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Can a minority shareholder force an Israeli company to hold a shareholders’ meeting?

Yes. Section 63 of the Companies Law 5759-1999 obliges the board to convene a special general meeting when a qualifying shareholder demands one, and the demand has to set out the items for the agenda. The threshold is holding at least 5% of the issued share capital together with 1% of the voting rights, or at least 5% of the voting rights on its own. The board must convene the meeting within 21 days of receiving the demand. Section 64 then lets the shareholder who demanded it convene the meeting personally if the board does nothing, with the company paying the reasonable costs.

Control of the agenda normally sits with the board, and Sections 63 and 64 are the statutory correction to that. The demand must be in writing and must specify the resolutions to be put, because the meeting is limited to the matters listed. A meeting convened by the shareholder under Section 64 has to be held within three months of the original demand, and the company reimburses the reasonable expenses of calling it. Where the mechanism is obstructed, an Israeli court can order a meeting to be convened and can set the arrangements for holding it. Quorum and notice periods come from the company’s articles of association, so those have to be checked before the demand is served.

For a foreign minority investor the usual trigger is a founder group that stops reporting, refuses to approve financial statements, or will not appoint the director the investment documents promised. Serve the demand in writing at the registered office recorded with the Companies Registrar, keep proof of delivery, and draft the resolutions precisely rather than in general terms. The mechanism guarantees a meeting, not an outcome: the votes still decide, so it works best combined with the inspection right over the company’s books and, where the majority is acting oppressively, a petition for relief. Our guide to minority shareholder rights in Israeli companies maps out the full toolkit.

⚖ In Practice
  • Governing law: Sections 63 and 64, Companies Law 5759-1999
  • Threshold: 5% of issued share capital plus 1% of voting rights, or 5% of voting rights alone
  • Deadlines: Board must convene within 21 days of the demand; a shareholder-convened meeting must be held within 3 months of it
  • Competent authority: Companies Registrar (Rasham HaChavarot); disputes are heard by the Economic Division of the Tel Aviv District Court
  • Costs: The company bears the reasonable expenses of a meeting the shareholder had to convene

From the full guide: Minority Shareholder Rights in Israeli Companies

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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