Translation Notice — This is an English translation of a Hebrew law and may contain inaccuracies. In any dispute or legal matter, the original Hebrew text as published in Reshumot (ספר החוקים) is the sole authoritative and legally binding version.
Law
Companies Law, 5759-1999
חוק החברות
Part 9: General Provisions
Chapter I: Change of Types of Corporations
Change of Company Type
343.
[Amendment: 2011-4]
(a)A private company that has become a public company, or a public company that has become a private company, as well as a company that has become a reporting corporation or a company that has ceased to be a reporting corporation, and a company that has become a debenture company or has ceased to be such a company, shall notify the Registrar of Companies thereof within fourteen days from that date.
(b)The Minister, after consultation with the Securities Authority, may prescribe provisions regarding the implementation of this Section, including provisions regarding documents to be transferred from the Registrar of Companies to the Securities Authority or from the Securities Authority to the Registrar of Companies.
Change of Shareholders' Liability
344.
(a)A company in which the liability of shareholders is unlimited may amend its articles of association and determine, with the approval of the court upon an application pursuant to Section 350(a) and subject to such conditions as the court may prescribe, that the liability of shareholders therein is limited; the Minister may prescribe provisions for the implementation of this Section.
(b)A company in which the liability of shareholders is limited may amend its articles of association, with the consent of all shareholders, and determine that the liability of shareholders therein is unlimited.
Conversion of a Cooperative Society into a Company
345.
(a)A registered cooperative society (in this Section — a society) seeking to register as a company shall prepare a plan for its reorganization as a company and submit it for approval to the Registrar of Cooperative Societies as defined in the Cooperative Societies Ordinance.
(b)The Minister, in consultation with the Minister of Labor and Welfare, may prescribe the conditions under which the Registrar of Cooperative Societies may approve a plan submitted to him pursuant to subsection (a), including conditions intended to ensure that the position of the society's creditors shall not be adversely affected.
(c)If the Registrar of Cooperative Societies has approved the plan, the plan shall be brought for approval before a general meeting of the society of which lawful notice was given twenty-one days in advance and in which the plan was set out in detail; if the plan was adopted by a majority of at least three-quarters of the members entitled to vote who voted in person or by proxy, articles of association shall be drawn up in accordance with this Law, and upon submission of the application for registration, a copy thereof shall be delivered to the Registrar of Companies and fees shall be paid as the Minister may prescribe.
(d)If the Registrar of Companies has approved the registration, he shall notify the Registrar of Cooperative Societies thereof, who shall cancel the registration of the society as a cooperative society and shall publish notice thereof in the Official Gazette (Reshumot); following the cancellation, the Registrar of Companies shall register the society as a company.
(e)Upon registration of the society as a company, the Registrar of Cooperative Societies shall transfer to the Registrar of Companies a transcript of all entries in his Register of Charges relating to charges created by the society prior to its registration as a company and which were subsisting at the time of registration, and of all documents in his possession creating or evidencing such charges, and the Registrar of Companies shall register, without a fee, the charges and the particulars in the transcript relating to each charge.
(f)All assets and liabilities, including known and unknown, existing and contingent liabilities of the society, shall pass upon registration to the company, and all legal proceedings to which the society is a party may be continued such that the company shall be the party to those proceedings.
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Section A: Public Benefit Company – General Provisions
Public Benefit Company
345a.
[Amendment: 2007-2, 2011-3]
(a)A public benefit company is a company whose articles of association prescribe exclusively public purposes and also prohibit the distribution of profits or any other distribution to its shareholders (in this Chapter – distribution of profits).
(b)In this Chapter, "public purposes" – a purpose as detailed in the Second Schedule; the Minister, with the approval of the Constitution, Law and Justice Committee of the Knesset, may amend the Second Schedule.
Registration of a Public Benefit Company
345b.
[Amendment: 2007-2]
(a)A person applying to register a company whose articles of association prescribe exclusively public purposes and also prohibit the distribution of profits shall declare before the Registrar that the applicant is seeking to register a public benefit company; the application shall be accompanied, in two copies, by the following documents:
(1)documents pursuant to Section 8, including articles of association stating that the company is a public benefit company in accordance with the requirements of this Chapter;
(2)a declaration by the first members of the audit committee of their willingness to serve as members of the audit committee, in accordance with the form used for the declaration of first directors, with the necessary modifications;
(3)the name and address of the promoter;
(4)particulars of the assets to be vested in the company to be registered and the parties from whom they were transferred;
(5)a declaration by the shareholders, the first directors, and the first members of the audit committee that they are aware that registration of a public benefit company is being applied for.
