Second, and most importantly, in the circumstances of the case, the very fact that the officers stood on both sides of the barricade of the transactions does not give rise to a concern of harm to the companies that undertook the provision of the guarantees (Heftziba Investments in the back-to-back transactions, and Heftziba Engineering in the engineering transaction), all the more so the concern of harm to the shareholders. Thus, since the shareholders of the companies and the decision makers in it are the same, this fact is sufficient to dispel the concern of a conflict of interest on the part of the officers. And I will explain.
- According to basic concepts in corporate law, the company belongs to its shareholders - Therefore, an action that is agreed upon by all the shareholders is nothing but their action with their property. On the basis of the aforesaid, the rule has long since been established, according to which an action taken with the consent of all the shareholders in the company, as a rule, will not be considered a breach of the fiduciary duty towards the company:
"When a holder is not involved in an interest external to the company, such as the interest of creditors, then all the shareholders are entitled to do with the company's property as they wish, including even to give it as a gift. In this way, the shareholders do not harm anyone else, and an action taken by them unanimously cannot constitute a breach of a duty of trust towards any of them or an oppression of any one. The same is true of an administrator, who acts with the consent of all shareholders (for his duty to the creditors, see section 424 ofthe Penal Law, 5737-1977). The manager's duty of trust towards the company is intended to ultimately advance the interests of the shareholders" (Civil Appeal 995/90 Adoram Engineers in Tax Appeal v. Gat, [published in Nevo] para. 5 (July 14, 1992)).
And in the context of stakeholder transactions, it was clarified that "All the shareholders have given their hands to any action of the company, It is difficult to attribute any further significance to the need to approve the action in accordance with the aforementioned instructions" (Civil Appeal 10568/02 Bank Leumi Le-Israel in an appeal Taxes N. Harari, P.D. 58(5) 673, 678 (2004); Hereinafter: Mountain Appeal); Therefore, the rule is that in a situation where all the shareholders in the company agree to a certain transaction, it should be regarded as a lawful action even if it was not approved in accordance with the rules for approving interested party transactions (Mountain Appeal, ibid.; Additional Civil Hearing 5286/04 Harari v. Bank Leumi Le-Israel Ltd., [Published in Nevo] Paragraph 4 (January 24, 2006), as follows: Another Hari Discussion; Civil Appeal 4845/04 Klein v. Blass, [Posted inNevo] Paragraph 12 (14.12.2006)).