By Emily Rose

JERUSALEM Nearly 70% of Israeli startups have taken action to relocate parts of their business outside Israel, a survey released on Sunday by an Israeli non-profit organisation on the government's planned judicial overhaul found.

The survey by Start-Up Nation Central sought to measure the economic impact plans by the hard-right coalition of Prime Minister Benjamin Netanyahu that would restrict the Supreme Court's powers to strike down legislation.

For months, demonstrators have held mass street protests against the plans they say they threaten Israeli democracy by removing a check on executive power.

Business groups have also cited the proposed changes as the reason for a 70% drop in tech fundraising in the first half of the year.

Israel's tech sector is a growth driver, accounting for 15% of economic output, 10% of jobs, more than 50% of exports and 25% of tax income. But institutional investors have not been a big part of its success, with most investment coming from venture capital funds.

The survey, completed by professionals representing 521 companies, said 68% of Israeli startup companies "have begun taking active legal and financial steps, like withdrawing cash reserves, changing HQ location outside Israel, relocation of employees and conducting layoffs."

Additionally, 22% of companies said they have diversified cash reserves outside Israel and 37% of investors say companies in their portfolios have withdrawn some of their cash reserves and moved them abroad.

"Concerning trends like registering a company abroad or launching new startups outside Israel will be hard to reverse," said Start-Up Nation Central CEO Avi Hasson.

The survey was released as lawmakers began debating a bill that would prevent the Supreme Court from quashing legislation on the grounds of manifest "unreasonableness".

(Reporting by Emily Rose; editing by Barbara Lewis)