Having said that, we will return to examine whether the appellants met the burden of proof imposed on them at this preliminary stage of the hearing, as to the existence of prima facie damage caused to them. As may be recalled, the District Court's position was that the failure to specify the date on which the shares of Alcint held by the appellants were sold negates Minya and Biya from the possibility of examining whether they were harmed. I find this position difficult.
The burden of proof - applying the full fairness test
- As may be recalled, the causes of action that the trial court should have clarified are those that raise concerns about discrimination against minority shareholders in Alcinet. As a rule, in a claim for removal of discrimination, there is no obligation to prove, at the first stage, that the plaintiffs suffered damage (see: Article 191 30Companies Law, and before him Article 235 30Companies Ordinance; Habib-Segal, at pp. 626-629). The burden imposed on the plaintiffs is to prove prima facie the existence of discrimination, and if the plaintiffs met this burden, the burden of proof shifts to the defendants. This is the "full fairness" test (Entire Fairness) in which the burden of proof is transferred to the defendants and they must convince the court of the full fairness of their action. The full fairness of the transaction is preserved, when the controlling shareholders are able to prove the equitable results of their action, in relation to all shareholders (see: Name, at p. 628). Thus, for example, in the case of Bachar The court ruled that:
"The burden imposed on the shareholders who claim discrimination is to prove prima facie the existence of discrimination. If such proof is brought, the burden will shift to the majority, to vote that it acted properly and that its action does not constitute discrimination against the minority" (ibid., at p. 249).
It was also held that:
"Moreover, a special relationship between a parent company and a subsidiary requires, by their very nature and nature, recognition of the duty to rank higher than usual of the behavior of the majority with regard to its attitude towards the minority" (ibid., at p. 248).