Commercial Law Attorneys
Voluntary Dissolution of a Single-Shareholder Company in Israel
A single-shareholder company (sometimes called a sole proprietorship company) is a company in which one person serves as the sole shareholder and may also act as the CEO and the sole director. Like any other company, a single-shareholder company can reach a point where dissolution becomes necessary — for example, due to inactivity. When the dissolution is voluntary, it can be carried out through a shortened liquidation procedure specifically designed for single-shareholder companies.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
The Shortened Dissolution Procedure
The standard company liquidation procedure is often lengthy and complex. Over time, however, it became clear that when a single-shareholder company dissolves voluntarily, the process can be significantly shortened — saving both the business owner and the Companies Registrar considerable time and effort. While this shortened procedure is relatively quick and straightforward, it is strongly recommended to carry it out with the assistance of a lawyer. First, certain stages of the process — such as signing affidavits — must be done before an attorney. Second, professional legal guidance ensures that the procedure is handled efficiently, deadlines are met, and unnecessary costs or delays are avoided.
Eligibility Requirements for the Shortened Procedure
The shortened dissolution route is not available to every single-shareholder company. It applies only to companies in which the sole shareholder is also the sole director. Additionally, the company must not have complex or extensive assets, because the procedure requires the company to settle all its liabilities and liquidate its assets within six months. Companies with complex obligations that cannot meet this timeline must undergo the standard liquidation procedure instead.
It is important to note that as part of the dissolution process, the company owner may be eligible for an exemption from annual fees — including fees for previous years that were not paid — thereby avoiding the imposition of penalties. To obtain this exemption, the owner must submit the relevant documentation, and an attorney can provide guidance on the specific requirements.
Steps in the Dissolution Process
The shortened liquidation procedure for a single-shareholder company involves the following steps:
- Signing the application: The shareholder signs a dissolution application form and attaches a solvency affidavit.
- Appointing a liquidator: A liquidator is appointed (the shareholder may serve in this role) and signs an affidavit.
- Setting a general meeting date: A date for the general meeting must be set within four to six months from the date of the dissolution decision. Since there is only one shareholder, this meeting is essentially a formality.
- Publication: A notice regarding the voluntary dissolution request must be published, and a copy sent to the Companies Registrar within seven days of signing the solvency affidavit.
- Asset realization: After receiving approval from the Companies Registrar, the owner may begin realizing the company’s assets and settling its liabilities.
- Completion: Once all steps are completed, the Companies Registrar issues a certificate of dissolution. The process typically takes approximately 45 days on average.
We invite you to schedule a consultation to discuss all matters related to company dissolution and liquidation.
Mor & Co. Law Firm’s Commercial Law Department has extensive experience in mergers, acquisitions, and corporate dissolutions, representing entrepreneurs, businesses, and corporations from Israel and abroad across a wide range of legal areas. Contact us by phone at 02-595-3322, via WhatsApp at 050-441-1343, or through the online contact form below.