Rehabilitation of an Israeli Nonprofit Organization (Amutah)
This article addresses issues surrounding rehabilitation of an Israeli nonprofit organization. If an investigation of an Israeli nonprofit organization reveals problems to be addressed and the organization is willing to address them in order to avoid other legal ramifications, the Registrar of Amutot may offer the Israeli nonprofit organization a chance for rehabilitation.
This Series of Posts
Our team of lawyers works in a variety of fields, including Israeli nonprofit law. This article is one in a series focusing on important information about nonprofits or charitable organizations (an amutah in singular and amutot in plural) in Israel. This series of posts discusses various rules for proper and legal management of nonprofit organizations in Israel in order to better help you administer your Israeli nonprofit organization.
For more information on the Israeli Corporations Authority which oversees Israeli nonprofit organizations, see the government website. For more articles from an Israeli lawyer and legal advice for Israeli nonprofit organizations related to the topic of this article, see our articles about record keeping, financial statements and verbal reports.
Rehabilitation is relevant in the event that an Israeli nonprofit organization has failed to live up to its legal obligations and is refused a certificate of proper management, an investigator is appointed, or if it is close to liquidation. If the amutah wishes to fix the problems, the Registrar of Amutot may agree to devise a “rehabilitation scheme.” This scheme would require the Israeli amutah to fulfill the Registrar of Amutot’s requirements, which should allow the Israeli amutah to receive a certificate of proper management in the future.
Examples of Failures in Legal Obligations
A few examples of failures to maintain proper management of the organization that may be granted a rehabilitation scheme by the Registrar of Amutot are listed here.
1) A significant financial deficit such as a deficit greater than 50% of the Israeli amutah’s earnings in the past year.
2) A failure to make a record of one financial transaction or financial statement.
3) A failure to record smaller financial transactions.
4) A failure to record other financial transactions, expenses, loans and more.
Schemes for Rehabilitation of an Israeli Nonprofit Organization
Rehabilitation schemes are customized to the particular problem at hand and will require various levels of oversight. The Israeli amutah must agree to the scheme and to the extra oversight, and the extra oversight will require extra payment from the Israeli amutah.
Rehabilitation schemes for the examples listed above could include:
1) A program to liquidate the deficit accompanied by monitoring from an external auditor.
2) Submitting quarterly reports to a few of the Israeli amutah’s mandatory institutions or an external auditor.
3) Completion of further procedures under supervision of those acting on behalf of the Registrar as well as providing additional receipts and paperwork and quarterly reports, as requested.
4) Compliance with requests from an external financial controller who will have significant authority to supervise and veto various financial transactions and attend meetings in the Israeli amutah. This will also include aspects mentioned in the previous rehabilitation schemes regarding further paperwork and reporting.
If you have questions about rehabilitation of an Israeli nonprofit organization or anything else related to Israeli nonprofit organizations, please contact us.
Advocate Joshua Pex specializes in Israeli nonprofit law and would be happy to discuss the needs of your nonprofit organization with you.