12-34-56-78 Chekhov v. State of Israel, P.D. 51 (2)
- The special manager was appointed to his position as part of the liquidation process of the association, after the association ran into financial difficulties, to the point that the association's employees did not receive their wages and the association was forced to sell assets in order to repay its debts to its creditors. The special director was also appointed by the Jerusalem Regional Rabbinical Court as a special director of the Wolf Endowment.
- As stated, the trial court accepted the request of the special administrator and ordered the appellants to return sums withdrawn by them from the Neve Simcha fund. The court insisted that the The Associations, and Regulations The Associations (Remuneration for the Chairman of the Board, Member of the Board and Member of the Audit Committee of the Association), 5769-2009 (hereinafter: Regulations of the Associations) regulates the issue of remuneration and salary ceilings for board members of the association. The determination of salary by the General Assembly is subject to the provisions of the law and the regulations and the maximum amount determined therein. The Non-Profit Organizations Law prohibits the distribution of profits to board members and imposes liability on board members in the event of prohibited distribution. In the case law, it was clarified that the interpretation of the term "prohibited distribution" is broad and includes salary and any benefit from the association to a board member, officer, or anyone connected to them by family connection. Therefore, a board member is not entitled to receive a profit, including a salary, from the association as long as he serves in his position.
The trial court rejected the appellants' argument that Neve Simcha is a separate entity with a legal personality separate from the association, and therefore the prohibition on receiving wages from the association does not apply to it. It was held that Neve Simcha is an "asset" of the association, and therefore the appellants are prohibited from withdrawing wages from it while they were serving as board members, and the salary they received should be regarded as a "prohibited distribution" according to The Non-Profit Organizations Law. Alternatively, even if Neve Simcha should not be seen as an asset of the association, it is owned by the Wolf Endowment, and section 8 Law Loyalty prohibits an endowment trustee from receiving a salary, and Yosef and Adv. Shachor also served as trustees of the Wolf Foundation.