Was the plaintiff's lawful decision to file the lawsuit?
- Point The conclusion is that, as a rule, the authority in the company to make a decision on filing a lawsuit of significant weight, which is not part of the company's day-to-day management, is the company's board of directors (Civil Case (Tel Aviv Economic) 43013-03-17 Hassin v. Luband, paragraph 32 [Nevo] (19.6.2018); Zohar Goshen and Assaf Eckstein Corporate Law 463-462 (2023)). In our case, too, the plaintiff does not dispute that the authority to order the filing of the claim was vested in her board of directors. For the purpose of the discussion, and although this question is not devoid of doubts, I will assume that the meeting of the Board of Directors on November 17, 2024 was lawfully summoned. Even under this assumption, there is a substantial difficulty in the way the decision was made, stemming from the fact that the quorum required for the opening of the meeting was not convened.
- Article 104 The Companies Law states that"The legal quorum for the opening of a meeting of the board of directors shall be a majority of the members of the board of directors, unless otherwise stipulated in the articles of association." In our case, the bylaws of Kibbutz Buchritz (P/1) do not refer to the quorum required for the meeting of the board of directors. In any case, the default default applies In section 104 to the Companies Law, according to which the quorum required to open a meeting is a majority of the members of the board of directors.
0 The board of directors of Kibbutz Buchritz consists of two members - Yosef and Shalom. Only Yosef was present at the meeting, and in any case most of the members of the board of directors were not present at the beginning of the meeting (or during it), and the legal quorum required for the opening of the meeting was not formulated. Even if we assume that Shalom was lawfully summoned to the meeting and chose not to appear, this does not raise or lower the issue of the quorum demand. The necessary conclusion, therefore, is that the required conditions were not met In section 104 to the Companies Law. It is not superfluous to add in this context that the plaintiff's response to the motion for dismissal indicates that she does not dispute this (see paragraph 13 of the response).
- Moreover, the presentation of the question in our case as focused on the query requirement may miss the main problem inherent in the fact that the claim was filed solely according to Yosef's decision. Yosef is one of two directors in the company, and the one who owns half (and in fact slightly less) of the company's shares. Although Yosef Shalom claims that he did not object to filing the lawsuit, there is also no claim that he agreed to it. In other words, even according to Yosef, the decision to file the lawsuit does not enjoy the support of the majority of the board members or the majority of the shareholders. It is not clear by virtue of what Yosef believes that he is entitled to make a decision on his own in a matter that is so essential to society (cf. Opening Stimulus (Tel Aviv District) 1863/91 Rudov v. Hadar (1993)).
At this point, it should be added that the question of whether it is correct, as far as Kibbutz Bucheritz is concerned, to file the current lawsuit is not simple. In addition to the "usual" considerations that such a question involves - the chances of the lawsuit, the costs of managing it, etc. - in the present case it seems that a strategic decision is necessary regarding the legal position that the company should adopt. The 2015 agreement grants Kibbutz Buchritz the consideration specified in the agreement - reimbursement of expenses and three or six apartments (although it should be assumed that according to the Tshuva Group, Kibbutz Buchritz breached the agreement and is not necessarily entitled to the consideration stated in it). According to the line of argument in the current lawsuit, the 2015 agreement did not even constitute a binding contract. Kibbutz Buchritz therefore faces a strategic question - whether it is right for it to demand its rights by virtue of the 2008 agreement or by virtue of the 2015 agreement. Such a decision must be made by the competent authority in the plaintiff, and certainly a situation in which the decision is made at a meeting of the board of directors in which the legal quorum required by law was not present, and when there is not even a claim that the decision received the support of the majority of the board members or the majority of the shareholders - it is unacceptable. This is all the more true in light of the fact that this is a company whose shareholders and directors are in a sharp dispute.