In addition, it was determined In the section 281, that an interested party transaction that has not been duly approved can be canceled by the Company against a third party ("Another Person") - If "That person knew about the personal interest of the officer in the company in approving the transaction or about the personal interest of the controlling shareholder in the public company or in the private company that is a bond company in the approval of the transaction, and knew or should have known about the lack of approval for the transaction as required by this chapter". On this section, the Special Director bases his main argument that back-to-back transactions can be canceled.
- The issues that need to be decided in this case
- According to the Special Manager's version, each of the three transactions at the center of the appeals (the two back-to-back transactions and the engineering transaction) constitutes a stakeholder transaction as aforesaid In the section 270(1) Law The Friendship - Being "A transaction of a company with an officer of its" or "A company's transaction with another person who is an officer of the company has a personal interest". As already noted, this section is intended to apply to a typical stakeholder transaction - In which the company communicates with the officer (or with another person), in such a way that in practice it is the officer who stands on both sides of the barricade of the transaction (self dealing). This state of affairs raises a concern that the officer who is in a conflict of interest will abuse the decision-making power given to him by the company, in order to enter into a transaction that benefits him at the expense of the company or some of its shareholders. The Fixed Mechanism In the section 272 The law is therefore intended to deal with this concern and to alleviate it by approving the employment by a party in the company that is free from a conflict of interest; With regard to the necessary approvals, the section distinguishes between an "unusual transaction" and a "transaction that is not exceptional".
In the present case, it was claimed that these were transactions "Deviations"Therefore, and in the absence of an audit committee in the companies, The back-to-back transactions required the approval of Hefzibah Investments' board of directors and general meeting, and an engineering transaction required the approval of Hefzibah Investments' board of directors and general meeting (Section 272(b) to the law). According to the Special Manager's version, with respect to all three transactions, the necessary approval mechanism was not fulfilled - Therefore, they can be canceled according to Section 281 to the law.