#EntrepreneurOfTheWeek – Tomer Maor
#Post3
Hey friends!
I promised we’d slaughter some sacred cows this week, right?
So after yesterday’s post about Jept (ChatGPT) and “DIY legal research,” today we’re diving into another funny–sad reality I run into again and again:
📌 LLC / LP agreements written in Hebrew, governed by Israeli law, with Israeli jurisdiction — for operations entirely in the U.S.
Yes, really.
Companies or partnerships formed in the U.S., operating in the U.S., with agreements written as if they’re running a shawarma stand in Ramat Gan.
The scenario is familiar:
A developer wants to raise money from Israeli investors.
He prepares Hebrew agreements — “Partnership Management Agreement” and other creative names.
He thinks he’s doing the investor a favor: “It’s in your language! Transparent! Easy to understand!”
The investor thinks the same: “Wow, this developer really cares about me.”
And I get why it happens: Hebrew feels comfortable, familiar, safe.
But let’s be blunt:
❌ It doesn’t work.
❌ It cannot work.
❌ And in some situations — it’s downright dangerous.
Let’s dive in.
1️⃣ A U.S. entity operates according to U.S. law. Period.
There is a fundamental principle in American corporate law called:
The Internal Affairs Doctrine
Its meaning is simple:
👉 Everything related to the internal structure of a company —
• appointing or removing managers
• the powers of managers
• rights of members/partners
• voting mechanisms
— is determined exclusively by the law of the state where the entity is formed.
Examples:
You formed an LP in Ohio?
Only Ohio determines who the GP is and how they can (or cannot) be replaced.
You formed an LLC in Delaware?
Same thing — only Delaware law governs its internal affairs.
A Hebrew agreement does not and cannot override this.
🧩 A very common example:
Let’s say your Hebrew agreement “protects” investors by giving them the right to remove the manager under certain conditions — not even criminal stuff, just operational issues (e.g., manager disappears, stops reporting, etc.).
And let’s say you file a lawsuit in Israel — because the Hebrew agreement says Israeli courts have jurisdiction.
And the Israeli court rules:
“We hereby order the removal of the manager of ‘Kulam Marviḥim LLC,’ an entity registered in Ohio / Delaware.”
Great.
Now what?
How do you enforce that?
Walk into a U.S. title company with an Israeli court ruling and say, “Hi, we’re the managers now”?
Walk into a bank with it?
They’ll laugh you out the door.
They will require a U.S. court order.
So now you go to a U.S. court…
With a Hebrew agreement…
Governed by Israeli law…
And say:
“Hello, your Honor, please replace the manager because Israeli law applies here. Never mind your doctrines or internal-affairs rules.”
Good luck with that.
And that’s without even touching the horror stories I’ve seen where limited partners sign agreements in Hebrew on behalf of the partnership — a huge legal landmine.
(Reminder: A limited partner must NOT take any managerial action — certainly not sign agreements on behalf of the partnership — unless they want to become a general partner and expose themselves to liability.)
🧨 Bottom line for investors:
If you’re investing in the U.S. —
the agreement must be in English and governed by U.S. state law.
Yes, sometimes you’ll need an American lawyer.
Yes, lawsuits — if they happen — will be in the U.S.
This is part of the game.
🧨 Bottom line for developers:
You always work hard to protect your investors.
Give them the correct tools, not comforting illusions.
Do it for them.
Do it for yourselves.
Do it for all of us.
And the picture?
Yet another example of Jept messing up — an American judge totally confused by a Hebrew contract he cannot read and cannot enforce.
