A controlling shareholder is not be liable for company city tax debt if it did not receive assets for no consideration

A company held property and did not pay city tax to the Tel Aviv municipality. The municipality demanded that the controlling shareholder pay the debt personally.
The Court rejected the claim against the shareholder and held that it should not be held accountable for the company’s city tax debt. Under Israeli law a local authority may collect property tax debts of a company directly from its controlling shareholders, inter alia, if the following cumulative conditions are met: A. This is a non-residential property; B. The owner of the property is a private company that is not a protected tenant under law; C. The city tax debt is final; D. the company liquidated or ceased its activity; E. This is the controlling owner, who owns at least 25% of the company share capital; and also F. The controlling shareholder took over the company's assets without consideration or in partial consideration (diversion of assets). Here, all the conditions were met, except for the element of diversion of assets. The company fell into an extremely difficult financial situation due to circumstances beyond its control and assets were not diverted to the shareholder. Therefore, the only the company owes the property tax debt and not the shareholder.