In other words, the imposition of liability is contingent on the existence of a relationship of trust (i), a breach of the fiduciary duty (ii), a conscious participation in the breach (iii) and the consequent cause of damage (iv) (see also: In re Elec. Last MILE Sols., Inc. S'holder Litig., 2024 WL 223195, * 5 (Del. Ch. January 22, 2024); Jason W. Rigby, Financial Advisor Aiding and Abetting of a Breach of a Fiduciary Duty Post Rural Metro: Clarifying Knowing Participation, 41 Del. J. Corp. L. 545, 550 (2017); Columbia Pipeline case, at p. 451; Tuch, on page 199; Eckstein and Shapira, on page 496).
- In this context, it will be said that the element of guilt, which is included in the third element mentioned in the words of Vice-Chancellor Glasscock, is also very broad, so that the intervening foreigner may bear responsibility even when all his sin is limited to the fact that he did not prevent the violation committed by the trustee (Tuch, at p. 199). Similarly, it should be noted that, as noted, the list of factors exposed to the imposition of liability has expanded in recent years, and thus extends from controlling shareholders (perceived in Delaware as fiduciaries themselves) who exert improper influence on an officer, financial advisors, investment banks, and lawyers with whom the company is assisted, to the opposite side of a merger transaction (Columbia Pipeline, at p. 471; see also: Brinkley Rowe, See No Fiduciary, Hear No Fiduciary: A Lawyer's Knowledge within Aiding and Abetting Fiduciary Breach Claims, 85 Fordham L. 1389 (2016); Maren B. Worley, Holding Investment Bankers Liable for Aiding and Abetting Corporate Directors: The under-Deterrent, 32 Byu J. Pub. L. 151 (2017)).
It should be noted that this latest expansion was also marked with warning lights within Delaware itself, out of concern that it would increase the costs of a merger transaction and, as a result, harm the control market (see: Morgan v. Cash, 2010 WL 2803746, *27 (Del. Ch. July 16, 2010) (hereinafter: the Morgan case); see also: Amir Licht, "The Buyer Be Beware – Liability of a Party Involved in a Breach of Duty of Trust in a Merger Transaction", point at the end of sentence (December 3, 2023); On the importance of the control market, see, for example: Frank H. Easterbrook & Daniel R. Fischel, The Proper Role of a Target's Management in Responding to a Tender Offer, 94 Harv. L. Rev. 1161 (1981)).
- Moreover, the main violation also has many facets. Thus, just for the sake of example, this doctrine can be applied, for example, when the officers conducted a defective proceeding for the sale of the company (as was the case in the RBC judgment), a proceeding tainted by a conflict of interest, when relevant information was not disclosed to the shareholders (as was the case in the Columbia Pipeline case) – and in any other form of breach of fiduciary duty, as aforesaid, even when it is consequential and even consolidates with the duty of care.
In this context, it should also be said that there are many and varied possibilities regarding the identity of the main infringer. Thus, for example, even a party that was involved in a breach of fiduciary duty by a controlling shareholder, who, as stated, has a fiduciary duty in Delaware, may be liable (see, for example, the Columbia Pipeline case, at p. 471, supra note 33, and the many references therein).
- It is worth emphasizing that when we are dealing with the imposition of liability for involvement in a breach of a director's fiduciary, as a rule, no special complexity arises with respect to the first two elements, which deal with the existence and breach of a fiduciary duty. Thus, the analysis is based on Delaware's developed laws regarding the liability of directors, which view the fiduciary duty imposed on them as an axiom (Columbia Pipeline case, at pp. 451-452 and 460).
- The third element, which we are dealing with with knowing participation, is the central element of this cause, and it includes within it – awareness of the violation and guilty involvement in it (Columbia Pipeline case, at p. 470; Gatz v. Ponsoldt, 925 A.2d 1265, 1276 (Del. 2007)). In the matter of awareness, it is an actual knowledge or force, so that the plaintiff must show that the intervening alien knew or should have known about the infringement, and that he intended to be involved in it or that he was reckless in relation to it (RBC case, at p. 862; Columbia Pipeline case, at p. 471). The degree of guilt is also multifaceted, and in essence it is a party that concocted a conspiracy with the officer, seduced him or caused him to make the relevant decision, or when he otherwise took advantage of the violation (ibid., at pp. 471-472 and 477; Malpiede v. Townson, 780 A.2d 1075, 1099 (Del.2001) (hereinafter: the Malpiede case)).
- To complete the picture, it should be said that the fourth element requires proof of damage, as well as a causal connection between the damage and the main breach committed by the trustee, and even in this context, the doctrine of aiding & abetting does not bear unique characteristics that deviate from the general law (see, for example, the Malpiede case, at p. 1097; the Columbia Pipeline case, at p. 489).
After this brief review, we will turn here to the provisions of Israeli law in this context.