I have always considered the subject of company liquidation as somewhat gloomy, since the company ran into trouble from which it could not escape.
However, after much experience, I've come to realize that liquidation is relevant ni many more cases than merely the closing of a company for bankruptcy purposes.
For example it may be that a person is an owner of an idle company. perhaps the company never started business and trading. Perhaps it used for holdings or some other passive goal, and it no longer useful for anything, idly accruing debt due to maintenance requirements.
Let's go over the things that you should know to get into the process of Israeli Company Liquidation.
Avoid Idle Company Maintenance Requirements
Whether active or idle, every Israeli company has maintenance requirements. These are:
· Annual state fee.
· Submission of annual return.
These requirements are due each year. If a company doesn't comply to either one of them, sanctions may be imposed.
Sanctions are severe and compliance is relatively simple, so if a company owner wishes to keep the company alive, compliance is a basic requirement. However, if the owner has no use whatsoever of the company, it may make more sense to liquidate it.
What is Company Liquidation?
Liquidation, also known as winding up, winding down, and dissolution, is a process in which the company is terminated. Its like the "death" of the company.
Consider this: the company is "born" with a Certificate of Incorporation, and it "dies" with a Confirmation of Liquidation.
After such confirmation of liquidation, the company no longer exists, and no more business may be conducted through it. The company cannot holds assets anymore, and cannot accrue any debt.
How to Liquidate a Company in Israel?
The liquidation of a company in Israel requires all the directors to sign a liquidation application form. Thereafter the form is submitted to the state and the liquidation process begins.
A liquidation notice will be published in the gazette and there should pass 100 days. This interval is meant to give any creditors the chance to oppose to the liquidation process.
if no notices of opposition is submitted to the state during those 100 days, the liquidation will be over, and a Confirmation of Liquidation will be issued.
Can the Company Liquidation Process in Israel be Done Remotely?
Yes, it can be done 100% remotely. If the country in which the director is located is a part of the Apostil Convention, the form can be signed by way of a signature authentication by notary, and a certification by Apostil.
If the country in which the director is located is NOT part of the Apostil Convention, a visit at the Israeli consulate is required.
It should be reminded that ALL directors must sign the form.
The Israeli Company Liquidation application form is in the Hebrew language.
What are the Requirements to Initiate the Liquidation Procedure of the Israeli Company?
There are few requirements to start the procedure of liquidation of an Israeli company.
· That the company has no bank account.
· That the company has stopped doing business altogether.
· That any due state fees are fully paid.
· That the company is fully solvent to pay any and all debts, the creditors of which may claim against the company during the company liquidation procedure.
How Much Does it Cost to Liquidate an Israeli Company?
To review the costs of liquidation, you can refer to our fee schedule page.
How Long Does it Take to Liquidate a Company in Israel?
As mentioned above, the procedure will take 100 days as of the moment of filing the liquidation application form to the state. After which, the confirmation of liquidation will be issued to the general public, and the company will be officially terminated.
What Happens if the Company has a Surplus and the Company is Liquidated?
In case the company has any surplus, prior to the liquidation procedure a distribution to the shareholders must be made, exactly like a dividend distribution. Indeed, this distribution is actually called "liquidation dividend". Since one of the requirements to initiate the Israeli company liquidation procedure is the absence of any bank accounts to the company, it is obvious that all cash must be distributed.
If the company holds any assets, those assets must be passed on to the shareholders, exactly like dividends in-kind.
What Happens if the Company has Debt and the Company is Liquidated?
In case the Israeli company has outstanding debt, all debt must be cleared before initiating the company liquidation process.
What Happens if the Company has Debt but the Company is Insolvent?
Although these are not special cases, they admittedly belong to the minority of cases. If an Israeli company becomes insolvent and wishes to be liquidated, the liquidation procedure must be taken to an Israeli District Court. There the procedure will be conducted as a full liquidation procedure, which will involve competent legal representation by us.
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