(b)If the Registrar finds that registration of a public benefit company is being applied for, or an amendment of the articles of association pursuant to subsection (c), the Registrar shall not register the company or the amendment of the articles of association unless the Registrar of Endowments has confirmed that after registration or after amendment of the articles of association the conditions referred to in Section 345a(a) will be met and that the articles of association are consistent with the provisions of this Chapter, after all information requested for this purpose has been provided; the Registrar of Endowments shall give its response within 45 days from the date on which all documents and information required for this purpose were received.
(c)If a company has resolved to amend its articles of association as a result of which the conditions referred to in Section 345a(a) will be met, it shall notify the Registrar thereof by statutory declaration signed by the majority of its directors and its general manager, and such resolution shall have no effect unless the amendment has been registered by the Registrar; the company's application to register the amendment of the articles of association shall be accompanied by the documents referred to in subsection (a), with the necessary modifications.
(d)After the registration of a public benefit company or after the registration of an amendment to the articles of association, the company shall be issued a certificate of incorporation or an amended certificate of incorporation, as the case may be, stating that it is a public benefit company and that the approval of the Registrar of Endowments has been obtained.
(e)If the Registrar has registered a public benefit company or registered an amendment to the articles of association of such a company, the Registrar shall transmit to the Registrar of Endowments a copy of the certificate of incorporation or of the amended certificate of incorporation of the company and of its articles of association, as well as a copy of the documents delivered pursuant to subsection (a) or (c), as the case may be, for the purpose of registration in the register referred to in Section 345c.
(f)If the certificate of incorporation of the company states that it is a public benefit company and that the approval of the Registrar of Endowments has been obtained for its registration, it shall be deemed to be a company registered in the register referred to in Section 345c.
(g)The failure of a company to make a declaration before the Registrar as provided in this Section shall not derogate from its being a public benefit company, and it is required to submit an application to the Registrar of Endowments for registration in the register referred to in Section 345c, together with a copy of its certificate of incorporation, a list of shareholders and directors of the company, and the documents referred to in subsection (a); upon receipt of notice from the Registrar of Endowments as referred to in Section 345c(c) regarding the registration of such a company in the register, the Registrar shall amend the certificate of incorporation of such company as provided in subsection (d), with the necessary modifications.
(h)The Minister may prescribe forms for the submission of an application under this Section as well as additional documents to be attached to the application.
Register of Public Benefit Companies
345c.
[Amendment: 2007-2]
(a)The Registrar of Endowments shall maintain a register of public benefit companies (in this Chapter – the Register).
(b)The Register shall be open to public inspection and any person may inspect it.
(c)Upon receipt by the Registrar of Endowments from the Registrar of the certificate of incorporation of a public benefit company and documents delivered to the Registrar in respect thereof pursuant to Section 345b(e), the Registrar of Endowments shall register it in the Register; upon receipt by the Registrar of Endowments of an application from a public benefit company for registration in the Register, the Registrar of Endowments shall register it in the Register and shall give notice of the registration to the company and to the Registrar, if satisfied that its articles of association are consistent with the provisions of this Chapter, after all information requested for this purpose has been provided.
(d)
(1)Without derogating from the obligation of a public benefit company to submit an application for its registration pursuant to the provisions of Section 345b, if the Registrar of Endowments becomes aware by other means of the existence of a company operating exclusively for public purposes and prohibiting the distribution of profits, the Registrar of Endowments shall register it in the Register.
(2)Registration as referred to in paragraph (1) shall be effected after the Registrar of Endowments sends, by registered mail, notice to the company of its intention to register it in the Register; if the company does not respond to the notice within 45 days from the date of dispatch of the notice, the Registrar of Endowments shall register it in the Register and shall give notice thereof to the company and to the Registrar.
(3)Upon receipt of the notice from the Registrar of Endowments, the Registrar shall amend the certificate of incorporation of the company as provided in Section 345b(d) and shall deliver it to the company, and the company shall be deemed to be a public benefit company.
