Can a director resign from an Israeli company, and what happens if the last director leaves?

The resignation notice goes to the board, the chair or the company itself, and should state the reasons for leaving. The company then reports the change to the Companies Registrar. A director who suspects the company will not file can send the Registrar a copy of the notice, which puts the date on the public record. When no director remains, the company still exists, but it cannot act through a board to sign contracts, run its bank account or approve financial statements. Shareholders holding the majority required by the articles appoint a new director. Where they are deadlocked or unreachable, a shareholder or creditor can apply to the court for relief. The CEO and other office holders keep their own statutory duties in the meantime.

Foreign sole directors and nominee directors often resign after a sale, a falling-out with an Israeli partner, or a move abroad, and timing matters. Liability for acts during the term, such as unpaid withholding tax, unfiled reports or approval of an unlawful dividend, survives the resignation. Leaving in the middle of a crisis does not cut that exposure off and may draw attention if the company later collapses. A departing director benefits from board minutes that record any objections to disputed decisions, copies of the documents they signed, and a check of whether the D&O policy covers claims made after they leave. Bank signing rights must be removed separately, because banks do not act on the Registrar filing. See the guide on director liability in Israeli companies.

From the full guide: Director Liability in Israeli Companies: A Complete Guide for Foreign Directors

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