Liquidation of an Israeli Nonprofit Organization (Amutah)

In the event that an Israeli nonprofit organization wishes to cease its activities and existence as a legal entity, it is required to begin a voluntary liquidation process.  (Note that this is different from the procedures involved in a merger.)

The Israeli amutah can be liquidated for a number of reasons, including:

1) The General Assembly has decided by a two-thirds majority that the amutah should be liquidated.
2) The Israeli amutah is not able to pay its debts.
3) It is deemed right and just for the Israeli amutah to shut down.

In order to voluntarily liquidate, the Israeli nonprofit organization must do the following:

1) The Executive Board must examine the Israeli amutah and determine its solvency, and then it must declare solvency to the Registrar of Amutot in front of an attorney.
2) The General Assembly must adopt a voluntary liquidation resolution and appoint one or more liquidators.  This must be decided by a two-thirds majority or as is specified in the by-laws.
3) The liquidator(s) will publish a notice about liquidation and give time to creditors to submit claims, and a notice must also be published in two daily newspapers and Reshumot.  The liquidator is also responsible to deal with debts and remaining assets, and once finishing their responsibilities, the liquidator will send a report of liquidation to the Audit Committee.
4) A final General Assembly must be held where the report is presented and approved, which is then submitted to the Registrar of Amutot.

The Israeli nonprofit organization that engages in voluntary liquidation must submit a number of documents to the Registrar of Amutot including:

1) An affidavit of the majority of Executive Board members
2) Minutes from the first and last General Assembly
3) A copy of the publication in the two newspapers and Reshumot
4) Documents showing that funds or assets were transferred to another amutah
5) The liquidator’s report and approval by the Audit Committee
6) Financial statements from the past four years.

After this process and submission of documents, the Registrar of Amutot will provide documentation that the voluntary liquidation process has been completed.

If you have questions about liquidation procedures and documentation, 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.