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Big News: Israeli Court Gives US Investors Equal Rights as Shareholders

Israeli Court Grants US Investors Same Rights as Shareholders

In a landmark decision, the Israeli District Court ruled that holders of American Depositary Shares (ADS) in Israeli companies traded on the Nasdaq should be treated as shareholders, granting them equivalent rights under Israeli Companies Law.

This ruling clarifies the rights of ADS holders, including the ability to call meetings, propose agenda items, and vote.

The decision stems from a case involving activist shareholders of Nano Dimension, an Israeli company listed on Nasdaq, who were initially denied the right to convene a shareholders meeting.

The court’s ruling is expected to bolster shareholder activism, especially among minority shareholders, and improve corporate governance practices in Israeli companies.

This change aligns the treatment of ADS holders with that of shareholders in Israel, potentially influencing how companies manage their governance structures and engage with investors globally.

The ruling may also lead to increased scrutiny of related party transactions and other practices that could disadvantage minority investors.

Israeli companies are now taking steps to revise corporate governance policies, enhance communication with ADS holders, ensure legal compliance, and implement shareholder engagement initiatives.

The U.S. and Israel have a long history of close economic cooperation, bolstered by a free trade agreement since 1985. This agreement has facilitated significant bilateral trade and investment, with the U.S. being Israel’s largest trading partner.

In the stock market, many Israeli companies choose to list their shares on U.S. exchanges like Nasdaq through ADSs, providing American investors easy access to the Israeli market.

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