(e)The Minister may prescribe which particulars shall be included in the Register.
Assistance and Guidance to Public Benefit Companies in Managing Their Affairs
345c1.
[Amendment: 2014-5]
The Registrar of Endowments shall publish information and guidelines for public benefit companies, and shall, to the extent possible, familiarize itself with their activities and conduct training sessions for them, all for the purpose of assisting them in managing their affairs in accordance with the provisions of the law.
Designation of "P.B.C." Alongside Company Name
345d.
[Amendment: 2007-2]
(a)A public benefit company registered in the Register shall indicate, alongside its name, in every document, signage, or publication issued on its behalf, the suffix "public benefit company" or "(P.B.C.)".
(b)A company that is not a public benefit company, as well as a public benefit company that has not been registered in the Register, shall not indicate alongside its name the suffix referred to in subsection (a), nor shall it present itself in any other manner as a public benefit company.
Restriction on Amendment of Articles of Association
345e.
[Amendment: 2007-2]
(a)Notwithstanding the provisions of Section 20, a public benefit company may not amend, directly or indirectly, the purposes set out in its articles of association, including the provisions of its articles of association relating to the allocation of assets upon winding up, or the provisions of its articles of association prohibiting the distribution of profits, and shall not include, directly or indirectly, any provision in its articles of association that conflicts with the provisions of Section 345g; no such amendment of the articles of association shall have effect unless the amendment has been approved in accordance with the provisions of this Section.
(b)Notwithstanding the provisions of subsection (a), a public benefit company may, in accordance with the provisions of Section 20, resolve to replace a public purpose prescribed in its articles of association, including the provisions of its articles of association relating to the allocation of assets upon winding up, with another public purpose, and may also add a public purpose to or remove a public purpose from the public purposes prescribed in its articles of association; before the general meeting resolves to amend the public purposes as aforesaid, the board of directors shall present to it a detailed account of the assets accumulated for the purposes of the company prior to the proposed amendment, and the commitments undertaken by the company in that regard, including commitments towards donors to the company.
(c)A resolution of the general meeting as referred to in subsection (b) requires registration by the Registrar of Endowments or approval of the court as detailed below, as the case may be:
(1)if the public purpose that the company seeks to replace in its articles of association, to remove therefrom, or to add thereto is related to the public purpose being replaced or to the other public purposes prescribed in its articles of association (in this Section – a related purpose), such amendment requires registration by the Registrar of Endowments; if the Registrar of Endowments considers that such purpose is not a related purpose, the Registrar of Endowments shall notify the company accordingly, and the company shall act as provided in paragraph (2);
(2)if the public purpose that the company seeks to replace in its articles of association or to add thereto is not a related purpose, or if there is no related purpose in the articles of association to the purpose the company seeks to remove, such amendment requires court approval.
(d)The Registrar of Endowments shall not register an amendment of purposes as referred to in subsection (c)(1) unless satisfied that in the circumstances of the case it is just and proper to do so, having regard to the purposes of the company, its activities prior to the amendment, and the commitments undertaken by the company for the purpose of the amendment.
(e)The court shall decide on an application for amendment of the purposes of a public benefit company pursuant to this Section after giving the Registrar of Endowments an opportunity to express its position; the court shall not approve an amendment of purposes unless satisfied that in the circumstances of the case it is just and proper to do so, having regard to the purposes of the company and its activities prior to the amendment, and subject to such conditions and arrangements as it shall determine.
(f)The Registrar shall not register an amendment of the purposes of a public benefit company pursuant to Section 40 except after the Registrar of Endowments has registered such amendment or after receiving from the company a copy of the court's decision approving such amendment pursuant to this Section.
(g)The Minister may prescribe provisions regarding the obligation of a public benefit company to give notice of its intention to amend its purposes or of the amendment of purposes, and the means of giving such notice, as well as the time periods for giving notice, having regard to the types of companies, and may authorize the Registrar of Endowments to prescribe such provisions with respect to a specific company, having regard to its nature or the circumstances of the case.
Action in Excess of Purposes
345f.
[Amendment: 2007-2]
Notwithstanding the provisions of Section 56(b), retrospective approval by a public benefit company of an action taken in excess of the purposes prescribed in its articles of association shall be given by the general meeting with court approval; the court shall not approve such an action unless satisfied that in the circumstances of the case it is just and proper to do so, having regard to the purposes and activities of the company.
