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Law

Companies Law, 5759-1999

חוק החברות

Chapter III: Voluntary Liquidation

Resolution for Voluntary Liquidation

342kd.

[Amendment: 2018]

A company may pass a special resolution for its voluntary liquidation in accordance with the provisions of this Chapter, provided that the directors of the company have given a solvency declaration pursuant to Section 342כה.

Giving a Solvency Declaration

342ke.

[Amendment: 2018]

A solvency declaration shall be given by all or a majority of the directors of the company, in which they shall declare that they have thoroughly examined the state of the company's affairs and that in their opinion the company is able to pay its debts in full within 12 months from the commencement of its liquidation (in this Chapter – solvency declaration).

Convening a General Meeting for the Purpose of Passing a Resolution for Voluntary Liquidation

342kf.

[Amendment: 2018]

(a)A general meeting at which the voluntary liquidation of the company is on the agenda shall be convened after a solvency declaration in respect of the company has been given pursuant to Section 342כה, and its convening shall take place within 90 days after the giving of the solvency declaration.

(b)The solvency declaration shall be attached to the notice of the general meeting.

Appointment of Trustee by the General Meeting

342kg.

[Amendment: 2018]

A general meeting that has passed a special resolution for the voluntary liquidation of the company shall appoint a trustee to implement the liquidation proceedings, and may determine the trustee's remuneration, provided that the remuneration so determined shall not be such as to render the company insolvent.

Commencement of Liquidation and Cessation of the Company's Business

342kh.

[Amendment: 2018]

(a)The voluntary liquidation of a company commences upon the passing of the resolution for its voluntary liquidation as referred to in Section 342כד.

(b)Upon the commencement of a voluntary liquidation, the company shall cease to carry on its business, except insofar as is required for the purposes of its beneficial winding up.

Notice to Creditors of Voluntary Liquidation

342ki.

[Amendment: 2018]

Where a company has passed a resolution for voluntary liquidation, the trustee shall notify the known creditors thereof in writing, including creditors in respect of whom the debt is disputed, within 21 days from the date of the passing of the resolution.

Notice to the Registrar

342l.

[Amendment: 2018]

(a)The trustee shall send the Registrar notice of the company's resolution for voluntary liquidation and of his appointment, within 21 days from the date of the passing of the resolution; the solvency declaration shall be attached to the notice; the Minister may prescribe provisions regarding the particulars of the notice to the Registrar and additional documents to be attached thereto.

(b)Where the trustee has sent notice to the Registrar in accordance with the provisions of subsection (a) and the Registrar is satisfied that the conditions under this Chapter for the company's resolution on voluntary liquidation have been met, the Registrar shall register a note of the company's voluntary liquidation.

(c)Where a note of the voluntary liquidation of a company has been registered pursuant to subsection (b), the Registrar shall publish it to the public on the website of the Ministry of Justice; the Minister may prescribe additional provisions regarding the publication of a public notice of such a note, in the manner and at the time to be prescribed.

Trustee – Duties and Powers in Voluntary Liquidation

342la.

[Amendment: 2018]

(a)The trustee shall act as expeditiously as possible to complete the voluntary liquidation proceedings of the company in accordance with the provisions of this Chapter, including –

(1)adjudicating proofs of debt;

(2)acting to collect and administer the assets of the liquidation estate;

(3)paying the company's debts and acting to distribute the remainder among the shareholders.

(b)Upon the appointment of the trustee, the powers vested in the board of directors and the chief executive officer shall pass to the trustee, unless the general meeting has resolved that all or some of the powers shall remain with the board of directors or the chief executive officer; however, the powers specified below shall be exercised by the trustee only after obtaining the approval of the general meeting by special resolution:

(1)repayment of a debt to a particular class of creditors;

(2)a compromise with a creditor or debtor of the company regarding the amount of the debt and the manner of its payment, which has a material effect on the scope of the assets of the liquidation estate.

Cessation of a Trustee's Term of Office

342lb.

[Amendment: 2018]

(a)The general meeting may resolve to terminate the trustee's term of office, provided that the trustee is given a reasonable opportunity to present his position before the general meeting.

