary.,9,9,,.%,,.% Ordinary class B % % Yiftah Ron- Ordinary. The Company has not issued securities which are convertible into Company shares. Error! Unknown document property name.

19 C-2 Tal (2) ) ( Controlling shareholder of the Company. (2) Chairman of the Board of Directors of the Company Controlling shareholder of the Company As of the date of the Prospectus, the controlling shareholder of the Company is the State of Israel, which holds 79,98, ordinary shares and 4,53,252 Class B ordinary shares, which jointly constitute approximately % of the issued and paid-up share capital of the Company and the voting rights therein.

20 D- Chapter 4 - Rights Associated with the Shares of the Company 4.. The rights associated with the shares of the Company In light of the Company s status as a Government Company as well as a public company, the Company is subject to the Companies Law and the Regulations thereunder, the Government Companies Law and the Regulations thereunder, and the Securities Law and the Regulations thereunder. As required by law, when the provisions of the Article of Association of the Company will be in contradiction with a cogent provision of the applicable law, the applicable provisions of the law will prevail. In addition, pursuant to section 3 of the Government Companies Law, the Articles of Association and Memorandum of Association of the Company do not have the power to derogate from the provisions of the Government Companies Law. For a description of the principal provisions which apply to the Company by virtue of the Government Companies law, including with respect to decisions which require Government approval, see section 2 of part A of the Company's Annual Statements for the year ended General For details with respect to the rights which are associated with the shares of the Company, see the text of the Articles of Association of the Company, as was published in the Company s immediate report of November 22, 22 (reference number ), and its contents are presented in this prospectus by way of reference Arrangements from the Companies Law Following are details of the arrangements determined in the Articles of Association of the Company, pursuant to the provisions of the Companies Law : Restriction of Amendment of the Articles of Association (sections 2 and 22 of the Companies Law): The Articles of Association of the Company do not include a provision restricting the Company from amending any of its provisions, and such an amendment will be Certain provisions of the Company's Articles of Association are inconsistent with the provisions of the Government Companies Law. Where any provision of the Articles of Association of the Company contradicts a compelling provision of the Government Companies Law, the provisions of the Government Companies Law will apply.

21 D-2 executed pursuant to the law Appointment of Directors (section 59 of the Companies Law) Article 79 of the Articles of Association of the Company determines that members of the Board of Directors are permitted to appoint, from time to time, any other competent person to be a member of the Board of Directors, to fill a position which was temporarily vacated, or not more than four other competent persons in any year by way of adding to the Board of Directors, but in such a manner that the total number of members of the Board of Directors will never exceed the maximum number determined in the articles of association. Every member of the Board of Directors appointed under this section will serve in his office until the ordinary general meeting after his appointment, and he will then be suitable to be reelected. For details regarding appointment of directors in the Company see section 2.4. of Chapter A of the Annual Statements for the year ended Legal Quorum of the General Meeting (section 8 of the Companies Law) Articles 56, 58 and 59 of the Articles of Association of the Company determine that: No discussion will be held at a general meeting unless a legal quorum is present at the time the meeting began the discussion. A legal quorum will be constituted when all the shareholders who are entitled, by virtue of the shares held by them or represented by them, to 5% of all the votes of the Company, are present, themselves or by proxy Should a legal quorum not be found within half an hour from the time which was determined for the meeting, the meeting will be adjourned by one week to the same date and the same time and the same place, without repeat notice of the holding of the adjourned meeting, or to a date, time and place that will be determined by the Board of Directors in a notice to the shareholders. Should a legal quorum not be found at the adjourned meeting within half an hour from the time which was determined for it, then the legal quorum will be any number of participants who will be present The legal quorum as stated will be permitted to discuss matters for which the meeting was convened. In any case, a subject that was not included on the

