Client updates /  Controlling Shareholder

Can a company dismiss its CEO after the controlling shareholder changes? This was the central question in a recent proceeding in which we represented an employer and its new controlling shareholder. Indeed, Israel’s national labor court accepted our claim, and ruled, for the first time, that a company may dismiss its CEO after the controlling shareholder changes and wants to appoint a new CEO.

The number of companies with a decentralized ownership structure, i.e., with no controlling shareholder, has been rising in recent years, as has their share of the capital traded on the Tel Aviv Stock Exchange. The recently proposed amendment to the Israeli Companies Law aims to revise the corporate governance regulations specifically applicable to such companies. 

In recent weeks, the Israeli Ministry of Justice published a memorandum proposing an amendment to the Companies Law, focusing on the corporate governance regime in public companies without a controlling shareholder.

The Israel Securities Authority (ISA) and the Ministry of Justice published a call to the public to adjust the corporate regime, as part of addressing problems that may arise as a result of the transition of public companies to a decentralized ownership structure.