(b)Where the office of trustee becomes vacant, the general meeting shall appoint another person in his stead; any shareholder may convene a general meeting for this purpose.

(c)A trustee appointed pursuant to subsection (b) shall notify the Registrar of his appointment within 21 days of the date of appointment.

Application of Provisions Regarding Voluntary Liquidation Proceedings

342lc.

[Amendment: 2018, 2024-2]

The provisions of the Insolvency and Economic Rehabilitation Law shall apply to voluntary liquidation proceedings under this Chapter, as detailed below and with the necessary modifications:

(1)the provisions of Chapter A of Part 4 of that Law, as well as regulations made under that Chapter, shall apply to proofs of debt and their approval, unless otherwise prescribed in this regard by regulations under Section 342נד(1) in fine; however, the time for filing a proof of debt as referred to in Section 210(a) of that Law shall be within 90 days from the date of publication of the public notice pursuant to Section 342ל(c);

(2)for the purposes of the inclusion of assets in the liquidation estate, the provisions of Sections 216(1) and 218 of that Law shall apply;

(3)the collection and administration of the company's assets by the trustee shall be carried out pursuant to Chapter C of Part 4 of that Law;

(4)the realization of the company's assets by the trustee shall be carried out pursuant to Section 227 of that Law.

Payment of Liquidation Expenses and Company Debts to Creditors, and Shareholders' Right to the Remainder

342ld.

[Amendment: 2018]

The provisions of Sections 342טז through 342יח regarding the payment of liquidation expenses and the company's debts to creditors, regarding shareholders' right to the remainder, and regarding interim payments, shall apply, with the necessary modifications, to voluntary liquidation proceedings under this Chapter; however, approval for interim payments pursuant to Section 342יח shall be given by the general meeting.

Right to Apply to the Court

342le.

[Amendment: 2018]

The trustee, a shareholder, or a creditor may apply to the court with a request that it determine any question of law or fact arising in connection with the liquidation proceedings.

Convening General Meetings

342lf.

[Amendment: 2018]

(a)The trustee may, at any time, convene a general meeting of the company and bring before it for approval any matter that he deems appropriate.

(b)Where the liquidation proceedings have continued for more than one year, the trustee shall convene a general meeting of the company at the end of the first year and at the end of each calendar year thereafter, and shall submit to the meeting a report on his activities and on the conduct of the liquidation during the preceding year.

Cancellation of Liquidation

342lg.

[Amendment: 2018]

(a)The general meeting may pass a special resolution to cancel its voluntary liquidation, if all or a majority of the directors, or the trustee, have declared that upon cancellation of the voluntary liquidation the company will be able to repay its debts as they fall due.

(b)The cancellation of the liquidation does not affect the validity of any sale, transfer, payment, or other legal act performed lawfully prior to the cancellation.

(c)Where a company has resolved to cancel its voluntary liquidation, the trustee shall send a copy of the resolution to the Registrar and to its known creditors, and shall publish it in the manner and at the time to be prescribed by the Minister.

(d)Upon the Registrar's receipt of a copy of the resolution to cancel the voluntary liquidation, the Registrar shall delete the note of the company's voluntary liquidation.

Completion of Liquidation

342lh.

[Amendment: 2018]

(a)Upon the trustee's completion of his duties, he shall prepare a final report of his activities and shall convene a general meeting of the company at which the report is to be considered.

(b)Notice of a general meeting pursuant to this Section shall be delivered and published in the manner to be prescribed by the Minister, at least one month before the date fixed for its convening, and a copy of the trustee's final report shall be attached thereto.

(c)Within seven days of the date of convening the general meeting, the trustee shall send the Registrar notice that the meeting was convened and shall attach thereto the minutes of the meeting and the final report; if there was no quorum at the meeting, the trustee shall send the Registrar notice that the meeting was duly convened but that no quorum was present.

Dissolution of the Company and Termination of the Trustee's Term of Office

342li.

[Amendment: 2018]

(a)Upon the Registrar's receipt of the trustee's notice and the final report pursuant to Section 342לח, and upon the Registrar's finding that no debts remain owing to the Registrar by the company in respect of fees and payments under Section 44(6), the Registrar shall register the dissolution of the company, and from the date of such registration the company shall be dissolved.

