"Personal interest" - a person's personal interest in an action or transaction of a company, including a personal interest of his relative and of another corporation in which he or his relative has an interest, and with the exception of a personal interest deriving from the very holding of shares in the company.
"Relative" - a spouse, brother or sister, parent, parent, descendant or descendant of the spouse or spouse of any of the above;
As already noted, this wording applied at the relevant time in our case and has since been amended. However, both before and after the amendment, the definition of "personal interest" was and remains a broad definition, and some would say "circular", that"It does not cast material content beyond the literal meaning of the term(See: Matter Elovitch, paragraph 31). The extension is intended to allow flexibility in applying the definition: "It is not for nothing that the legislature chose to refrain from setting the boundaries of a term 'Personal interest'. The legislature adopted a definition 'Open' who uses the tongue 'Including', With the understanding that in light of the dynamism of commercial life and the capital market, The definition will be filled with content from case to case" (עניין Elovitch, ibid.) (and see also: Gross - Directors & Officers, p. 481; David Hahn "'He will be clean from his home': Personal interest in approving a company's transaction" The Attorney 99 93, pp. 95-96 (2007)).
Alongside the broad definition, case law clarified that not every "interest" a person has in a transaction will necessarily be defined as a "personal interest" for the purpose of Companies Law; And the test set for the purpose of distinguishing between a "just" matter and a personal matter is "The Excess Affinity Test". The purpose of this test is to determine whether the decision maker in the company has a personal connection to the transaction, which is Extra about the interest inherent in a shareholder or a normative officer by virtue of being such, and what Its size of the additional connection (see: Matter Elovitch, paragraph 32; Interest Arad, at p. 335; Derivative Claim 7541-12-14 Leibowitz v. Yoresh, [Posted inNevo] Paragraphs 39-41 (June 2, 2016) (Appeal against the judgment dismissed according to Regulation 460(II) For the Regulations Civil Procedure, 5744-1984 in a judgment of June 29, 2017 inCivil Appeal 6798/16); Gross - Companies Law, pp. 342-343). Moreover, it was clarified in the case law that with regard to transactions of interested parties, the concept of "personal interest" must be interpreted with caution, and the weight of the excess connection to the transaction in question must be taken into account against the background of the other circumstances of the case - "and to allow the investigating body to 'clean' shares that are allegedly tainted by a 'personal matter' where it will be determined that the weight of this matter is light and negligible" (עניין Arad, ibid.). In other words, the very existence of an "excess connection" is not enough, but rather a "excess connection" is required Significant which can affect the discretion of the interested party ( Elovitch, paragraph 32; The Judge Khirbat Kabub OnDerivative Claim (Tel Aviv) 48081-11-11 Rosenfeld v. Ben Dov, [Posted inNevo] paragraphs 105-108 (March 17, 2013); Gross - Directors & Officers, pp. 312-313; Habib-Segal 573-571).
- In this case, Mordechai Yona and Boaz Yona stood as officers of companies on both sides of the back-to-back transactions and the engineering transaction. Mordechai Yona was personally a sidekick For an Engineering Deal - in which he was "released" from his guarantee to Mizrahi Bank, which was given to ensure the activities of Hefzibah Housing and Hefziba Investments; And it was Hefziba Engineering that took upon itself the provision of the guarantee to the bank. In the framework of BTB Discount Deal It was Boaz Yona who stood on both sides of the deal - When he took a loan from Discount Bank, and transferred the funds to Hefziba Investments, which in turn mortgaged them in favor of the bank and guaranteed the repayment of the loan taken by Boaz Yona. Similarly, Mordechai Yona and Boaz Yona together were also For the Oriental BTB Deal, indirectly and through Heftziba Shikun, with Heftziba Investments also guaranteeing Bank Mizrahi for the repayment of the loan by Hefziba Shikun. These circumstances by their very nature create "interest" for the officers in the transactions in question - In the view of the Special Manager, this is a clearly personal matter that does not require an examination of an "excess connection".
First of all, it should be clarified that the position of the Special Director regarding the existence of a personal interest that does not require an examination of an "excess connection" is inconsistent with the interpretation given in case law of the definition of "personal interest" set forth in the law. As detailed above, not every "interest" of a shareholder or officer in a transaction constitutes a "personal interest" for the purpose of Companies Law, and the test of excess affinity is intended to distinguish between one and the other. Moreover. The Special Director relies in his arguments on the claim of the "statutory circle", which should be rejected as aforesaid, and does not claim at all the existence of an excess connection that Mordechai Yona or Boaz Yona had in connection with the back-to-back transactions or an engineering transaction; In any case, it has not been argued or proven that this is an excess connection Significant, which may have influenced the judgment of the officers in decision-making to the extent of harming the good of the companies. The only argument that was heard in this context regarding the back-to-back transactions was a mere "atmosphere claim", according to which Mordechai Yona and Boaz Yona were interested in beautifying Heftziba Investments' balance sheets in the hope that this would postpone the end until the expected collapse of Heftziba Group; However, this argument is not supported by any evidence, and it has nothing to rely on. As for an engineering transaction - It was claimed that Mordechai Yona sought to avoid repaying his personal debt to Heftziba Engineering, which amounted to millions of shekels; However, even this argument is flawed on its face, since there is no dispute that even after the transaction was executed, Mordechai's debt to the company remained the same.