Transaction BTB Discount: Another "back-to-back" loan. This time, it was Discount Bank that provided a loan of ILS 20 million to Boaz Yona personally, and Boaz Yona transferred the funds to Heftziba Investments. These funds were also deposited by Heftziba Investments in a closed financial deposit - which was pledged by it in favor of the bank as collateral for a loan given to Boaz Yona. In this context as well, Hefziba Investments' guarantee for the repayment of the loan was a condition for making the loan available in favor of Boaz Yona.
Engineering Deal: The third transaction is a transaction in which a third company in the group, Heftzibah Engineering and Construction (2006) inTax Appeal (Hereinafter: Heftzibah Engineering) Guarantees in favor of Mizrahi Bank - which are intended to ensure the financial activity of Hefziba Shikun and Hefziba Investments in the Bank. It should be clarified that there is no direct connection between this transaction and the aforementioned back-to-back transactions.
It should be noted at this point that the three companies (Hefziba Shikun, Hefziba Investments, and Hefziba Engineering) are private companies that were wholly owned by Mordechai Yona and his wife Hefziba Yona, while Mordechai Yona also served as chairman of the board of directors of all the companies (At Heftziba Engineering, Mordechai Yona was the sole director).
- The District Court discussed the validity of each of the transactions in a separate decision, for which a separate appeal was even filed, but the hearing of the three appeals was conducted before us in a unified manner. The main argument held by the Special Director is that the provision of each of the guarantees constitutes a "stakeholder transaction", to which provisions apply The Chapter The Fifth To Part 6 2Companies Law, which establish a special procedure for approving the transaction and require that it be "in the best interest of the company" (and when relevant, "does not harm the company's interest"). According to the claim, the transactions do not meet the conditions of these provisions, and therefore the guarantees can be canceled vis-à-vis the banks. In addition, with respect to the two transactions that were made with Bank Mizrahi, it was claimed by the Special Manager that the legal structure created in the guarantee documents formulates Disguised pledge, which on the one hand was intended to give the bank priority in competition with creditors, but on the other hand was not registered in the Companies Register - Therefore, the guarantees are void vis-à-vis the creditors of the guarantor companies. Regarding the back-to-back transactions, the Special Manager further claims that their entire purpose was to inflate and distort Hefzibah Investments' financial statements; and that this is a contractual obligation that contradicts public policy and is null and void as aforesaid In Sections 30 and31 30The Contracts Law (General Part), 5733-1973 (hereinafter: The Contracts Law).
A Brief Normative Introduction - Stakeholder Transactions
- It is appropriate to preface and briefly lay down the normative basis relevant to our case for the discussion of interested parties' transactions, in order to facilitate familiarity with the arguments of the parties and the rulings of the District Court.
The focus of the proceedings is Section 270 Law The Friendship, which is intended to deal with a typical stakeholder transaction in which the company engages with its officer, in such a way that in practice it is the officer who stands on both sides of the barricade of the transaction (self dealing). The Fear In this state of affairs is that "Whoever is in charge of making decisions in the company will take advantage of his power and position in order to derive benefits for himself or his associates at the expense of the company and its shareholders." (Moti Yamin and Amir Wasserman Corporations & Securities 607 (2006)). As a rule, in order to Protect The company and the בעלי The shares due to the "representative problem" that arises when the company conducts a stakeholder transaction, were determined inCompanies Law Procedural and substantive provisions designed to reduce the fear of abuse and ensure that the terms of employment are fair.