Prohibited Distribution
345g.
[Amendment: 2007-2]
(a)Notwithstanding the provisions of Section 301, a public benefit company may not make a distribution of profits, directly or indirectly, including a distribution of profits to the promoter of the company, and any distribution of profits made by it shall be deemed for the purposes of this Law to be a prohibited distribution.
(b)The provisions of this Section shall not apply to a gift of minor value and reasonable, given in accordance with the custom in the circumstances of the case.
Audit Committee
345h.
[Amendment: 2007-2, 2014-5]
(a)The general meeting of a public benefit company shall appoint an audit committee in accordance with provisions prescribed pursuant to subsection (h), to the extent such provisions have been prescribed; office holders of the company shall not be members of the audit committee.
(b)The provisions of Sections B through G of Chapter III, in Part Three, shall apply, with the necessary modifications, to the convening of meetings of the audit committee and the manner of its conduct; for the purposes of these provisions, a public benefit company shall be deemed to be a public company.
(c)The provisions of Sections 114, 115(a), (b), (d) and (f), 116a, 117 and 118 shall not apply to the audit committee of a public benefit company.
(d)The liability, rights and duties of members of the audit committee shall be as those of directors of the company, subject to the provisions prescribed pursuant to Section 345j.
(e)The following are the functions of the audit committee:
(1)to examine the propriety of the company's actions and those of its organs, including the conformity of the company's actions with its purposes;
(2)to examine the achievement of the company's objectives with efficiency and economy;
(3)to monitor the implementation of resolutions of the general meeting and the board of directors;
(4)to identify deficiencies in the management of the company, inter alia through consultation with the internal auditor of the company or the auditing accountant, to the extent appointed, and to propose to the board of directors ways of rectifying them; if the audit committee finds such a deficiency that constitutes a material deficiency, it shall hold at least one meeting on the deficiency in question without the presence of office holders of the company, and to the extent possible – in the presence of the internal auditor or the auditing accountant, as the case may be; notwithstanding the foregoing, the committee shall give the audited party an opportunity to present its position, and an office holder may also be present at such a meeting for the purpose of presenting a position on a matter within the scope of the office holder's responsibility, if the committee has so requested;
(5)to examine the financial affairs of the company, its account books and salary payments therein, including the allocation of the company's funds to the advancement of its purposes;
(6)to decide whether to approve actions and transactions requiring audit committee approval pursuant to Sections 255 and 268 to 275;
(6a)to decide, on the basis of reasons to be detailed, with respect to actions referred to in Section 255, whether they are material actions or non-material actions, and with respect to transactions referred to in Section 270(1) and (4) – whether they are extraordinary transactions or non-extraordinary transactions, for the purpose of their approval under this Law, and the audit committee may so decide with respect to a category of actions or transactions, according to criteria it shall determine in advance; if the audit committee has determined such criteria, it shall review the manner of their application from time to time and at least once a year;
(6b)to examine the internal audit system of the company and the performance of the internal auditor, and whether the internal auditor has the necessary resources and tools to fulfil the internal auditor's role, and also to examine the internal auditor's work plan before it is submitted for approval to the board of directors and to propose amendments thereto, all having regard, inter alia, to the special needs of the company and its size;
(6c)to examine the scope of the work of the auditing accountant and the auditing accountant's remuneration, and to bring its recommendations before those who determine the remuneration pursuant to Sections 155 and 165;
(6d)to establish arrangements for the handling of complaints by employees of the company in connection with deficiencies in the management of its affairs and for the protection to be afforded to employees who have made such complaints;
(7)to examine any other matter connected to the activities of the company;
(8)to bring before the board of directors and the annual general meeting its conclusions in light of an examination as referred to in this subsection.
(f)The audit committee shall send notice of its meetings and the items on the agenda to the auditing accountant of the company and to the internal auditor of the company, and they are entitled to participate in meetings of the audit committee.
(g)The audit committee may demand that a meeting of the board of directors or of the general meeting be convened, for the purpose of bringing its conclusions before them, and if a board of directors meeting or a general meeting has not been convened, the audit committee may convene them itself, and the provisions of Section 64 or 98 shall apply as the case may be, with the necessary modifications.
