"It emerges from the wording of the regulations that there was no legal quorum in the general assemblies that were convened. As stated above, the convening of the General Assembly was invalid, and in any case there is no need to discuss the question of what is the status of the decisions made therein... There is no basis for the opinion that it is possible to legitimize a general meeting, in which there is no legal quorum and in which some of the shareholders are absent, only because of the claim that there are disputes between the shareholders; When a company's regulations stipulate that the company's activities can only be carried out by a certain number of managers who act together, the action of a manager acting alone is invalid, contrary to what is stated in the regulations. And if the regulations establish a legal quorum for the company's meetings, there is no validity to the decisions that fall in the gathering of only some of the shareholders, which does not amount to a legal quorum... Formal flaws, as described above, go to the root of the matter and are capable of depriving the validity of the decision made by some of the decision-making powers, without the need to discuss the additional question at all, whether those who purported to act within the powers of all the directors had the best interests of the company as a whole or only some of its shareholders in mind."
Thus, from the Supreme Court's judgment in the Kut It appears that when the decision is made by an institution of the company without the presence of a legal minyan as required by law or in accordance with the company's articles of association, the decision made is not only "defective", but it is Invalid.
- According to the plaintiff, we should not learn from a judgment in our case Kut, since it was given before the entry into force of the Companies Law, and in any case before the entry into force of the Article 109 to the law. However, the Supreme Court's ruling regarding the invalidity of decisions made without the required legal quorum is not based on A provision of one law or another, and it seems to reflect a basic perception according to which when the decision was made, the decision was not made at all by the competent body. Given this, it is doubtful that Section 109(a) The Companies Law applies in relation to a defect that is expressed in the fact that the quorum requirement is not met. There is no need to decide this question in our case, and it is sufficient that we focus on a situation in which not only was the quorum requirement not met as a condition for the opening of the meeting, but the decision also did not receive the support of the majority of the members of the board of directors at any stage (even retroactively). In such a situation, it is not only a "flaw" in the convening of the meeting, but a situation in which no meeting was held at all and no decision was made by the competent body. This is, in fact, a similar claim According to the claim that "nothing has been done" (Non est factum) which is recognized in the field of contract law. Therefore, when the legal quorum requirement to open a meeting of the Board of Directors was not met, and even later on the consent of the members who were not present at the meeting was given in a manner that led to the majority of the members of the Board of Directors expressing support for the decision, then the "decision" that was supposedly made at that meeting is not only flawed, but invalid in the first place.
- This view of the nature of the defect also has implications for the question of who is entitled to raise the claim. Indeed, as a rule, the defendant has no standing to raise claims regarding the correctness of the proceeding in which the company's decision to file a lawsuit against him was made. However, things are different when it comes to a claim that relates to the question of whether a decision was made by the body authorized to file the lawsuit. In this regard, the words of the Supreme Court and other municipal requests are appropriate 207/74 THE RUSSIAN ECCLESIASTICAL MISSION IN JERUSALEM State of Israel v., IsrSC 29(1) 836 (1975). In the same matter, a lawsuit was filed by an entity that presented itself as the "Russian Church Mission in Jerusalem," and the defendants sought to dismiss the lawsuit out of hand, claiming that it was not a legal entity that had been lawfully incorporated. The Supreme Court upheld the District Court's decision to instruct the plaintiff to provide additional details regarding the manner in which she was incorporated. In this context, the Supreme Court held as follows (pp. 839-840; emphasis added):
"A condition for the proper conduct of a legal proceeding is that the two litigants in whose disputes the court is required to rule will stand against each other. Where you do not have a plaintiff, you do not have a claim, and where you do not have a claim, the court is not entitled to rule, and if it does, no court action arises. Therefore, the court must stop a proceeding and even cancel it, if it finds that there is no plaintiff or defendant before it, such as that a group of people who sued or is sued lacks a legal entity and therefore the law does not recognize its existence... Similarly, if there is a litigant who is unable to act, whether he is a minor who is not entitled to sue except through his guardian or close friend, or if he is a corporation that has no managers..... The same is true if the corporation exists and even has management, but it did not allow the filing of the claim on behalf of the corporation..."