Companies Law, 5759-1999
חוק החברות, תשנ"ט-1999
Published: 1999-05-27Consolidated Hebrew text as of 2026-03-17 · Last amended 2024-09-15✓ Amendment status checked against the Knesset legislation record on 2026-09-28
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
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Chapter IV: Remedies, Monetary Sanction and Registration of a Company as a Defaulting Company
Section A: Remedies
Remedies§
352.
(a)In respect of a breach of a right conferred by this Law on a shareholder against the company or against another shareholder, or on a company against a shareholder, the laws applicable to breach of contract shall apply, with the necessary modifications.
(b)Nothing in the provisions of this section shall derogate from the rights of a shareholder pursuant to any law.
Breach of Obligations to Maintain Registers and to Report§
353.
Without derogating from the provisions of any law, a breach of obligations to maintain registers in a company or to give notices or reports to the Registrar of Companies that a company is required to give pursuant to this Law, or pursuant to the Companies Ordinance, constitutes a breach of a statutory duty towards any person who relied on the registers in the company or at the Registrar of Companies.
Security for Legal Costs§
353a.
Where an action has been brought before a court by a company or a foreign company in which the liability of the shareholders is limited, the court having jurisdiction to hear the action may, on the application of the defendant, order that the company provide sufficient security for the payment of the defendant's costs if the defendant succeeds in the action, and may stay the proceedings until the security is provided, unless the court considers that the circumstances of the matter do not justify imposing an obligation on the company or the foreign company to provide security, or if the company has proved that it has the ability to pay the defendant's costs if the defendant succeeds in the action.
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Contact Us →Section B: Imposition of a Monetary Sanction by the Registrar
Monetary Sanction§
354.
(a)Where the Registrar has reasonable grounds to believe that a private company or a foreign company that is not a reporting corporation has done any of the following, the Registrar may impose on it a monetary sanction of NIS 9,380:
(1)violated an instruction of the Registrar under section 37(b) or (c);
(1a)failed to pay fees or other payments that it is obligated to pay under section 44(6);
(2)violated an obligation to submit reports, pursuant to the provisions of section 140;
(3)violated an obligation to submit an annual report, pursuant to the provisions of sections 141 or 348;
(4)violated an obligation imposed on it pursuant to the provisions of sections 173(a) or 175;
(5)violated an obligation imposed on it pursuant to the provisions of section 343.
(b)Where the Registrar has reasonable grounds to believe that a company that is a reporting corporation failed to pay fees or other payments that it is obligated to pay under section 44(6) or violated an obligation imposed on it pursuant to the provisions of section 343, the Registrar may impose on it a monetary sanction as referred to in subsection (a).
(b1)
(1)Where the Registrar has reasonable grounds to believe that a public benefit company has done any of the following, the Registrar may impose on it a monetary sanction as referred to in subsection (a):
(a)violated an obligation to notify the Registrar that a resolution was adopted to amend its articles of association, the effect of which is that the company will be a public benefit company, pursuant to section 345b(c);
(b)violated an obligation to state alongside its name the suffix "public benefit company" or "(P.B.C.)", pursuant to the provisions of section 345d(a);
(c)violated an obligation to submit reports and documents in accordance with the provisions of sections 345b, 345c or 345x;
(d)failed to pay fees or other payments that it is obligated to pay under section 345aa;
(e)violated an obligation as referred to in sections 2 or 5a(a) to (c) of the Disclosure Obligations for Recipients of Support from a Foreign State Entity Law, 5771-2011;
(2)Where the Registrar has reasonable grounds to believe that a public benefit company has done any of the following, the Registrar may impose on it double the monetary sanction as referred to in subsection (a):
(a)violated an obligation to declare before the Registrar, at the time of submitting the application for its registration, that it is a public benefit company pursuant to section 345b(a);
(b)violated an obligation to submit to the Registrar of Endowments an application for its registration in the register, pursuant to the provisions of section 345b(g), provided that a monetary sanction shall not be imposed on the same company both for failure to make a declaration at the time of registration and for failure to register in the register; however, a monetary sanction may be imposed under this subsection in respect of the same company if six months have elapsed from the date of imposition of the monetary sanction for failure to make a declaration to the Registrar and the company has not yet been registered in the register;
