Once the aforesaid has been clarified, I will refer to the examination of the normative outline as determined with respect to all the tracks, and after that, I will examine their applicability in the case before me.
- The first track - lifting the corporate veil - Section 6 of the Companies Law -
Section 6 of the Companies Law states:
“)a) (1) A court may attribute a debt of a company to a shareholder thereof, if it finds that in the circumstances of the case it is just and correct to do so, in the exceptional cases where the use of the separate legal personality is made in one of the following:
(a) in a manner that may defraud a person or deprive a creditor of the company;
(b) in a manner that harms the purpose of the company and while taking an unreasonable risk as to its ability to repay its debts, provided that the shareholder was aware of such use, and taking into account his holdings and the fulfillment of his obligations to the company under sections 192 and 193 and taking into account the company's ability to repay its debts.
(2) For the purposes of this subsection, a person shall be deemed to be aware of the use as stated in paragraph (1)(a) or (b) even if he suspects the nature of the conduct or as to the possibility of the existence of the circumstances that caused such use, but refrains from clarifying them, except if he acted negligently only."
With regard to lifting the corporate veil between the company and its shareholders, as already noted above, the courts reiterated that this tool should be used cautiously, only in exceptional and extreme circumstances and not as a routine matter. This is because lifting the veil undermines the principle of the company's separate legal entity, and thus it is liable to create a situation that can thwart the legitimate expectations of the direct parties to the dispute and even undermine "the stability of the corporation's legal institution in general" (see: Amir Licht, "Lifting the Veil and Deferring Debt after Amendment 3 to the Companies Law: What Has Changed?" Corporations B/3 65, 70 (2005).