22 D-3 agenda of the meeting that was adjourned will not be discussed at an adjourned meeting Only matters that were on the agenda of the meeting at which it was decided to adjourn and that were not discussed or that the discussion regarding them was not completed at that meeting will be discussed at the adjourned meeting; there is no need to give notice of the adjournment and the matters on the agenda of the adjourned meeting, but if the meeting was adjourned by fifteen (5) days or more, notice of the adjourned meeting will be given in the same manner as notice was given of the meeting at which the discussion was adjourned The chairman is permitted, with the consent of a meeting at which a quorum was present, and will be required - if so ordered by the meeting - to adjourn the meeting from one date to another and from one place to another. Whenever a meeting is adjourned by ten days or more, a notice of the adjourned meeting will be given in the same manner as was given for the original meeting. Except as stated above, the members will not be entitled to notice of the adjournment of the meeting or of the matter which will be discussed at an adjourned meeting. No matter will be discussed at an adjourned meeting except for the matter which could be discussed at the meeting at which the adjournment took place The chairman (if there is a chairman) of the Board of Directors, or, in his absence, a managing member of the Board of Directors, will preside at every general meeting, but should there be no chairman or managing member of the Board of Directors, or should neither one of them be present in any meeting within fifteen (5) minutes from the time set for holding the meeting, or should he not wish to preside, the members who are present will choose any member of the Board of Directors or - if a member of the Board of Directors is not present, or if all of the members of the Board of Directors who are present refuse to preside - one from among them, to preside over the meeting The majority required for decisions by the general meeting (section 85 of the Companies Law)

23 D Article 66 of the Company s Articles of Association determines that subject to all special rights or limitations attached at the time to any class of shares, each member present in person or by proxy will have one vote for each share held by him. Article 63 of the Company's Articles of Association determines that if the votes are equal, the chairman of the meeting will be entitled to an additional or decisive vote in addition to the votes to which he is entitled as a member Article 5 of the Company's Articles of Association determines that the rights or the privileges, all or part of them, which are attached to any class of shares constituting part of the Company's capital at that time, can be (unless otherwise determined in the terms of issue of the shares of that class) changed in any manner with consent in writing by three-quarters of the shares of the same class or approval of an extraordinary resolution adopted at a separate meeting of shareholders of the same class Voting by the Board of Directors (sections 5 and 7 of the Companies Law) Article 99 of the Company s Articles of Association determines that questions raised at meetings of the Board of Directors will be decided by a majority vote. If the votes are equal, the chairman will have a second or decisive vote Term of Office (section 222 of the Companies Law) Article 95 of the Company s Articles of Association determines that if selection of members of the Board of Directors did not take place in any general meeting in which it should have taken place according to the provisions of section 94 of the articles of association, the retiring members of the Board of Directors will continue their term until their positions are filled at a general meeting pursuant to the articles of association. All members of the Board of Directors will retire from their office once every two years at an ordinary general meeting Resolution of Dividend Distribution and Limitation of Dividend Distribution (sections 3 and 37 of the Companies Law) Article of the Company s Articles of Association determines that the members of the Board of Directors are permitted, with the approval of the

24 D-5 general meeting, to declare dividends from time to time, but such dividend will not be paid out of the Company s profits (except as was explicitly permitted by the Companies Ordinance [New Version], 983). A dividend will not exceed the sum recommended by the members of the Board of Directors, and the declaration of the members of the Board of Directors of the existing amount of profits at any time for dividends will be decisive. The members of the Board of Directors may, if they see fit, and if in their opinion the Company s position justifies such a payment, declare and pay from time to time an interim dividend, without payment as aforesaid Article of the Company s Articles of Association determines that it is permitted, with the approval of the general meeting, to pay dividends, in full or in part, in kind, and to pay them, in full or in part, by dividing among the members or between any class of members, according to their rights, fully paid up shares, debentures or other Company securities or of any other company, or any other assets suitable for distribution as mentioned above. The members of the Board of Directors have absolute authority to make assessments, adjustments and arrangements and to issue certificates or title documents as they deem necessary or beneficial for facilitating a just distribution among the members of all the dividends or dividend parts that will be paid as mentioned above or for giving them the benefit of their proper part and proper interests in property, and no member will dispute an assessment, adjustment or arrangement executed as stated. The description of the provisions of the Articles of Association regarding the issues noted in section 4.3 above is a concise description of the provisions of the Articles of Association with respect to those issues and does not constitute a substitute for reading the full version of the Articles of Association of the Company.

