According to Israeli law, every company that is a registered company in Israel, must pay an annual fee and must submit annual financial reports to the Registrar of Companies. This law is applicable not only to active companies, but to non-active companies as well, so long as the company has not been legally dissolved. As long as the company is registered with the Registrar of Companies, the company shall continue to accrue annual fees. Non-payment of these annual fees, and/or insufficient submission of financial reports can result in fines for both the company and/or its management as well as exposure to additional penalties.
Recently, the Israeli government has taken additional measures to help ensure that payment of annual fees and the submission of financial reports. According to the latest amendment of the law, as of January 1, 2010, additional measures will be taken against companies failing to complete their responsibilities as outlined above, including the inability of majority shareholders and/or directors to register new companies, the inability to execute liens and mortgages, etc.
The existence of a non-active company is a liability subject to large fines and additional penalties for its shareholders. In order to prevent such sanctions, a company must be legally dissolved.