On February 5, 2019, the Audit Committee approved the DAKMA engagement in addition to the loan agreement with the borrower, as well as the increase in the total amount of the loan that DAKMA will give to the borrower to ILS 26 million.
- On February 5, 2019, the Company published an immediate report entitled "Update to the Material Loan Agreement" (hereinafter: Immediate Report of February 5, 2019). The report opens with the words "In light of the borrower's failure to pay part of the loan principal and interest on time and in accordance with the terms of the loan agreement, the balance of the loan is approximately ILS 13 million". It was also reported that on February 4, 2019, Dekma entered into an addendum to the loan agreement, in which it was agreed to increase the balance of the original loan in the amount of approximately ILS 10.6 million and to add additional collateral. Additional data were also reported regarding current repayment dates, various options available to the company in the event of non-repayment of the loan, and an increase in the credit facility for DAMCA.
- In the administrative statement of claims, it was claimed that the immediate report of February 5, 2019 was the first time that the company noted that the borrower did not meet the terms of the loan. It was claimed that the borrower was in breach of the loan agreement as early as October 26, 2018, and at that time the company should have published an immediate report. Given that the loan was the only one given by the company at the time, its scope was significant in terms of its equity, and therefore it was a substantial loan from the company's point of view. The company also viewed the loan as material, and the fact that it reported the breach in the report dated February 5, 2019, and its subsequent conduct, indicates that in its view, too, the breach was a material event.
It was alleged that Lorenzi, the general manager of Dekma Capital, was responsible for its reporting and was knowledgeable about the loan and its breach, and that he acted with gross negligence by failing to submit an immediate report on the borrower's breach of the agreement in a timely manner. It was argued that Lorenzi's negligence on the factual level also indicates its existence as a mental element. It was argued that the company is liable for the aforementioned breaches by virtue of its duty under the Securities Law and the regulations enacted thereunder to submit immediate and periodic reports in accordance with the law, as well as by virtue of Lorenzi's actions and omissions.