Decision - The Plaintiff's Right to Accounts
- As stated, the plaintiff is a shareholder in the companies and petitions to receive accounts. We interpreted above the legal framework regarding the right of a shareholder to review the accounts, and emphasized that In a small private company, which operates as a kind of partnership, the right to inspect should be interpreted in detail while giving weight to the special relationship between the shareholders.
- The plaintiff bases her arguments in Greenberg on a preliminary infrastructure that, according to her, is sufficient to point to the company's conduct in a manner that deprives it of its rights. This reliance should not be adopted, since the claims of discrimination have not yet been discussed. On the contrary, the procedural agreement was that the request for the provision of accounts would first be decided and that only after reviewing the accounts, would the plaintiff be able to consider filing a claim for remedies to remove the alleged discrimination. Therefore, we should not assume that the discrimination has already been proven.
- This is not enough to close the door on the plaintiff's claim, since from the undisputed facts and the documents that have already been presented, it is possible to understand the existence of the suspicion of discriminatory conduct. We have seen that there is no dispute that the company took loans in favor of Greenberg or companies under his control. We also saw that it was claimed that the loan repayments were being paid Back to BackIn other words, Greenberg transfers what is needed to the company in order to pay the loan repayment. We also saw that there are allegedly properties for which the rent is collected by a company connected to Greenberg. These facts should be before our eyes when examining the plaintiff's request for accounts. We will examine the requests in order.
- Most of the documents that the plaintiff wishes to review as detailed in paragraph 44 above are not included in the list of detailed documents Section 184 to the Companies Law, i.e. Documents in which the shareholder's right to review is not conditional on any condition. The only documents included in the list in section 184 The plaintiff wishes to review are the company's financial statements and the minutes of the general meeting.
- Prima facie, there is no dispute that the plaintiff is entitled to review these documents, and according to the claim, they were also delivered to her. The remaining dispute regarding these documents is regarding the period. It seems that the law is with the plaintiff regarding the relevant period. The plaintiff should not be prevented from reviewing the documents to which she is entitled in relation to the period prior to the deceased's death. The plaintiff, as the person who inherited the rights of the deceased in the shares, also inherited any right accompanying the right of ownership of the shares, including the right to inspect the documents. Therefore, The plaintiff is entitled to receive for its review all of the company's financial statements and all the minutes of the general meeting as of July 2016.
- The rest of the documents that the plaintiff wishes to review are not included in the Article 184 to the Companies Law, and therefore the discussion focuses on the arguments regarding the right to review the permanent Section 185 to the Companies Law.
Right to inspect documents according to Article 185 The Membership Law is conditional on two conditions; The first is to specify the purpose of the demand; The second - The document is included in the scope of the cases listed in subsection(a)(1) or (a)(2). Even if the shareholder meets these conditions, the company has the option of qualifying the review in one of three situations; The application was filed in bad faith, the documents include a trade secret or a patent, or the examination will otherwise harm the company (see Opening Stimulus 3816-05-08 Ilan N' Ilan [Nevo] (25/7/2010)). And dove. The burden of persuading that the conditions of the qualification for review have been met rests with the company (ibid., at paragraph 15).
- In completing the argument, the plaintiff emphasized the right to review according to the rulings of the judgment for the provision of accounts and did not elaborate on the purpose of the review, but it appears from her arguments that the purpose of the review is "In order to track the company's status" (Chapter 9 of the summaries in the Greenberg Properties lawsuit), and in order to clarify the issue of the repayment of the loans taken by the company for Greenberg's needs (ibid., for the summaries). In the demand letter dated November 9, 2023, the plaintiff clarified that the documents were needed in order to clarify the transactions with "the company's stakeholders".
- These purposes are proper purposes that ostensibly justify the right to inspect documents. This is a small company, and it is clear that Greenberg managed and manages the company for many years. The alleged use of his power as a manager, in order to enter into a loan with the bank on behalf of the company and to finance his or related companies' private activities, justifies an examination of the company's documents. Even if Greenberg claims that he makes sure to return any payment to the company, There is no doubt that the use of the company as a "conduit" for taking private loans raises concerns about activity that deprives the plaintiff or harms the company, and therefore this is a worthy target for the plaintiff's request for review. We have also seen that the rent is transferred to a company connected to Greenberg and not directly to the company, and that clarifying this issue is also a worthy purpose for consideration.
- Once I have found that the purpose of the examination is a proper purpose, it is necessary to examine whether the requested documents are included in the provisions Sections 185(a)(1) or 185(a)(2) to the Companies Law. Section 185(a)(1) Dealing with the examination of documents relating to transactions that require the approval of the General Meeting under sections 255 and 268 Up to 275 to the Companies Law. These include transactions with interested parties or transactions with another person of special interest (section 270). Article 255 Dealing with the approval of the actions of an officer, including an action"that there is a conflict of interest between fulfilling his role in the company and fulfilling another role of his or her personal affairs".
- There is no dispute that taking a loan by the company for Greenberg's personal needs or of companies related to him is included in the list of actions that require approval according to Article 255 of the Companies Law, and in the list of transactions with interested parties in the company as detailed in Chapter 5 of the Law. The same applies to the assignment of the right to rent to a company related to Greenberg. Therefore, it is clear that the plaintiff has the right to examine those documents relevant to the follow-up of these transactions and actions. And dove. It is also claimed that Greenberg employs family members, and that such employment is included in the scope of actions that require the approval of the company and justify granting the shareholder the right of review.
- In light of the aforesaid, the plaintiff is entitled, by virtue of the provisions of the Companies Law, see the following documents detailed in paragraph 44 Above: (a) Bank statements of the Company's accounts; (b) Lease agreements; (d) The management agreements; (f) The financial statements; (g) Engagement with the interested parties; (h) Minutes of the shareholders' meeting.
The plaintiff is not entitled to review the accounts to which the rent was flowed (document (c)), the accounting card (document (e)), the minutes of the company's board of directors, the insurance policy (document (i)) and the details of the work carried out in the commercial center in 2020 (document (j)). The documents that the plaintiff is entitled to review will be For a period beginning 7 years before the filing of the claim.
- The company wishes to restrict the right to inspect on the grounds that it is a bad faith request. This argument is unacceptable, since it was not clarified why the request for review was filed in bad faith. There is also no claim that these are trade secrets of the company or that granting the right of access will harm the company in any way.
- The plaintiff asks to rely on its right to review the other documents on the relationship of trust between it and Greenberg that justifies an order for the provision of accounts in accordance with the rulings relating to a judgment for the provision of accounts.
There is no dispute that there is a special relationship between the plaintiff and Greenberg as shareholders in a small private company that operates as a "kind of partnership". However, this relationship is not sufficient to justify granting the right to inspect the additional documents detailed above. The relationship between the parties does not establish the plaintiff the right to inspect the accounts of Greenberg or of companies related to him, nor does it justify the right to inspect the accounting of the management company or the other documents whose perusal was not permitted under the directive of the Article 185 to the Companies Law. In light of this conclusion, there is no need to elaborate on the question of the scope of Greenberg's fiduciary duty towards the plaintiff, and as a result of this his duty to provide additional documents for her review.
- I will note that I did not find it appropriate to examine a director's right to inspect company documents, and the relationship between it and the conditions necessary for the purpose of granting a remedy of providing accounts, For the simple reason that the lawsuit against Greenberg Properties was not filed by director, except by the shareholder. The fact that the plaintiff's daughter serves as a director of the company does not mean that the claim before me, which was filed by the plaintiff alone, should also be examined According to the rules relating to a director's right to inspect the company's documents, or the question of whether an officer may file a claim for the provision of accounts.
However, I would like to emphasize that this decision does not negate the right of the director to demand that the documents be reviewed in accordance with the rights and conditions set forth Section 265 to the Companies Law. To the extent that the director wishes to review the additional documents, it is expected that the company will allow the review in accordance with the law and will refrain from limiting the unlawful review.
- In the lawsuit for review of the documents of Kedem Be'erot, the plaintiff also claims that there is concern that the company is conducting itself in a manner that deprives it of its rights as a minority shareholder. However, the documents she submitted do not have any preliminary evidentiary basis in this matter.
- The plaintiff emphasizes that the investment agreement stipulates that in exchange for the loan that the deceased will provide to Har Yarok, Kedem Be'erot and Greenberg, he will receive 10% of the profits of Kedem Be'erot and 10% of the land they will purchase in the Ben Gamliel complex. Therefore, the plaintiff petitions to receive all the documents related to the transaction for the sale of the land. The plaintiff further claims that Kedem Be'erot refrained from providing her with information and documents relating to the project for the construction of the celebration hall in Be'erot Yitzhak and its income from renting the hall for events. Therefore, it is requested to review the documents that will enable it to obtain full information regarding Kedem Be'erot's activities.
- Most of the requested documents are not included in the list of documents to which the plaintiff is entitled to review as a shareholder, in accordance with Article 184 to the Companies Law.
The plaintiff's application also does not meet the conditions as required by section 185 of the Companies Law. The purpose of the requirement for review is not defined. This is ostensibly a "fishing expedition" and not a request for review for a proper purpose. Moreover, the plaintiff's requests to review the documents of the sale of the land in Ben Gamliel were ostensibly intended to clarify whether the defendants had fulfilled their obligation in the investment agreement, according to which the deceased would be entitled to 10% of the land. However, we saw that in the allocation agreement, Appendix 3 to the plaintiff's summaries, it was explicitly stated that the land had already been sold and that "Har Yarok and High Lift Made in Israel, in a tax appeal, exercised in November 2015 the full rights in the property known as Block 707, part 7 of 2 Ben Gamliel Street, Tel Aviv."