The Life Cycle of an Israeli Company
What is the company life cycle that an Israeli corporation goes through from the start of its inception? What are the different milestones it may encounter?
Our law office, specializing in Israeli corporate law, can help you run your company from registration and throughout its entire duration.
What is the legal status of a corporation?
A corporation is a legally independent entity in its own right. As such, it is deemed legally competent to assume rights and responsibilities. Having its own legal identity means that a company is legally distinct from its shareholders and those who act in its name and it may both sue and be sued.
When does the veil get lifted?
“Lifting the veil” is when the rights and obligations of the company and its shareholders become ascribed to each other. Ordinarily, if a third party sues a company, they can only be reimbursed by the company from its own assets and not from those of its shareholders. This is based on the principle that a company has its own legal identity. The courts, in extraordinary circumstances, can decide to lift the legal “veil” which separates the rights and obligations of a company from its shareholders, if it feels that the latter has inappropriately exploited the company’s distinct legal status.
From incorporation to dissolution
Upon the incorporation of a company, it will receive a certificate of incorporation attesting to this fact. The life cycle of a corporation spans the date specified in the certificate of incorporation until the the process of liquidation is resolved upon its dissolution.
Bylaws
A company’s bylaws dictate its activities and must be submitted to the registrar of companies at the time of its incorporation. The bylaws constitute the contractual obligations which the company has with its shareholders and which the latter have with themselves. The companies ordinance used to distinguish between the bylaws of a company and its memorandum, giving preference to the latter, yet the companies law did away with this distinction and dictates that the bylaws govern.
Dissolution
As part of the dissolution process, the company’s assets are placed in a receivership and disposed of and allocated according to the preferential hierarchy set forth by statute and in the company’s articles of incorporation. A trustee is appointed to oversee this process who assumes the powers of the board of directors and places the company’s assets in a receivership. As stated, the process of dissolving the company concludes with its liquidation.
Suspension of proceedings
One byproduct of the courts dissolving a company is that it will suspend proceedings against it. This would preclude someone persisting in pursuing an action or commencing one against the company absent the court’s consent. The aim of suspending proceedings is to put a stop to private claims for being reimbursed by company assets in favor of collective ones based on the principle of equal distribution among the company’s creditors.
Claims on debt
Subsequent to an order being granted for a company’s dissolution, it is incumbent on the trustee to settle all claims on company debt to its creditors. The creditors must submit such claims to the trustee within six months of the order being granted for the company’s dissolution, who then must rule on them.
Mergers
A merger is as it sounds. It is when two companies merge into one. The element of a merger is that one company absorbs another, with only the former perpetuating its existence. At this point, the absorbed target company will be eliminated from the registrar of companies’ books.
Tender offer
A tender offer is a public offer to all of the shareholders of the target company to acquire its assets. There are statutory safeguards in place to ensure that the rights of all the shareholders in the target company will be upheld. The companies law makes a distinction between two different types of tender offers. The one, which is known as a “special tender offer,” is directed towards acquiring control of a public company. The other, known as a “complete tender offer,” places its focus on the acquisition of a public company in its entirety. On occasion, this may be effected in the face of shareholder opposition and may result in a public company being transformed into a private one.
The receiver
The receiver is someone who is appointed at the direction of the court for the purposes of preserving certain company assets, and collecting and administering them, towards the end of upholding the rights of those who are entitled to their remuneration.
Contact an Israeli corporate law expert
Whether you are interesting in establishing a company in Israel, registering a new company with the registrar, establishing a company bank account, settling company debt or dissolving a corporation, our legal experts are at your service:
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