Editor’s note: This is general educational information about how share classes and voting rights are treated for companies listed in Tel Aviv, based on the official filings and published legal analysis listed at the end. It is not investment advice and is not a view on any company.
Analysis: the rule shapes where companies list, not how they are governed
The measurable effect of Section 46B is on venue rather than on control. Concentrated control is ordinary in Tel Aviv, and it is produced by ownership blocks and holding structures rather than by voting ratios. A one class rule closes one route to a control premium and leaves the others open, which is why Israeli corporate law spends most of its governance machinery on the treatment of a controlling shareholder rather than on the arithmetic of votes.
The counterfactual is visible in the listing statistics. The TASE remains the sole authorised stock exchange and public securities market in Israel, with 546 companies maintaining an equity listing at the end of 2025 and 21 companies completing initial offerings during the year, including one company that listed through the dual-listing route. Founders who want weighted voting are not absent from the Israeli market; they are present through their New York listings, and the dual-listing arrangement then imports them back into Tel Aviv on foreign terms.
For a reader, the useful discipline is to check which door a company came through before assuming which rules apply to it. A company that offered its shares to the Israeli public directly is under Israeli corporate governance requirements and, on the face of Section 46B, has one class of voting shares. A dual-listed company reports under its home market rules, may carry a weighted voting structure, and answers class action claims in Israel under the disclosure liability standards of the market where the documents were published. What the sources cited here establish is the rule and the exemption route around it. What they do not establish is how many dual-listed companies actually use weighted voting today, which is a question only the individual charters can answer.
What the documents say
A founder who holds a tenth of a company’s shares and more than half of its votes is holding a structure that Israeli law kept off the Tel Aviv Stock Exchange for decades. Section 46B of the Israeli Securities Law essentially prohibits the listing on the TASE of companies with a dual-class voting stock structure, including the super-voting stock commonly held by founders in the United States. The interesting part of the story is not the prohibition itself but the hole that was opened in it for companies that list in Tel Aviv alongside a foreign exchange, and what that hole means for anyone reading a Tel Aviv share register.
What a dual-class structure actually does
The canonical description of the structure sits in the prospectus Google Inc. filed in August 2004. The company told investors that after the offering it would have two classes of authorised common stock, that the rights of the two classes were identical except with respect to voting and conversion, that each Class A share carried one vote and each Class B share ten votes, and that a Class B share was convertible at any time into one Class A share. Only the Class A stock was sold to the public, at $85.00 a share across 19,605,052 shares, and only the Class A stock was quoted.
Three design choices do the work. The economic rights are equal, so nothing about dividends or liquidation distinguishes the classes and the public buyer is not being sold an inferior claim on cash. The voting ratio is fixed in the charter rather than negotiated deal by deal. And the conversion runs one way, from high vote to low vote, so the insider block shrinks when insiders sell but never grows back into public hands. A holder of a tenth of the economic capital can therefore control a majority of votes purely as arithmetic, without any shareholder agreement or pyramid holding company.
The Israeli rule and the door left open in it
Israel took the opposite path early. The one class requirement was written to remove the gap between capital rights and control rights at its source, rather than policing the consequences afterwards through disclosure. That choice has a cost, since a founder who wants weighted voting has to list somewhere else, and Israeli technology founders have overwhelmingly listed in New York.
The dual-listing arrangement is what reconciles the two systems. The Knesset adopted it in 2000 to strengthen the TASE by attracting companies already listed on the New York Stock Exchange or the NASDAQ Stock Market, and a dual-listed company is one with the same class of securities listed on a qualified non-Israeli exchange and on the TASE. Its Israeli reporting obligation is satisfied by filing its foreign disclosure reports with the Israel Securities Authority, without Hebrew translation, and such companies do not become subject to Israeli corporate governance requirements by virtue of the TASE listing. By January 2019 there were 55 dual-listed companies on the TASE. The list of qualified exchanges, long limited to the NYSE, NASDAQ and the London Stock Exchange Main Market, was extended in June 2018 to Hong Kong, Singapore and Toronto after a review by the ISA of foreign rules and oversight mechanisms.
Section 46B sat awkwardly against that arrangement, because a company admitted for its foreign listing might carry exactly the structure the section bars. In June 2017 the ISA approved a legislative proposal to amend the Securities Law to formally exempt dual-listed companies from Section 46B, and pending that amendment the ISA and the Israeli courts generally took a liberal approach in applying the rule to dual-listed companies. The practical effect is a two track market: a company listing in Tel Aviv on its own must have one class of voting shares, while a company arriving through the dual-listing door brings its home market structure with it.
What still bites when there are two classes
Israeli company law does not ignore share classes even where they exist. In a merger of a company with more than one class of shares, the transaction must be approved by each class of shareholders separately, and a scheme of arrangement or reorganisation under the Companies Law requires the approval of holders of at least 75 percent of the voting rights represented at the meeting. A class vote is a different instrument from a general vote: it gives the low-vote class a veto over the specific transaction rather than influence over the company, and it applies only where the corporate action is one the statute lists.
