Another argument made by the special manager is that the transactions were not "For the benefit of society" As required In the section 270 Law The Friendship And because of this, they can also be canceled. There is no dispute that where it is a transaction thatInna For the benefit of society, it cannot be maintained at all - Even if special permits are granted; And according to what is claimed, this context also applies Section 281 Law The Friendship, according to which a company is entitled to cancel a transaction in which it entered into an agreement with a third party because it was not approved as required by law.
- As will be explained below, the case before us is a unique case. The back-to-back transactions and the engineering transaction are ostensibly stakeholder transactions, since the officers of the guarantor companies were on both sides of each transaction. Nevertheless, none of the three transactions show a concern of harm to the companies or shareholders and they did not pose any danger from these transactions; Not even the minority shareholders in the companies, if only because in practice there is no minority in these companies at all. This state of affairs is the result of the ownership and management structure of Heftziba Investments and Heftziba Engineering - Each of them is a private family company, owned by Mordechai Yona together with his wife Hefziba Yona, and he also served as chairman of the boards of directors in both of them. Given the identity between the shareholders in the companies and the decision makers in them, it is clear that the transactions were made with the intention of the shareholders; And in this state of affairs, the mechanism for approving stakeholder transactions is fixed In the section 272 The law was found to be futile - And there is no longer any significance to insisting on its existence. In addition, in these circumstances, the burden on the special manager to prove that the transactions do not meet the test of the "best interest of the company" is particularly heavy, and this burden has not been lifted. The result of the aforesaid is that the special manager has no legal grounds for canceling the transactions. Now I will expand.
- No grounds arose for canceling the transactions due to non-compliance with the approval mechanism set forth in section 272 of the Law
- To the question of the existence of "Personal interest" of an officer or controlling shareholder in a particular transaction has implications in a series of different situations in the life of the company (for details see: Yosef Gross Companies Law Volume 1, pp. 339-340 (5th edition, 2016), below: Gross - Companies Law); And for our purposes - A transaction in which an officer has a "personal interest" is a transaction that is required to be approved in accordance with the mechanism set forth in the law regarding interested party transactions. The term "personal interest" therefore constitutes a gateway To the fifth chapter To Part VI of the Law The Friendship.
The definition of "personal interest" is found in the definitions section of the law, and because of its importance, I will reiterate it as follows: