The threshold set by the law, which requires the examination of defined types of documents, is a minimum, and is a statutory duty imposed on the company's organs towards the shareholders, but it is certainly not an upper threshold, beyond which the company is prohibited from providing information, when it is said that there are persons with a direct interest in the company's activities and business.
In my opinion, in the specific situation that exists here, when the investors, all the applicants except Dina herself, are foreign residents, and as may be recalled, they have been deprived of the position of power that they enjoyed, there is absolutely no good reason to deny them maximum and full transparency regarding the use of the funds and to allow them to review and understand where they are channeled and how the company operates on a day-to-day basis.
See also Derivative Claim 65307-12-18 Tzadikiewicz in Tax Appeal v.' Insure Engineering and Safety in Tax Appeals [Nevo] (4/1/2021); Civil Case (Haifa) 46827-11-11 Khazaneh v. Khazaneh [Nevo] (22/1/2012); Civil Case 3395-06-14 Sadeq N' Hurwitz [Nevo] (19/3/2018).
- Privilege Broader review by the shareholder may be found in the company's founding documents, since sometimes the shareholders agree at the time of the company's incorporation to grant each shareholder a broader right of review than that set forth in the Companies Law (See Goshen and Eckstein, supra, at p. 289; Danziger, supra, at p. 17, and compare Civil Appeals to the 6830/15 Anonymous vs. Anonymous, paragraph 30 [Nevo] (12/1/2016)).
- Another source of receipt of the accounts on which the plaintiff relies is the rulings regarding the "judgment for the provision of accounts". A claim for a judgment for the settlement of accounts was recognized in Israel even before the establishment of the state. The right to receive accounts is anchored in both law and equity law (see J' Sussman, Civil Procedure, 567, 7th edition (1995)). The right to receive accounts in defined relationships, such as between a sender and a sender, between a partner and his partner, and between an authorized person and a licensor has been recognized. From honesty, the right to accounts was recognized wherever there was a trust relationship, and accordingly the beneficiary's right to receive accounts from the trustee was recognized (see also Licht, Laws of Faith - Duty Trust in the Corporation and the General Law, 250 - 255 (2013)).
- The lawsuit for a judgment for the payment of accounts is conducted in two stages; In the first stage, the court examines whether there is a relationship between the parties that justifies the provision of accounts, and if it finds that such a relationship exists, the court moves on to the second stage to give instructions regarding the manner in which the accounts are prepared (see Civil Appeal 127/95 Fruit Production and Marketing Council v. Mehadrin Ltd., IsrSC 51(4) 337 (1997); Civil Appeal 8713/11 Sayeg v. A. Luzon Properties and Investments Ltd., paragraph 106 [Nevo] (20/8/2017)).
- In court rulings, it was noted more than once that in the first stage, the plaintiff was required to convince not only of the existence of a relationship that justifies the provision of accounts, but also of the existence of a right to receive the funds for which he is requesting accounts (see Civil Appeal 8713/11 Ibid., paragraph 106 [Nevo]; Civil Appeal 4724/90 A.S. A. Funds in Tax Appeal v. United Mizrahi Bank Ltd., P.D. 46(3) 570 (1992); Civil Appeal 5064/90 Sassi v. Arza Wineries T.R.Z. Ltd., P.D. What(2) 130 (1991)). The requirement to prove the two components in the framework of the first stage is inaccurate, since a distinction must be made between different claiMs. As clarified Other Municipality Requests 5444/95 Bnei Motarnot Association of the Galilee v. Archbishop Maximus Salome , P.D. 51(4) 811 (1997), there are situations in which the existence of a connection between the plaintiff and the defendant, such as a fiduciary relationship, is sufficient to justify the issuance of an order for the accounts, and that this right "[...] is not contingent upon proof of the right to sue in relation to those funds for which the accounts are requested." (ibid., p. 819; and see also Civil Appeal Authority 5685/17 Zilkha N' Calderon [Nevo] (6/9/2017); Civil Case 4515-09-18 Nabi'i 50' Grape, paragraph 10 [Nevo] (3/5/2024); A. Licht: "Returning old crowns, when does a claim for the payment of accounts not involve the right to claim money?" Point at the end of a sentence (8/11/2017)).
- It seems that the requirement to prove the existence of a prima facie right in relation to the funds in respect of which the order for the provision of accounts is requested should be limited mainly to commercial proceedings, in which the plaintiff for accounts is at a disadvantage of information and wishes to receive for his review documents to prove his claim, such as in claims between an agent and a supplier, between partners in a business project, and the like. On the other hand, in those cases where there is a trust relationship between the parties, the plaintiff may have a right to receive accounts even without proof of a prima facie right to the funds. It is sufficient that the plaintiff is a beneficiary, who wishes to monitor the trustee's actions, and seeks to ascertain whether the trustee is in breach of his duties in order to grant him a right to the accounts. Certainly, sometimes the accounts are not required to receive financial relief, but rather to receive declaratory remedies, to provide instructions for the restitution of assets, and more (see Civil Appeal 28/85 Development of Yehuda in a Tax Appeal vs. Estate of the Late Yehuda Ziss, P.D. w(1) 078 (1986); Civil Appeal Authority 9710/04 "Ora" Moshav for Cooperative Agricultural Settlement in Tax Appeal v. Belsky [Nevo] (11/1/2005)).
- Sometimes the accounts are required by the plaintiff to prove the defendant's improper conduct, such as to prove discrimination, as in the lawsuit before us, without this being accompanied by a demand to receive funds. Even in such situations, the court may order the payment of accounts, even if no right to the funds has been proven, and it is sufficient for the court to be convinced that there is a relationship that justifies the right to receive the accounts, and that there is some evidentiary basis for its claims regarding the defect in the defendant's conduct.
- In order for a shareholder to be able to establish his right to the accounts, beyond the scope of the rights to review granted to him under the Companies Law, while relying on the rulings regarding judgments for the provision of accounts, he must be convinced of the existence of a relationship that justifies the provision of the accounts, since it is not enough that he is a shareholder. As stated, the right to receive accounts that are not in accordance with the rights set forth in the Companies Law is contingent on proof of a relationship that justifies the right to receive the accounts, such as proof of a trust relationship.
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