(b)The final general meeting convened pursuant to Section 342לח shall resolve how to deal with the company's documents listed in Section 124 and with the trustee's documents after the dissolution of the company, provided that they shall be preserved for a period of not less than seven years; if the general meeting has not passed a resolution on this matter, the documents shall be preserved by the trustee or by a person authorized by him for this purpose, for seven years from the date of dissolution.

(c)The trustee's term of office shall terminate on the date of dissolution.

Granting a Winding-Up Order in Respect of a Company that has Resolved on Voluntary Liquidation

342m.

[Amendment: 2018]

Nothing in voluntary liquidation proceedings under this Chapter shall derogate from the right of a shareholder or the Attorney General to petition for the winding up of a company by a court pursuant to Chapter B; where a court has granted a winding-up order pursuant to such a petition, it shall order the termination of the voluntary liquidation proceedings and the continuation of proceedings by the court, in such manner as it shall direct.

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Chapter IV: Expedited Voluntary Winding Up of an Inactive Company

Inactive Company

342ma.

[Amendment: 2018]

An inactive company, for the purposes of this Chapter, is a company in which all of the following conditions are met (in this Chapter – "inactive company"):

(1)it has no assets;

(2)it has no debts; for this purpose, a debt arising from an annual fee from which the company is entitled to receive an exemption by virtue of Regulations made under Section 44 shall not be regarded as a debt;

(3)there are no pending legal proceedings to which the company is a party, and no administrative enforcement proceedings pursuant to law are being conducted against it.

Resolution for Expedited Voluntary Winding Up

342mb.

[Amendment: 2018]

An inactive company may adopt, at the general meeting, a resolution for expedited voluntary winding up in accordance with the provisions of this Chapter, provided that all of the following conditions are met:

(1)the resolution was adopted with the consent of all shareholders participating in the meeting;

(2)the notice convening the meeting was delivered to the shareholders at least 21 days before the date of the meeting, or, with the consent of all shareholders, at a date closer to the convening of the meeting;

(3)the agenda of the general meeting included a proposal for expedited voluntary winding up.

Filing an Application for Expedited Voluntary Winding Up

342mc.

[Amendment: 2018]

(a)Where an inactive company has adopted a resolution for expedited voluntary winding up, it shall file with the Registrar an application for expedited voluntary winding up within 30 days of the date on which the resolution was adopted.

(b)The following two items shall be attached to an application under subsection (a):

(1)a declaration signed by all or a majority of the directors stating that the conditions for the company being an inactive company under Section 342ma have been fulfilled and that a resolution for expedited voluntary winding up was adopted pursuant to Section 342mb;

(2)a resolution of the company as to how the company's documents listed in Section 124 are to be handled after its dissolution, in a manner that ensures they are preserved for a period of not less than seven years.

(c)The Minister may prescribe provisions regarding the particulars to be included in the application and declaration to be filed with the Registrar under this Section, as well as additional documents to be attached to the application.

Publication of Notice of Filing an Application for Expedited Voluntary Winding Up

342md.

[Amendment: 2018]

(a)Where an application for expedited voluntary winding up has been filed with the Registrar and the Registrar has found that the conditions for filing it under this Chapter have been fulfilled, the Registrar shall publish on the website of the Ministry of Justice a notice of the filing of the application by the company; such notice shall state that if no objections to the application are filed within 90 days of the date of publication, the company will be dissolved; the Registrar shall record a note regarding the expedited voluntary winding up of the company.

(b)The Minister may prescribe provisions regarding the manner of publication on the website of the Ministry of Justice, including the period during which the information shall be published, inter alia in order to ensure the reliability of the information, its availability, and the protection of the information against unauthorized use.

Objection to the Application

342me.

[Amendment: 2018]

Where an application for expedited voluntary winding up has been published pursuant to Section 342md, any person who may be adversely affected by the dissolution of the company may file an objection to the application within 90 days of the date of its publication.

Cessation of Winding Up Proceedings by the Registrar

342mf.

[Amendment: 2018]

Where an objection has been filed pursuant to Section 342me, or where the Registrar has found during the period for filing objections that a condition for the expedited voluntary winding up of the company is not fulfilled, the Registrar shall notify the company of the cessation of the winding up proceedings and shall remove the published notice made pursuant to Section 342md.

