At the same time, the panelists were of the opinion that it should be examined whether this signal is sufficient in order to establish a reporting obligation, and noted that this is a complex question that may arise in a range of cases, and it must be examined very carefully. We also noted that when the consequences of an ongoing event are uncertain, the question of the extent of the impact of the concrete event on society becomes extremely difficult and complex.
The conclusion of the two panelists was that "given the totality of the specific circumstances of the case before us, the aforesaid signal was not sufficient to establish a reporting obligation." The panelists based their determination on a series of reasons. First, Lorenzi acted in order to deal with the breach of the loan agreement quickly, quickly and relatively efficiently. It was determined that the borrower was in breach of the loan agreement from October 2018, and shortly thereafter, negotiations were conducted with him with the aim of correcting the violation. Following these negotiations, a new agreement was reached, which includes, inter alia, additional collateral and an agreement on entitlement to agreed compensation and arrears interest. The second reason is their position that the type of business in which the company is engaged and their nature should be taken into account. In our case, we are dealing with loans that carry a considerable risk of delay in payments. These loans are usually given to borrowers who cannot obtain credit in the banking system, high interest rates are set and collateral of a significant value is given to guarantee their repayment. According to the opinion of the two members of the panel, it appears that the risk of delay in loan payments exists to a considerable extent in the company's regular business and was taken into account in advance in formulating the terms of the loans. Accordingly, the original loan was backed up by collateral of a high value, which would certainly have been significantly higher even in a scenario of realization. According to the panelists, this as well can significantly reduce the risk to which the company would have been exposed as a result of the violation. Some indication of the immateriality of the information was seen by the two panelists in that when the information about the borrower's non-compliance with his payments was revealed, it did not lead to a significant decrease in the value of the share. Finally, the two members of the panel were of the opinion that evidence supported, to a certain extent, in their conclusion that after the immediate report in which it was reported that the borrower had not met his payments, the Israel Securities Authority granted the company a permit to publish a prospectus without demanding that corrections be made.
- Kastiel and Dekel-Shafrir held that: "In view of the accumulation of reasons detailed above, we are of the opinion that the ISA did not meet the burden of proving that the information regarding the breach of the loan agreement, at the relevant times, amounts to material information that is required to be reported to the capital market".
Against these determinations of the Economic Enforcement Committee, the Authority's petition was filed.