(h)The Minister may prescribe provisions regarding –
(1)a minimum number of audit committee members who shall serve in public benefit companies whose turnover exceeds an amount the Minister has prescribed;
(2)eligibility requirements for members of the audit committee, generally or for categories of public benefit companies.
(i)In this Chapter, "turnover" – the total annual receipts of a public benefit company from all sources and types, received on average over the three financial years that have elapsed, and if three financial years have not yet elapsed since the establishment of the company – the total receipts as aforesaid received on average over the financial years that have elapsed since its establishment.
Internal Auditor
345i.
[Amendment: 2007-2, 2014-5]
(a)The board of directors of a public benefit company whose turnover exceeds ten million new shekels, or a higher amount prescribed by the Minister, shall appoint, with the consent of the audit committee, an internal auditor, in accordance with the provisions of Sections 146(b) to 148, and 150 to 153, with the necessary modifications; if the board of directors and the audit committee do not reach agreement on the appointment of the internal auditor, the general meeting shall decide.
(b)The internal auditor shall submit to the board of directors for approval a proposed annual or periodic work plan, after the audit committee has examined it as provided in Section 345h(6b), and the board of directors shall approve it, with such modifications as it sees fit.
Remuneration of Directors, Audit Committee Members and Other Office Holders
345j.
[Amendment: 2007-2]
(a)A director or a member of the audit committee, as well as a corporation controlled by any of them, shall not provide, directly or indirectly, paid services to a public benefit company other than as a director or member of the audit committee, as the case may be; the Minister may prescribe provisions with respect to categories of companies, having regard to their purposes and the number of persons employed therein, in which it shall be permissible to appoint an employee or a person who provides paid services to the company as a director, except as chairperson of the board of directors, provided that the number of such directors shall not exceed one-quarter of all members of the board of directors; for the purposes of this subsection, "control" – as defined in Section 1, including the presumption that a person controls a corporation if that person holds 25% or more of the issued capital of the corporation or of the voting rights therein, and an individual and that individual's relative shall be deemed to be one person.
(b)The Minister shall prescribe provisions regarding the salary or remuneration to be paid to directors and members of the audit committee of a public benefit company, and regarding their terms of office, including restrictions on salary, remuneration and terms of office as aforesaid; the Minister may prescribe such provisions regarding other office holders in a public benefit company, including regarding their terms of employment; provisions pursuant to this subsection may be prescribed for categories of public benefit companies.
(c)If an office holder or a member of the audit committee has received remuneration in contravention of the provisions prescribed pursuant to this Section, including for services provided to the company, that person shall be required to return to the company what was received, unless that person proves that at the time of engagement the person did not know and was not required to know of the existence of the remuneration restriction.
Expenses for Managing a Public Benefit Company
345ja.
[Amendment: 2007-2]
The Minister may prescribe the maximum rate of expenses that a public benefit company may incur for its management, including for salary and remuneration, in proportion to its turnover or to the funds it has expended for the advancement of its purposes; such provisions may be prescribed for categories of public benefit companies.
Approval of Certain Transactions
345jb.
[Amendment: 2007-2, 2014-5]
(a)The provisions of Section 255 and the provisions pursuant to Chapter Five of Part Six, except Sections 272(c) and (c1), 273(b), 275(c1) and 279, which apply to a public company, shall apply to transactions of a public benefit company, even if it is a private company, with the necessary modifications and subject to other provisions of this Chapter, and with the following modifications:
(1)a transaction of a public benefit company with a director or a member of the audit committee, or with a corporation controlled by any of them, requires, in addition to what is provided in Section 275, also court approval after the Registrar of Endowments has been given an opportunity to express its position; the court shall not approve the transaction unless satisfied that in the circumstances of the case it is just and proper to do so; in this paragraph, "transaction" – excluding a transaction for the provision of paid services that is prohibited pursuant to the provisions of Section 345j(a), and excluding an engagement pursuant to the provisions of this Law regarding the terms of office of that person as a director or member of the audit committee, as the case may be;
(2)an extraordinary transaction of a public benefit company with any of the following or with a corporation controlled by any of them requires, in addition to what is provided in Section 275, also court approval after the Registrar of Endowments has been given an opportunity to express its position: a relative of a director, a relative of a member of the audit committee, a shareholder of the company or that shareholder's relative, or the promoter of the company or the promoter's relative;
(3)a transaction of a public benefit company with any of those listed in paragraph (2) that is not an extraordinary transaction requires audit committee approval and thereafter board of directors approval, and notice of the approval of the transaction and its particulars shall be given to the Registrar of Endowments; if the Registrar of Endowments considers that the transaction is an extraordinary transaction, the Registrar of Endowments shall notify the company accordingly within thirty days from the date of receipt of the company's notice, and the transaction shall require approval as referred to in paragraph (2);
(4)wherever approval of the remuneration committee is required, it shall be deemed as if approval of the audit committee is required;
(5)Section 272(a) shall apply to an engagement with an office holder who is not a director or member of the audit committee regarding that office holder's terms of office and employment.