Dissolution of the Company

342mg.

[Amendment: 2018]

(a)Where the Registrar has found that no objection has been filed pursuant to Section 342me, the Registrar shall, upon the expiration of 10 business days from the last date for filing objections under that Section, register the dissolution of the company.

(b)The company shall be dissolved from the date of registration.

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Chapter V: Miscellaneous Provisions

Adoption of Resolution at General Meeting of Private Company

342mh.

[Amendment: 5778]

Nothing in the provisions of this Part shall derogate from the provisions of Section 76.

Indication of Winding-Up Proceedings in Company Documents

342mi.

[Amendment: 5778]

Where a company is in winding-up proceedings pursuant to this Part, this fact shall be indicated in every document issued on behalf of the company.

Trustee's Report Regarding Pending Winding-Up Proceedings

342n.

[Amendment: 5778]

(a)Where winding-up proceedings pursuant to this Part have continued for more than one year, the trustee shall submit to the Registrar, once a year, a report concerning the winding-up proceedings and their status.

(b)The Minister may prescribe provisions regarding the particulars of the report, the time of its submission, and its publication.

Offences Relating to Winding-Up

342na.

[Amendment: 5778]

(a)A shareholder of a company in respect of which a winding-up order has been made or which has passed a resolution for voluntary winding-up pursuant to this Part, or an office holder of such a company, who has done any of the following, shall be liable to three years' Imprisonment:

(1)concealed an asset of the company prior to the making of the winding-up order or the passing of the resolution for voluntary winding-up, with the intent that it not be included in the assets of the winding-up estate;

(2)concealed an asset of the company after the making of the winding-up order or the passing of the resolution for voluntary winding-up;

(3)failed to provide information or provided partial or false information to the trustee or to the general meeting with the intent to prejudice the winding-up proceedings.

(b)Without derogating from the provisions of subsection (a)(3), a person who was required to provide information to the trustee pursuant to Section 47 or 49 of the Insolvency and Economic Rehabilitation Law, as applied under Section 342יד(c), and failed to do so, or did so in a partial or false manner with the intent to prejudice the winding-up proceedings, shall be liable to one year's Imprisonment.

Cancellation of Dissolution

342nb.

[Amendment: 5778]

(a)Where a company has been dissolved, the court may, by Order, direct the cancellation of the dissolution, upon the application of any person interested in the matter, if it finds that such cancellation is justified in the circumstances of the case; once an order for cancellation of dissolution has been made, any proceeding that could have been taken had the company not been dissolved may be taken.

(b)An application for an order for cancellation of dissolution shall be submitted no later than the end of two years from the date of the company's dissolution; the court may, in exceptional cases and for special reasons to be recorded, permit the submission of an application at a later date.

(c)The person at whose application an order for cancellation of a company's dissolution was made shall deliver a copy of the order to the Registrar within seven days from the date the order was made, and the Registrar shall cancel the registration of the company's dissolution.

Application of Provisions to Foreign Company and Other Corporations

342nc.

[Amendment: 5778]

(a)The provisions of this Part, with respect to winding-up by the court, shall apply, with the necessary modifications, also to a foreign company conducting business or holding assets in Israel, even if it has not been registered pursuant to the provisions of Section 346.

(b)Without derogating from the provisions of subsection (a), the Minister may, by Order, apply the provisions of subsection (a) also to a specific other corporation.

Regulations –

342nd.

The Minister may prescribe provisions for the implementation of this Part, including provisions on the following matters:

(1)rules of procedure and the manner of conducting proceedings pursuant to this Part, including provisions regarding the submission of applications, documents to be attached thereto, time limits for their submission, their service, the filing of objections thereto, the duty of publication and the manner of publication, as well as provisions regarding the manner of filing a proof of debt, the particulars to be included therein, and the documents to be attached thereto;

(2)reporting obligations applicable to the company, the trustee, and any other interested party in the winding-up proceedings, the manner of preparing the reports, and the particulars to be included therein;

(3)fees and payments for proceedings pursuant to this Part.

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