Step-by-Step of Voluntary Liquidation in Israel

Liquidation is a legal process that ultimately dissolves the existence of a selected legal entity. During liquidation, the company empties itself of all its economic content, followed by the dissolution of its legal entity. The primary purpose is to sever the connection between the company and its shareholders once the company ceases to operate and exist.

The Israeli Companies Law outlines various paths for the liquidation of Israeli companies. It also determines the process and schedule for each option.

This short article will focus on voluntary liquidation. Voluntary liquidation represents one of two possible variations of a liquidation process, alongside liquidation by court.

In Israel, voluntary liquidation is a structured process, commencing with the preparation and submission of a solvency statement by the company’s directors, followed by approval of the liquidation by the company’s shareholders, notifications to the company’s creditors and the Registrar of Companies (ROC), and ultimately the dissolution of the company. Throughout this process, the company maintains its legal entity with reduced operational activities, ensuring an organized conclusion to its existence.

Voluntary Liquidation

A voluntary liquidation process consists of several stages and sub-stages designated to wind up the company’s affairs and distribute its assets. A company can only be dissolved if it is solvent and has no remaining debts.

Stage 1

Solvency statement.

The first step is filing with the ROC a solvency statement signed by a majority of the company’s directors. That statement will confirm that the directors examined the state of the company’s business and that the company can pay off all its debts within 12 months of the statement date.

Board resolution.

Based on the solvency statement, the company’s board of directors provides a resolution recommending the general meeting of the company to adopt a resolution of voluntary liquidation.

Shareholders’ resolution.

At the request of the board, the general meeting convenes. Based on the information provided by the board and the solvency statement, the general meeting approves the dissolution of the company and the appointment of a trustee. The general meeting must finalize the resolution during a 90-day period as of the solvency statement date.

Unless resolved otherwise by the general meeting, the appointment of the automatically revokes the authority of the board of directors as the governing body of the company and all managing powers are transferred to the nominated trustee.

Notice to ROC.

Within 21 days of the general meeting date, the trustee must notify the ROC of the expected liquidation and its appointment as trustee. During this time frame, the trustee must also notify all known creditors of the company of the ongoing liquidation process.   

“In voluntary liquidation” status.

Within 30 business days of receiving the trustee’s notice, the ROC will approve the liquidation status to the public. It will update the company’s status at the ROC’s database to “in voluntary liquidation” This status will be maintained throughout the liquidation process and until the company is finally dissolved.

During the liquidation period, the trustee will dispose of all company assets. After paying the costs and expenses of the liquidation, it will distribute any remaining money to the company’s creditors. All share transfers during the liquidation period are void, excluding transfers to the trustee or those made at its approval.

Stage 2

Preparations for final meeting.

Once the trustee finalizes the disposal of all assets and payment of remaining outstanding debts (if any), the trustee prepares a final liquidation report. This report states that the company has exercised all its assets, removed all its liabilities, repaid all its debts, and ceased its operations.

In addition, the trustee must now convene a final meeting of the shareholders to conclude the liquidation. The final meeting notice, which contains time, location, agenda, and other essential information, must appear on the ROC’s website at least 45 days prior to the final meeting date.

Final meeting.

At the final meeting, the shareholders must pass a resolution approving the final report, which finalizes and concludes the company’s business.

Submission of dissolution request.

Immediately after execution of the final meeting resolution, the trustee must submit to the ROC, within seven days, a copy of the final meeting protocol, the final report, and its confirmation that the final meeting was duly convened.

Completion of the liquidation process.

The ROC will review and approve the dissolution request up to 30 business days after receipt of the notice. Once approved, the ROC will issue a notification confirming the completion of the liquidation. The company will then be deregistered from the ROC’s database and its status will change to “voluntarily liquidated.”

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Barnea Jaffa Lande’s Corporate Department has extensive experience advising companies during both voluntary liquidation procedures and other liquidation procedures.

Adv. Uri Hillel is a partner in the firm’s Corporate Department.