(c)stated alongside its name the suffix referred to in paragraph (1)(b) or presented itself in another manner as a public benefit company even though it is not registered in the register within the meaning of section 345c, contrary to the provisions of section 345d(b);
(d)failed to appoint an audit committee contrary to the provisions of section 345h or failed to appoint an internal auditor contrary to the provisions of section 345i;
(e)violated an obligation to notify the Registrar of Endowments of the approval of a non-exceptional transaction as referred to in section 345l(a)(3);
(3)Where the Registrar has reasonable grounds to believe that a company that is not a public benefit company stated alongside its name the suffix referred to in paragraph (1)(b) or presented itself in another manner as a public benefit company, contrary to the provisions of section 345d(b), the Registrar may impose on it double the monetary sanction as referred to in subsection (a);
(4)Where the Registrar has reasonable grounds to believe that a foreign public benefit company violated the obligation to register pursuant to section 346, the Registrar may impose on it double the monetary sanction as referred to in subsection (a), provided that a monetary sanction shall not be imposed on the same company both for failure to register as a foreign company and for failure to register pursuant to section 345b(a) or 345b(g); however, a monetary sanction may be imposed for failure to register pursuant to section 345b(a) or (g) in respect of the same company if six months have elapsed from the date of imposition of the monetary sanction for failure to register as a foreign company and the company has not yet been registered as a foreign public benefit company;
(5)A Magistrate's Court may, upon application by a shareholder of the company, a donor to the company or the Registrar of Endowments, submitted after written warning thereof was given to the defendant, determine that an office holder in a public benefit company shall reimburse the company for the monetary sanction imposed on it under this subsection if the court finds that the said office holder knew or ought to have known of a violation as referred to in paragraphs (1)(a) or (e), (2)(a) or (b), or (3), unless that person proved any of the following:
(a)that that person opposed the violation and took all reasonable measures to prevent it;
(b)that that person relied in good faith on information provided to that person by a person holding a position in the company who was authorised to do so, to the effect that the provisions of the law for the violation of which the monetary sanction referred to in those paragraphs was imposed had not been violated;
(c)that due to other special circumstances that person was not required to know of the violation of the provisions of the law;
(d)for the purposes of paragraphs (1)(a), or (2)(a) or (b) — that the company acted in accordance with the other provisions of the law concerning a public benefit company even if it was not registered.
(c)Where the Registrar has reasonable grounds to believe that a company on which a monetary sanction was imposed violated the same provision for the violation of which the monetary sanction was imposed, within two years from the date of its imposition, the Registrar may impose on it double the monetary sanction referred to in subsection (a) or double the monetary sanction referred to in subsection (b1)(2) to (4); the Registrar may likewise do so if the company committed three or more violations within the said period, even if the monetary sanctions were imposed for the violation of different provisions.
Update of Monetary Sanction§
355.
(a)A monetary sanction shall be according to its updated amount on the date of the demand for payment thereof, and if an appeal was filed and the court hearing the appeal did not order its payment, according to its updated amount on the date of the decision on appeal.
(b)The Registrar may update the amount of the monetary sanction on the first of January of each year, in accordance with the rate of change in the index from the last index published before the update compared with the last index published before the commencement of this Law; the Registrar may also round the amount of the monetary sanction to the nearest amount that is a multiple of ten new shekels.
(c)The Registrar shall publish, by notice in Reshumot, the updated amount of the monetary sanction.
Demand for Monetary Sanction and Payment Thereof§
356.
(a)A monetary sanction shall be imposed on the company by a demand of the Registrar directed to the company (in this Chapter — demand); in the demand, the Registrar shall specify the violation as referred to in section 354 and shall notify the company that if the violation is not remedied within forty-five days from the date of the demand, the company shall be required to pay the monetary sanction on the date specified in the demand.
(b)If the company remedied the violation on the date specified in the demand, it shall notify the Registrar accordingly.
