The law distinguishes between transactions involving a personal interest of Officer and between transactions involving a personal interest of The controlling shareholder in the company, and establishes various mechanisms for approving these and other transactions. In general, it can be said that an unusual transaction of a company with an officer of it, or with another person in which the officer has a personal interest, must be brought to the approval of the audit committee as well as the approval of the board of directors; and a transaction with the controlling shareholder of the company requires "triple approval" (by the audit committee, the board of directors, and the general meeting), while a special majority of the general meeting is required in a way that gives the minority shareholders the power to block moves that do not serve the best interests of the company. This is the place to clarify that in this case it was alleged that Mordechai Yona and Boaz Yona had a personal interest in the back-to-back transactions and in the engineering transaction As Officers in the guarantor companies, and not as controlling shareholders in them. In any event, the distinction between the types of transactions and the scope and quality of the approvals required for them reflects an approach Proportionality of the law:
"This [the Companies Law] sought to create a proportionate arrangement that adjusts the costs of the approval proceedings to the risk of harm to the company's stakeholders' transaction, and/or to the minority shareholders. The more severe the risk of harm to the company and/or the shareholders, the more onerous the approval process is required by law, and vice versa. Accordingly, the law distinguished between exceptional transactions and non-exceptional transactions; between material and non-material actions; between transactions to determine the terms of employment of the organ in the company and transactions with other interested parties; between direct transactions between the company and its organ and transactions with third parties in which the company has a personal interest; and between public companies and private companies." (Habib-Segal, p. 565).
- It should be clarified that Companies Law Isn't Rule out the possibility That you dealt Stakeholders Be Desirable And even Worthwhile For the Company. Therefore, the arrangement set out in the law focuses on the procedure that the company must take before executing the transaction, and is intended to ensure that it is examined and approved by an independent body that is not affected by the conflict of interest. Procedural fairness is therefore intended to neutralize, as much as possible, the fear of a conflict of interest, which may harm the interest of the company or the shareholders; Alongside the procedural requirement, the law requires the independent organ to refrain from approving a transaction that is not "For the benefit of the company".
As part of Amendment No. 22 to the Law The Friendship There has been a change in the wording of the requirement that interested party transactions be for the benefit of the company: until the amendment in 2013, a stakeholder transaction was contingent on the fact that it was "Does not harm the good of society", and since the amendment the condition is that the transaction is "For the benefit of the company". Ostensibly, after the amendment, the standard is more stringent (positive and no longer negative); However, there are those who believe that this is only a "clarifying" amendment, since in view of the purpose of the company and the duty of fiduciary duty that applies to officers of the company, in any case it was not possible to approve transactions that were not in the best interest of the company (see: Ido Lachovsky "On the Duty of Loyalty, Transactions Officers and the Benefit of the Society" Duties of Trust in Israeli Law 89, at p. 95 (2016), below: Lachovsky - חובת אמונים; See also: Proposed Law for the Promotion of Competition and Reduction of Concentration, 5772-2012, Government Bill 706 (July 9, 2012), at p. 1108).
- Section 280(a) Completes the mechanism for approving interested party transactions established by the legislature, and instructs that an interested party transaction that has not been duly approved will be Invalid To the Company and to the interested party (the officer or controlling shareholder):
A transaction of a company with an officer thereof or a transaction as stated in section 270(4) and (4a) with a controlling shareholder thereof shall not be valid against the company and against the officer or controlling shareholder, if the transaction was not approved in accordance with the provisions of this chapter, including if there was a material defect in the approval process, or if the transaction was made in a material deviation from the approval.