25 E- Chapter 5 - Consideration from the Issuance and its Designation The Company is not offering any securities on the date of this prospectus, and therefore there will be no immediate consideration following the publication of the shelf prospectus. Pursuant to the provisions of section 25A of the Details of the Prospectus Regulations, the details with respect to use of the consideration for the offered securities as set in Chapter F of the Details of the Prospectus Regulations will be presented within a shelf offering report under which they will be offered. Therefore, if securities are offered in future pursuant to this prospectus and pursuant to the shelf offering reports, the consideration received for the securities will be used to finance the business operation of the Company under decisions of the management of the Company as will be from time to time. If a specific designation will be determined for the consideration received for the securities pursuant to the shelf offering report that will be published by the Company, it will be detailed in the shelf offering report, including Company policy with respect to investment of the consideration for the issue until the date of its use in practice.

26 F - Chapter 6 - Description of the Business Affairs of the Company 6. General Pursuant to the provisions of regulation 44(a) and regulation 6b of the Details of the Prospectus Regulations, for the description of the business affairs of the Company see Part A of the Annual Report for 27 published by the Company on March 5, 28 (reference number ) (the 27 Annual Report ), which is included in this Shelf Prospectus by way of reference. 6.2 Changes and supplements to the information in the 27 Annual Report The following is a description of the material changes and innovations that have occurred in the Company and in any other matter that has to be described in the annual report, in the period subsequent to publication of the 27 annual report until a date shortly before the date of publication of the Shelf Prospectus, as were reported by the Company on the Magna System. The immediate reports below are included in this Prospectus by way of reference. Report date Reference no. Purpose of the report March 25, Immediate report regarding the appointment of a director April 2, Immediate report regarding partial repayment of Debentures (Series 27) April 25, Immediate report on the signing of a consent decree with the Antitrust Authority 6.3 Board of Directors' Report on the Status of the Company s Affairs Pursuant to the provisions of regulation 44a of the Details of the Prospectus Regulations, the Board of Directors' Report on the Status of the Company s Affairs for one-year period ended on December 3, 27, see Chapter B of the 27 annual report, which is included in this Shelf Prospectus by way of referral.

27 F Subsidiaries and Related Companies of the Company Name of subsidiary/affiliated company Share class Number of shares held and their par value Holding rate of the Company (%) In securities In capital In voting In appointing directors Jordan Properties Company Ltd. Ordinary 3 of NIS.5 each Ordinary A 9,999 (*) of NIS. each Migrashei Hakablanim Company Ltd. Preferred of NIS. each 787 Deferred 63 (**) of NIS. each Total 2,63 of NIS. each.... National Coal Supply Corporation Ltd. (***) Ordinary A 9, of NIS each The Management Company of the Advanced Studies Fund of Israel Electric Corporation Employees Ltd. (****) Management A 6 of NIS each 7of the Management shares Energy Resources Development PMA Company Ltd. Ordinary 3,467,79 of NIS. each I.B.C. Israel Broadband Company (23) Ltd. ( IBC ) Ordinary 4 of NIS each (*****) (*) 66 ordinary A shares held by officeholders in trust for the Company. (**) 63 deferred shares held by officeholders in trust for the Company. (***) In accordance with the articles of association of the National Coal Supply Corporation, 3 directors are appointed from among the public and 6 are appointed from among the Electric Company. (****) The Company holds 5% of the management shares and of the rights to appoint directors, without rights to share profits. The remaining 5% are held as follows: the Mutual Help Society of Israel Electric Corporation Employees in the Southern Region (Final Holder) (25%), the Society of Israel Electric Corporation Workers

28 F -3 in the Northern Region (registered society) (Final Holder) (6.667%) and the Savings and Mutual Help Fund of Israel Electric Corporation Workers in Jerusalem Ltd. (Final Holder) (8.333%). The casting share, which grants its holder the decisive vote in any case of equal votes at the general meeting or the Board of Directors, was allocated personally to Mr. Daviv Hagoel, former Chairman of the Board of Directors of the Electric Company. (*****) In accordance with the founders' agreement and the IBC articles of association, the number of IBC directors will not be less than 5 and will not exceed 9 directors, and as long as there are no additional shareholders in the Company other than the Company and the controlling shareholder, ) the controlling shareholder will have the right to appoint up to 5 directors to the IBC Board of Directors, but in any case the number of serving directors appointed by the controlling shareholder will not be less than 3 directors at any time; 2) the Company will have the right to appoint between 2 to 4 directors to the IBC Board of Directors, subject to the number of directors appointed by the Company at any time being lower than the number of directors appointed by the controlling shareholder.

