Legal Updates

The duty to update the details of shareholders is on the shareholders and not the company

July 6, 2021

The Companies Registrar refused to allow a company to file an annual report and classified it as an infringing company due to an incorrect ID number of a shareholder who was registered with the company since 1960 and holds a deferred share and because a corporation liquidated in 1978 holds another 100 deferred shares and a liquidated corporation can not hold shares.

The Court held that the par value of the deferred shares in the total amount of ILS 10.1 will be deposited in an escrow account of the company legal counsel for the shareholders who are absent for a limited period of 12 months, in which the escrow will be published in two newspapers, one of which is an economic newspaper, and after such period the funds and the shares will be returned to the company. The Companies Registrar is obligated to maintain the accuracy of the register and may refuse to receive an annual report that contains incorrect identification numbers, but the duty to report and update the Companies Registrar rests with the shareholders and not the company. Thus, it is unlikely that those who have abandoned their shares will burden the shareholders who have an interest in the company by imposing costs on the company and defining it as an infringing company. Therefore, the solution is another attempt to locate the shareholders, followed by the return of the shares to the company and the registration of the annual report.