(b)The provisions of subsection (a)(1) and (3) shall not apply to a transaction of minimal value or to a transaction whose terms are identical to other transactions of the company with the general public.
(c)Without derogating from the provisions of subsection (a), the provisions of Section 280 shall apply to transactions that have not been approved in accordance with the provisions of this Section.
(d)In this Section, "control" – as defined in Section 345j(a).
Liability of Office Holders and Audit Committee Members
345jc.
[Amendment: 2007-2]
(a)Notwithstanding the provisions of Section 258(b), a public benefit company may not exempt an office holder or a member of the audit committee therein from liability for a breach of the duty of care towards the company, or give an undertaking to indemnify for a breach of the duty of care, and any such undertaking to indemnify shall have no effect.
(b)With respect to a public benefit company that has not been registered in the Register, the office holders therein shall be presumed to have breached their duty towards the company, unless an office holder proves one of the following:
(1)that all reasonable measures were taken to register the company;
(2)that the office holder relied in good faith on information from an authorized office-bearer of the company that no obligation to register existed, or that the company was registered as required;
(3)that due to the special circumstances of the case, the office holder was not required to know of the breach of the obligation to register in the Register;
(4)that the company acted in accordance with the remaining provisions of this Chapter regarding a public benefit company, even if it was not registered in the Register.
Derivative Claims and Derivative Defense
345jd.
[Amendment: 2007-2]
(a)In addition to the provisions of Section 194(a), the Registrar of Endowments, with the approval of the Attorney General, is also entitled to bring a derivative claim in a matter concerning a public benefit company.
(b)In addition to the provisions of Section 203(a), the Registrar of Endowments or the Attorney General is also entitled to defend on behalf of a public benefit company.
(c)The provisions pursuant to Section A of Chapter III in Part Five shall apply to a derivative claim or derivative defense as referred to in this Section, as the case may be, with the necessary modifications.
Transfer of Shares
345if.
[Amendment: 2007-2, 2018]
(a)A shareholder of a public benefit company may not transfer a share for consideration unless prior court approval has been given, after the Registrar of Endowments has been given an opportunity to express its position; however, a transfer of shares for consideration of a minimal amount shall not require approval as provided in this Section, provided that the shareholder has given prior notice to the Registrar of Endowments of such transfer of shares.
(b)Without derogating from the provisions of subsection (a), a share in a public benefit company is not transferable by inheritance, attachable, or pledgeable, and shall not form part of the assets of the shareholder available for distribution upon its winding up or in insolvency proceedings applicable to it, as the case may be, and shall not vest in a liquidator or trustee, as the case may be; upon the death of a shareholder or upon its winding up, the share shall be treated as a dormant share, as defined in Section 308.
Merger
345ig.
[Amendment: 2007-2, 2010]
(a)A public benefit company may merge, pursuant to the provisions of this Law, only with another public benefit company or with an association with public purposes as defined in this Chapter, provided that in addition to the approvals required for a merger under this Law, court approval is also obtained for the merger. The provisions of Chapter D2 of the Associations Law shall apply to a merger as referred to in this Section, with the necessary modifications.
(b)The court shall not approve a merger as referred to in this Section unless satisfied that in the circumstances of the case it is just and proper to do so, having regard to the purposes of the merging companies and their activities prior to the merger, and subject to such conditions and arrangements as it shall determine.
