Corporate Inheritance Law — Israel
Inheriting Shares in an Israeli Company in Israel
Rights, Restrictions, and Next Steps
When a shareholder in a private Israeli company (חברה בע"מ) dies, the shares form part of the estate — but inheriting them is rarely straightforward. Adv. Liron Elmaliach guides heirs through the legal and corporate process, from obtaining an inheritance order to registering in the shareholder register.
How Company Shares Pass on Death in Israel
Shares in a private Israeli company (חברה בע"מ) are a personal asset of the shareholder and form part of the estate when that shareholder dies. Under the Israeli Succession Law and Companies Law, the shares pass to the heirs in accordance with the deceased's will or, absent a will, according to the statutory order of intestate succession.
However, the company's articles of association often impose important restrictions on share transfers. A common provision is a right of first refusal — requiring the heir to offer the shares to existing shareholders before being registered. Another common requirement is board or shareholder approval for any new member joining the company.
It is critical to distinguish between two separate rights: the economic right (entitlement to dividends and distributions, which vests immediately upon the shareholder's death) and the management right(the right to vote and participate in decisions), which typically requires formal registration in the shareholder register before it can be exercised.
The first practical step is obtaining an inheritance order (צו ירושה) or probate order (צו קיום צוואה) from the Registrar of Inheritance Affairs or the Rabbinical Court. Only once this order is issued can the heir formally present their entitlement to the company and request registration.
Continuing or Selling the Business — Practical Steps After Inheriting
Once the inheritance order is in hand, a series of corporate and practical steps must be taken to reflect the new ownership reality. These include updating the shareholder register at the Companies Registrar, amending the authorised signatories at the company's bank, and — if the deceased was also a director — appointing a replacement director or taking on the role yourself.
Accessing bank accounts is often the most urgent practical concern for heirs. Because the accounts belong to the company (a separate legal entity), the bank will not act on an inheritance order alone. A board resolution and updated signatory forms are typically required, which in turn requires cooperation from co-shareholders — something that is not always forthcoming.
Where there are partnership disputes — for example, co-shareholders who resist the heir's involvement or try to dilute the inherited stake — early legal intervention is essential. An attorney can negotiate a fair buyout, obtain a valuation, or seek court relief if the co-shareholders are acting oppressively.
If the heir decides to sell the inherited shares, a professional valuation of the company is usually the starting point. The existing shareholders often have a right of first refusal, meaning they must be offered the shares before any third party. Getting the valuation right — and having an attorney review the sale agreement — protects the heir from selling below market value or signing away rights they did not intend to waive.
Frequently Asked Questions — Inheriting Company Shares in Israel
Answers to the most common questions about corporate inheritance law in Israel
Inherited Shares in an Israeli Company?
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