Brother-in-law took over the inheritance: family dispute at defense equipment company Silynxcom

Family struggles between shareholders at the defense equipment company Silynxcom: the two older siblings from the founding family — Nir, Ran, and Smadar — are suing their younger sister, Gal Nir, and her husband, the controlling shareholder (41.5%) and CEO of Silynxcom, Nir Klein, for approximately 17 million shekels, claiming they acted behind their backs to almost completely disinherit them from their share of the parents' will — shares in the parent company Silynx. This emerges from a lawsuit filed last week at the Central District Court in Lod.

Silynxcom develops and sells tactical in-ear headsets and other communication accessories to armies and defense entities, and it is traded on the New York Stock Exchange at a valuation of 6.5 million dollars, after going public in October 2023. The company reports that it sells its equipment to defense entities in about 40 countries around the world.

According to the statement of claim, the company was initially founded under the name SOS by the couple Adi and Ruth Nir. In 2005, it changed its name to Silynx and was registered in the USA. In 2008, Silynx raised funds from the investment fund Shamrock in exchange for 70% of its shares, while 30% remained with the Nir couple. Later, the CEO of Silynx and current controlling shareholder, Nir Klein, husband of the younger sister Gal Nir-Klein, purchased the Shamrock shares for a sum of only 250 thousand dollars. The 30% that remained with the Nir parents later passed as an inheritance to their three children in equal parts.

According to the lawsuit, on the eve of the IPO, the holding of the parents' estate in the company was diluted to 6%, while the share of their brother-in-law grew to 87%. For example, the older brother, Ran Nir, claims that the rights he inherited from his parents were converted by his brother-in-law without his consent, leading to his shares in the parent company being diluted from 24.5% to 1.47% in Silynxcom shares.

"The plaintiffs discovered that in July 2017, the sister Gal purported to sign on behalf of the mother of the family documents titled 'Change of Control' in the company Silynx, in order to transfer control to her husband, Nir Klein," it is claimed in the lawsuit. The plaintiffs add that the defendants acted contrary to the status quo agreement.

In response to correspondence on the subject, Nir Klein claimed that he paid in 2017 for the shares that increased his share, including injecting funds into the bank to ensure the repayment of Silynx's debts and waiving a salary of about 2.2 million shekels.

Note that the lawsuit was filed at the Central District Court in Lod after the Family Court in Petah Tikva dismissed a similar lawsuit due to lack of subject-matter jurisdiction. Judge Shirley Shai wrote that the conflict is primarily business-corporate, and the connection between the lawsuit and the family conflict is weak.