(c)The court shall decide on an application for approval of a merger as referred to in this Section after giving the Registrar of Endowments an opportunity to express its position.
Compromise or Arrangement
345jg.
[Amendment: 2007-2, 2012-2]
(a)Notice of any proceeding pursuant to Chapter Three of Part Nine, concerning a public benefit company, shall be given to the Registrar of Endowments, and the Registrar of Endowments shall be given an opportunity to express its position.
(b)Shareholders of a public benefit company shall not be entitled, in the framework of a proceeding pursuant to Chapter Three of Part Nine, to a share in the assets of the company, solely by virtue of being shareholders therein.
(c)The court shall not approve a compromise or arrangement pursuant to Chapter Three of Part Nine, concerning a public benefit company, unless satisfied that in the circumstances of the case it is just and proper to do so, having regard to the purposes and activities of the company, and provided that the compromise or arrangement is consistent with the provisions applicable to a public benefit company under this Chapter, including the provisions regarding the amendment of the company's purposes or its winding up, according to the nature of the proposed compromise or arrangement.
Appointment of an Inspector
345jh.
[Amendment: 2007-2]
(a)If there is reasonable ground for suspecting that a public benefit company is not complying with the provisions pursuant to this Law or that it is not complying with the provisions of its articles of association, the Registrar of Endowments may, at the request of a shareholder or shareholders holding at least 25 percent of the issued capital or at least 25 percent of the voting rights in the company, at the request of the audit committee, at the request of the Attorney General, or on its own initiative, investigate the affairs of that company, and for that purpose shall have the powers set out in Sections 9 to 11 and 27(b) of the Commissions of Inquiry Law, 5729–1968.
(b)For the purpose of conducting an investigation as referred to in subsection (a), the Registrar of Endowments may appoint an inspector; if an inspector has been appointed, that inspector shall have the investigative powers referred to in subsection (a), subject to the conditions of appointment; the inspector shall submit a report to the Registrar of Endowments.
(c)If an inspector has been appointed as referred to in subsection (b), the Registrar of Endowments may impose the costs of the investigation, in whole or in part, on the public benefit company, on office holders therein, or on a person who applied to the Registrar of Endowments with a request to open an investigation, and may require a security deposit from the person requesting the investigation for its costs.
Winding Up by Court
345ji.
[Amendment: 2007-2, 2018]
(a)A public benefit company shall be wound up by the court pursuant to the provisions of the Companies Ordinance that continue to apply pursuant to Section 345kc and subject to the provisions of this Chapter.
(b)In addition to the grounds for winding up prescribed in the Companies Ordinance and in this Law, the court may wind up a public benefit company upon the occurrence of any of the following:
(1)the company's activities are conducted in contravention of the law, its purposes, or its articles of association;
(2)a person appointed to conduct an investigation pursuant to Section 345kr has recommended the winding up of the company.
(c)An application for the winding up of a public benefit company on one of the grounds listed in subsection (b) shall be submitted by the Attorney General or by the Registrar of Endowments; an application for the winding up of a public benefit company on the grounds listed in Section 257 of the Companies Ordinance may also be submitted by the Registrar of Endowments.
(d)An application for the winding up of a public benefit company shall not be submitted by the Attorney General or by the Registrar of Endowments on the ground listed in paragraph (1) of subsection (b), or by the Registrar of Endowments on the ground listed in Section 257(5) of the Companies Ordinance, except after the Registrar of Endowments has warned the company in writing to rectify the defect, and the company has failed to do so within the time period prescribed by the Registrar of Endowments therefor, or if no time period was prescribed, within a reasonable time after receipt of the warning.
Voluntary Winding Up
345k.
[Amendment: 2007-2, 2018
345ka.
[Translation pending]
345kb.
[Translation pending]
345kc.
[Translation pending]
345kd.
[Translation pending]
345kd1.
[Translation pending]
345kd2.
[Translation pending]
345kd3.
[Translation pending]
345kd4.
[Translation pending]
345kd5.
[Translation pending]
345ke.
[Translation pending]
345kf.
[Translation pending]
345kg.
[Translation pending]
345kh.
[Translation pending]
345ki.
[Translation pending]
345l.
[Translation pending]
345la.
[Translation pending]
345la1.
[Translation pending]
345lb.
[Translation pending]
345lc.
[Translation pending]
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