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Do I have to make a tender offer if I buy more than 25% of an Israeli public company?

Usually yes. Section 328 of the Companies Law 5759-1999 bars an acquisition that would leave the buyer holding a control block of 25% or more of the voting rights in an Israeli public company, unless the shares are acquired through a special tender offer (hatza'at rechesh meyuchedet) addressed to all shareholders. A second threshold applies at 45%. The rule bites only where no existing holder already sits above the relevant level. Crossing 90% triggers a separate full tender offer regime, and shares bought in breach lose their voting rights.

The provision targets the private sale of control. Israeli law treats a control premium paid to a single seller as something the wider shareholder body should have a chance to share, so it channels the purchase into a public offer at one price. Section 328 catches any acquisition that would take the buyer to 25% or more where no existing holder has 25%, and any acquisition taking the buyer above 45% where no existing holder is above 45%. Acceptance is not simply a question of tendering enough stock. The offer must be accepted by a majority of the shares tendered by offerees who are not the offeror, controlling shareholders, or holders with a personal interest, and a minimum slice of the company's voting rights must actually be acquired.

For a foreign investor the consequences run well beyond the offer document. Shares acquired in breach of Section 328 become dormant, carrying no voting rights and no dividend entitlement until the position is corrected, and the selling shareholder is exposed as well. Timing is unforgiving, because the offer must stay open for a statutory period and the buyer cannot close a private purchase in parallel. Check separately whether the target holds Israel Innovation Authority funded know-how, a defence export licence, or a regulated banking or insurance permit, since ministerial or regulatory consent may be needed on top of the tender offer. Our M&A in Israel overview covers the wider deal process.

⚖ In Practice
  • Governing law: Sections 328 to 336, Companies Law 5759-1999 (special tender offer at 25% and 45%, full tender offer above 90%)
  • Competent authority: Israel Securities Authority (Rashut Niyarot Erech) and the Tel Aviv Stock Exchange for a listed target; the Companies Registrar (Rasham HaChavarot) for corporate filings
  • Acceptance test: a majority of shares tendered by unconnected offerees, excluding the offeror, controlling shareholders, and holders with a personal interest, and the offeror must acquire at least 5% of the voting rights through the offer
  • Consequence of breach: shares acquired in breach become dormant shares (menayot rdumot) with no voting or dividend rights until the position is cured
  • Other clearances to budget for: Israeli Competition Authority merger notification where the turnover thresholds are met, and Israel Innovation Authority consent where funded know-how is involved
  • Timeline: a special tender offer commonly adds 6 to 10 weeks to a transaction, before any separate regulatory clearance

From the full guide: M&A in Israel: A Legal Overview for Foreign Buyers and Sellers

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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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