On the question of whether you have made a transaction BTB Mizrahi formulates a "disguised pledge" - According to Bank Mizrahi, the case law is that a bank is not required to register that it will work on deposits that are managed by it in order to be considered as encumbered to secure any debt of the customer to the bank; In this regard, it does not matter whether it is a direct debt of the customer, or a debt that originates from the customer's guarantee. According to the claim, in view of the nature of the relationship between a bank and a customer, a constructive knowledge should be attributed to the public that every deposit held in the bank guarantees the customer's debts to the bank first of all - Whatever the source of the debt; And that if the banks were required to record a lien on every financial deposit in each account, it would be a burden and burden that could not be met.
Discussion and Decision
- I will preface by saying that I have not found any basis in law to determine that back-to-back transactions or engineering transactions can be canceled by the special manager, or that they are void because they are an invalid contract or because of the failure to register a disguised pledge, and therefore I will recommend to my colleagues that we reject the three appeals against the decisions of the District Court. I will elaborate.
Approval of Transactions with Stakeholders
- The Normative Framework
- Companies Law establishes a detailed mechanism for approving stakeholder transactions, designed to address the difficulty inherent in such transactions - Commonly known as the "representative problem" (The Agency Problem). The classic representative theory deals with problems that may arise where there is a gap between the interests of the decision makers in the company and the interests of those who are affected by the outcome of the decisions, and this refers mainly to conflicts of interest and information gaps that exist between the owners of the company and its officers, or between the majority shareholders and the minority shareholders. The underlying assumption of the theory is that the "representative" will prefer the promotion of his personal interest over that of the shareholders and will act opportunistically (Zohar Goshen "'The Agent Problem' As a Unifying Theory of Corporate Law" A memorial book for Gualtiero Procaccia - Sentence Essays 239 (5757); Irit Habib-Corporate Law Faculty 379-380 (2007), hereinafter: Habib-Segal; Ali Bukshpan and Ayalon Yadin "Family & Business - The Company As a personality who spoke about the encounter between corporate law and family companies." Law 48 127, 142-144 (2019)).
As noted at the beginning of the judgment, the legislature has created a series of procedural and substantive tools designed to reduce the concern of the representative problem that arises in transactions of interested parties. On the level of essence - Stakeholder transactions are subject to fiduciary and prudential duties imposed on officers, and to duties of good faith and fairness imposed on controlling shareholders. On the procedural level - Companies Law Establishes a mechanism for approving transactions of interested parties by various organs in the company, with the goal that the company's consent to the transaction be given by an organ free of conflict of interest and on the basis of full disclosure (Sections 275-270 to the Companies Law; Criminal Appeal 3891/04 Arad Investments and Industrial Development on Appeal Taxes State of Israel v., P.D. 60(1) 294, 331 (2006), hereinafter: The Arad Matter; Civil Appeal 2718/09 "Gadish" Compensation Funds on Appeal Taxes v. Elsint Ltd., [Published in Nevo] paragraph 31 (May 28, 2012); Joseph Gross Directors and Officers in the Era Corporate Governance, pp. 477-478 (5th edition, 2018), below: Gross - Directors & Officers; Amir Licht The Laws of Faith - The Duty of Trust in the Corporation and the General Law, at p. 377 (2013)).