29 F -4 Following are details of profits of subsidiaries and related companies of the Company for the years ended on December 3, 27, and December 3, 26 (in NIS thousands): For the year ended on December 3, 27 For the year ended on December 3, 26 Name of company Jordan Properties Company Ltd. * Migrashei Hakablanim Company Ltd. * National Coal Supply Corporation Ltd. The Management Company of the Advanced Studies Fund of Israel Electric Corporation Employees Ltd. Energy Resources Development PMA Company Ltd. * Profit (loss) before tax Profit (loss) after tax Dividend Profit (loss) before tax Profit (loss) after tax Dividend N/A** N/A** N/A** N/A** N/A** N/A** IBC (47) (47) -- * Inactive Company ** The Company does not have rights to a share in the profits of The Management Company of the Advanced Studies Fund of Israel Electric Corporation Employees Ltd. For additional details see Notes i, 2g and to the Financial Statements attached to the 27 annual report., 268/25

30 7.. The Board of Directors of the Company Name of the director Major General (ret.) Yiftah Ron-Tal Chairman of the Board of Directors Mona Bkheet G- Chapter 7 - Management of the Company Gideon Frank Forer (Arik) Arie Mordechai Muki Ben Ami Yoav Druker Shlomo Arbiv Diana Halabi Hasson Orly Gerti- Saroussi Dorit Inbar Rafael Mordechai Straka I.D. no.: Date of Birth: 43/79/936 6/6/97 45/44/95 4/9/956 27/7/964 27/2/959 6/2/956 4//979 6/2/6 6//959 28/7/95 Beit Itzhak, 38 Sasha 2 Haeshel 2 Khouri 4c Karlibach 65a Yosef B Hatzivoni Address for 22/3 Asher Street, 8 King Saul service of P.O.B 8926 Haifa Shaar Hefer 42 Gilboa, Argov Str., Str., Ramat Str., Haifa Str., Tel- Zvi Str., Str., Hod Boulevard, Modiin 4292, P.O.B. Nofit Ra anana Gan Aviv Ramat Gan Hasharon, process: Tel Aviv Citizenship: Israeli Israeli Israeli Israeli Israeli Israeli Israeli Israeli Israeli Israeli Israeli Membership of committees of the Board of Directors: Chairman of the Committee for Strategy, Structural Change and Image; Committee for Regional Cooperation and Business Development; Human Resources and Organization Committee; Budget, Financial and Risk Management Committee; Chairman of Agreements and Assets Audit Committee; Strategy, Structural Change and Image Committee; Budget, Financial and Risk Management Committee; Committee for Reviewing the Financial Statements; Committee to Accompany and Monitor the Company's Preparations for Emergencies;; Sub-committee Corporate Responsibility, Regulation and Rate Committee; Chairman of the Committee to Accompany and Monitor the Company's Preparations for Emergencies; Audit Committee; Committee for Strategy, Structural Change and Image; Chairman of the Human Resources and organization Audit Committee; Remuneratio n Committee; Strategy, Structural Change and Image Committee; Committee for Reviewing the Financial Statements; Budget, Financial and Risk Management Committee; Engagement s and Assets Committee; Chairman of the Corporate Responsibilit y, Regulation and Rate Committee; Budget, Financial and Risk Managemen t Committee; Human Resources and Organizatio n Committee; Subcommittee for Strategy, Structural Change and Image Committee; Corporate Responsibilit y, Regulation and Rate Committee; Committee for Regional Cooperation and Business Developme nt; Committee to Accompany and Monitor Strategy, Structural Change and Image Committee; Audit Committee; Remunerati on Committee; Committee for Reviewing the Financial Statements; Budget, Financial and Risk Managemen t Committee; Committee Strategy, Structural Change and Image Committee; Engagement s and Assets Committee; Committee for Regional Cooperation and Business Developme nt; Human Resources and Organizatio n Committee; Committee to Strategy, Structural Change and Image Committee; Chairman of the Budget, Financial and Risk Managemen t Committee; Committee for Regional Cooperation and Business Developme nt; Committee for Strategy, Structural Change and Image Committee; Human Resources and Organizatio n Committee; Chairman of the Committee for Regional Cooperation and Business Developme nt; Engagement s and Assets Strategy, Structural Change and Image Committee; Human Resources and Organizatio n Committee; Engagement s and Assets Committee; Corporate Responsibilit y, Regulation and Rate Committee; Committee to Accompany /9

