What happens to an Israeli company when the sole or majority shareholder dies?

An Israeli private company (chevra ba'am) is a legal person separate from its shareholders under the Companies Law 5759-1999. The death of a shareholder — even a sole shareholder — does not affect the company's legal existence or dissolve its contracts, bank relationships, or employment obligations. The shares are treated as estate property and pass to the heirs according to the Succession Law 5725-1965, by will or by intestacy. To transfer the shares on the company's register and with the Israeli Registrar of Companies (Rasham HaChevrot), the estate must present a certified succession order (tzav yerusha) or probate order from the Inheritance Registrar or Family Court.

The practical risk arises when the deceased was both the sole shareholder and the sole director. In that case, the company has no living director with authority to act, and no one can formally appoint a replacement until the shares are transferred to the heirs — which itself requires probate, typically a 3–6 month process. If the company has active contracts, employees, or urgent banking needs during this period, the heirs or the estate administrator may need to apply to the District Court for an order appointing a temporary administrator to manage the company's affairs. Foreign heirs should retain Israeli counsel immediately, because the Israeli Registrar of Companies requires Hebrew-language documents and the bank will freeze company accounts once it learns of the shareholder's death.

From the full guide: Company Formation in Israel: A Complete Guide for Foreign Investors

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