Why should I dissolve my “inactive” company[1]?

  1. Annual Fees. As long as the company exists it is required to submit an annual report to the Companies Registrar and to pay annual fees (currently in the amount of between NIS 1,120 and NIS 1,488 per year before interest). If these fees are not paid on time they incur arrears interest.
  2. Restrictions on shareholders. Upon not meeting the above commitments the company can be declared as “non-compliant company” which triggers restrictions on the company and its shareholders. Amongst others, a shareholder in a non-compliant company cannot be a founder in a new company and fines may be placed on the company which can be demanded from the company’s directors.
  3. Upon voluntarily liquidation of a company, the Companies Registrar will often agree to cancel any owed annual fees for the term that the company has not been active.

When can I dissolve the company?

  1. Only a solvent company can go into voluntary liquidation without court intervention. The company’s shareholders, and all or most of the company’s directors must declare that they have closely examined the company’s state of affairs and that they have come to the conclusion that the company will be able to pay its outstanding debts within twelve (12) months from the date on which the voluntary liquidation commences (“Solvency Affidavit”).
  2. We recommend that prior to the commencing of a voluntary liquidation a company be brought to the condition that it is inactive and that it has no assets and no liabilities; if not the liquidator is charged with the disposition of the assets, closing of the liabilities and taking any other actions necessary for an orderly winding up;

How do I dissolve the company?

  1. The Israeli Companies Ordinance [New Version] (1983) (the “Companies Ordinance”)[2] provides that voluntary liquidation begins upon the resolution of the company to wind itself up, after which the company must cease to conduct its affairs, save those actions necessary for an orderly liquidation. A company may initiate its voluntary liquidation by a resolution adopted by seventy five percent (75%) of the shareholders entitled to vote and present (in person or by proxy) at an extraordinary general meeting, duly convened and held (the “Extraordinary Meeting”).
  2. The Solvency Affidavit (defined above) must be filed with the Companies Registrar before the notice of the Extraordinary Meeting is sent to the company’s shareholders.
  3. Within seven (7) days of the adoption of the above resolution[3]of the aforementioned resolution, the company must send a notice to the official gazette of the State of Israel (the “Reshumot”) of this.
  4. The Companies Ordinance requires the appointment of a liquidator (the “Liquidator”) by the shareholders of the company.[4]
  5. The Liquidator will exercise the powers of the board of directors of the company as well as manage the voluntary liquidation, which is why we recommend that the company be brought to the situation that it is inactive and has no assets and liabilities prior to beginning this process – otherwise the Liquidator will have control over the disposition of the assets.
  6. The Liquidator must notify the Registrar of his appointment within twenty one (21) days thereof, as well as prepare a report describing, inter alia, how the voluntary liquidation is being carried out (the “Liquidator’s Report”). If applicable, the Liquidator’s Report must include specific details regarding the distribution of assets amongst, firstly, the creditors and, secondly, the shareholders of the company, to the extent that any assets remain after all of the company’s debts have been paid.
  7. A final general meeting (the “Final Meeting”) must be called by the Liquidator and notice thereof to the shareholders must be published in the Reshumot at least one month before the date set for the Final Meeting. At the Final Meeting, the Liquidator must present and describe the contents of the Liquidator’s Report to the shareholders.
  8. Within one week of the Final Meeting, the Liquidator must file the Liquidator’s Report with the Registrar and provide notice of the date on which the Final Meeting was held (the “Notification”).

Important to know…

  1. A company or any person that does not meet in full the obligations under applicable law associated with the discussed process, may be subject to a continuing fine.
  2. After a company has been dissolved, the Court may, in certain situations, give instructions that such dissolution be cancelled and that the company be “revived” with retroactive effect, as if it had never been dissolved.


[1] Company in this context is a company registered and incorporated in Israel.

[2] The Israeli Companies Law (1999) (the “Companies Law”), which entered into effect on February 1, 2000, supersedes most of the provisions of the Companies Ordinance. However, with respect to Voluntary Winding Up the Companies Law refers to the relevant provisions of the Companies Ordinance (see Section 367 (a)(1) of the Companies Law). The applicable arrangement with respect to Voluntary Winding Up is therefore the arrangement stipulated by the Companies Ordinance.

[3] This notice also includes the name and address of the Liquidator (as defined herein).

[4] This usually occurs at the Meeting.

Beverley Zabow

About Beverley Zabow