How do heirs inherit shares in an Israeli private company?

Company shares do not pass automatically on death. Under the Companies Law 5759-1999, a deceased shareholder's shares transmit to the estate, and the personal representative or heirs may be registered once the succession chain is proved. The practical trigger is the inheritance order from the Registrar of Inheritance Affairs, which establishes the heirs' entitlement. The heirs, or an appointed estate administrator, then present that order to the company, which updates its shareholder register and files the change with the Companies Registrar. Until registration is complete, the heirs generally cannot vote the shares or exercise management rights, so a company with a deceased key shareholder can stall until the estate is settled.

Two documents usually control the outcome beyond the succession order. The articles of association (takanon) often restrict share transfers, requiring board consent or offering a right of first refusal to existing shareholders, and these can apply to a transmission on death. A separate shareholders agreement may add put or call options that let surviving shareholders buy out the deceased's stake at a formula price. Because private company shares have no public market, valuing them for a fair division of the estate among co-heirs is often the hardest step. Foreign heirs can complete the entire process from abroad through a local attorney holding a power of attorney.

From the full guide: Distributing an Israeli Estate: A Practical Guide for Foreign Heirs

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