In practice, there are additional advantages to managing a foreign company, such as the absence of public registration of the shareholders or directors, the absence of the obligation to submit annual financial statements, the absence of the need for annual meetings or regular reports, and so on. In practice, this move allows the respondent to do whatever he wants in the company, without any reporting. Being a shrewd businessman, this gives him a real advantage.
It was found, therefore, that there is prima facie evidence of an attempt made by the man to obscure his tracks, but no prima facie evidence was presented that there was an asset smuggling or an attempt to reduce the value of the corporations, while all the shares of the foreign corporation were held in the man's hands. In order to ascertain whether further smuggling has taken place, the expertise of the accountant is required.
- With regard to the balance of convenience, as required by Regulation 95(d)(1), it is well known that the appointment of a special manager or the appointment of a receiver in relation to a going concern is liable to lead to the total collapse of the business, all at once. In any regular engagement agreement of a company with its business partners (banks, investors, customers, etc.), the appointment of a special manager and/or receiver is a "warning light" that leads to the cessation of the flow of funds and is sometimes even considered a breach of agreement. Such a move is liable to lead to a situation in which both parties will lose money, due to the total paralysis of the activities of all the companies.
In order to clarify whether such a remedy is required, it is necessary to examine the matter with the necessary caution, as stated in Regulation 11(b) CIFA, and to obtain an expert opinion on two central questions: one – what is the value of all the assets, including the corporations, and the second – whether a smuggling operation has been carried out. If it turns out that the value of the real estate and other assets is about half of the value of the corporations, then it is possible to suffice with imposing injunctions and foreclosure orders on the real estate and thus ensuring the wife's share of the property. If it turns out that the value of the real estate and additional assets is significantly lower than the value of half of the corporations, then it will be necessary to continue to check whether the smuggling of assets has been carried out, i.e., the transfer of the corporations' funds and assets to external entities, in a way that will lower the value of the corporations and will not allow them to be repaid from them.
- With regard to an alternative remedy, as required by Regulation 95(d)(2), which is less likely to be infringed and is capable of achieving the purpose for which the temporary relief was intended, it appears that this purpose can be achieved by imposing a temporary injunction, which will prohibit disposition of shares and real estate in which there are rights to the person or companies in whose shares he holds. If he is interested in selling this or that property (such as an apartment in a residential building that he owns or in a residential building that is under construction), he can apply for the Applicant's written consent to this action (as stated in Section 11AA in a Tax Appeal to the Law), and in the absence of consent, the court may apply to allow the sale of the apartment while converting the foreclosure on the funds received in exchange for it.
- As to the requirement of good faith, as required by Regulation 95(d)(3), the Applicant acted as required and approached the Court as soon as she became aware of the establishment of the corporation XX Ltd.
The lack of good faith lies at the door of the man who acted in contravention of the foreclosure order. Therefore, the Applicant will be able to submit within 7 days a ruling addressed to the Registrar of Companies on this matter, both regarding the manner of transferring the shares and regarding payments made for this purpose.
- In light of this, the result is that an injunction is hereby imposed prohibiting the making of a disposition (a transaction of any kind) in relation to all the shares that the man holds in all the companies and in relation to all the rights he holds in all the assets specified in sections 21 and 23 above.
This order will come into effect, subject to the Applicant providing a self-undertaking without limitation of the amount as required by Regulation 96, within 7 days from the date of this decision.