31 Name of the director Independent director: Expert external director/ext Major General (ret.) Yiftah Ron-Tal Chairman of the Board of Directors Committee; Corporate Responsibility, Regulation and Rate Committee; Committee to Accompany and Monitor the Company's Preparations for Emergencies; Sub-committee for Examination of the Actuarial Issue; Chairman of the Subcommittee for Examination of the Effectiveness of the Work of the Board of Directors. Mona Bkheet for Examination of the Actuarial Issue; Gideon Frank Committee; Sub-committee for Examination of the Effectiveness of the Work of the Board of Directors. Forer (Arik) Arie Committee to Accompany and Monitor the Company's Preparations for Emergencies ; Committee for Regional Cooperation and Business Developmen t; Subcommittee for Examination of the Actuarial Issue; Subcommittee for Examination of the Effectivenes s of the Work of the Board of Directors. G-2 Mordechai Muki Ben Ami Examinatio n of the Actuarial Issue. No No Yes Yes No No No No Yes No Yoav Druker the Company's Preparation s for Emergencie s. Shlomo Arbiv to Accompany and Monitor the Company's Preparation s for Emergencie s; Subcommittee for Examinatio n of the Actuarial Issue; Engagement s and Assets Committee. Diana Halabi Hasson Accompany and Monitor the Company's Preparation s for Emergencie s; Subcommittee for Examinatio n of the Effectivene ss of the Work of the Board of Directors. Orly Gerti- Saroussi Reviewing the Financial Statements; Committee to Accompany and Monitor the Company's Preparation s for Emergencie s; Chairman of the Subcommittee for Examinatio n of the Actuarial Issue Dorit Inbar Committee; Corporate Responsibil ity, Regulation and Rate Committee; Committee to Accompany and Monitor the Company's Preparation s for Emergencie s; Rafael Mordechai Straka and Monitor the Company's Preparation s for Emergencie s No Yes No Yes Yes No No Yes No No No No

32 Name of the director ernal director: Date of start of service: Major General (ret.) Yiftah Ron-Tal Chairman of the Board of Directors Appointed as director on 29/9/2, appointed as Chairman of the Board of Directors on 7//2. The appointment as director was renewed on 3/9/23, the appointment as Chairman of the Board of Directors was renewed on 2//23, the appointment as director was renewed again on 29/9/26, and the appointment as Chairman of the Board of Directors was renewed on 6//26 Mona Bkheet Gideon Frank Forer (Arik) Arie G-3 Mordechai Muki Ben Ami Yoav Druker Shlomo Arbiv Diana Halabi Hasson Orly Gerti- Saroussi Dorit Inbar Rafael Mordechai Straka 26/6/27 22/9/26 7//42/25 9/2/26 3/2/25 27/2/27 22/9/26 3/5/26 /5/26 25/3/28 Education: L.L.B in Law from the Hebrew B.A. in Economics and Accounting from the Hebrew B.Sc. (Graduate) Mechanical Engineering from the B.A. in Economics from the Ben- Gurion B.A. in Economics Business Administrat BA in Electrical Engineering "Strong Graduate of Economics and Political LL.B (Graduate) Law from the Netanya BA Accounting and Economics LL.B. from the Tel Aviv University; Graduate of Political Science, University