(b1)Where the Registrar has reasonable grounds to believe that a company on which a monetary sanction was imposed will not remedy the violation by the date specified in the demand, the Registrar may, if advance warning of this was given in the demand under subsection (a), impose on the company an additional monetary sanction at the rate of one-sixtieth of the monetary sanction for each day on which the violation continues, provided that it shall not exceed the sum of NIS 250,000; the provisions of this subsection shall not apply to failure to pay fees or other payments as specified in section 354, in subsections (a)(1a) or (b) or (b1).
(b2)Notwithstanding the provisions of subsections (a) to (b1), in respect of violations under paragraphs (1)(a), (2), (3) and (4) of section 354(b1), the company is not required to be given an opportunity to remedy the violation before the monetary sanction is imposed, and the Registrar shall be entitled to impose such a monetary sanction, which the company shall be required to pay on the date specified in the demand, which shall be no less than thirty days from the date on which the demand was sent, provided that the demand included a notice to the company that it is entitled to submit its contentions within 14 days from the date on which the demand and the said notice were sent to it.
(c)If an appeal against a decision of the Registrar as referred to in section 359 was filed, the monetary sanction shall not be paid unless the court ordered otherwise.
Shekel Interest and Arrears Charges§
357.
If the monetary sanction is not paid on time, shekel interest and arrears charges shall be added thereto, for the period of delay, until payment thereof, and the provisions of the Interest and Linkage Law shall apply, with the necessary modifications.
Collection§
358.
The Tax Ordinance (Collection) shall apply to the collection of a monetary sanction.
Appeal§
359.
(a)A decision of the Registrar under section 354 concerning a public benefit company may be appealed to the Magistrate's Court, within thirty days from the date of receipt of the demand.
(b)If the monetary sanction was paid and the appeal was allowed, the amount paid shall be returned with the addition of shekel interest, and the provisions of the Interest and Linkage Law shall apply in respect of such interest, with the necessary modifications.
(c)A decision of the court on appeal may be further appealed by leave.
Collection from a Director§
360.
(a)If a monetary sanction imposed under section 354 is not paid on time, the Registrar may demand, subject to the provisions of subsection (e), payment thereof from any person registered in the Registrar's registers as a director of that company or who was so registered at the time of the violation.
(b)The provisions of sections 355 to 359 shall apply to a demand under this section.
(c)If any of the persons listed in subsection (a) paid the monetary sanction, the company shall not be required to pay it, and the person who paid it is entitled to reimbursement from the company.
(d)A court shall not order a person required to pay a monetary sanction under this section to pay it if that person proved any of the following:
(1)that that person took all appropriate measures to prevent the violation;
(2)that that person was unaware of the violation and was not required to know of it.
(e)A company may indicate in the annual report that the general manager or a particular director is responsible for compliance with the provisions and obligations referred to in section 354; if the company so indicated, the Registrar shall not demand payment of the monetary sanction from another director of the company, unless payment of the monetary sanction was previously demanded from the general manager or from the director indicated by the company and was not paid by them.
Preservation of Criminal Liability§
361.
(a)Nothing in the provisions of this Section shall derogate from the authority of a prosecutor to file an indictment for an offence under this Law in respect of which a monetary sanction may be imposed under this Section, for reasons that shall be recorded; for this purpose, "prosecutor" has the meaning assigned to it in section 12 of the Criminal Procedure Law [Consolidated Version], 5742-1982.
(b)If an indictment as referred to in subsection (a) was filed against the violator, the violator shall not be obligated to pay the monetary sanction under this Section, and if it was paid — the Registrar shall order the return of the amount paid to the violator, with the addition of shekel interest, and the provisions of the Interest and Linkage Law shall apply in respect of such interest, with the necessary modifications.
Winding Up upon Application by the Registrar§
362.
The Registrar may apply for the winding up of a company pursuant to Chapter B of Part Eight A, if a monetary sanction imposed by the Registrar on the company under section 354 was not paid by it, and within three years from the date of imposition of the monetary sanction the Registrar again imposed an additional monetary sanction, which also was not paid on time, provided that both remain unpaid up to the date of submission of the winding-up application.
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