This determination was reinforced after section 6 of the Companies Law was amended in the framework of Amendment No. 3 to the Companies Law of 2005, and as part of the amendment, the cases in which the court may lift the corporate veil between the company and its shareholders have been significantly reduced. It should be noted that prior to the aforementioned amendment, the conditions for lifting the veil were defined only in a general manner, and the court was given broad judicial discretion to make use of the doctrine of lifting the veil where "in the circumstances of the case, it is just and proper to do so." The previous version of section 6, prior to the amendment, was widely criticized, and some claimed that it created a deterrent against taking initiatives and management by members of the company out of concern that personal liability would be imposed on them (see Civil Appeal 313/08 Azmi Nashashibi v. Ihab Rinrawi, 66 (1) 398 (01.08.2010) (hereinafter: "the Nashashibi case"), at page 35 and the references cited therein. Following the criticism, the section was amended and subsequently the Supreme Court clarified that after the amendment to section 6: "The ground for lifting the veil, where the court found that in the circumstances of the case it was 'just and correct', no longer stands as an independent cause alone, but is also required that one of the situations described in section 6 exist, i.e., that the use of the separate legal personality of the company is made in order to deceive a person. or deprive a creditor of the company; or in a manner that harms the purpose of the company, and while taking an unreasonable risk in relation to its ability to repay its debts. In addition, section 6 states after the amendment that the use of lifting the veil will be made only in exceptional cases."
It is not superfluous to note that in the framework of Amendment No. 3, section 54 of the Law was also amended by canceling subsection (b), according to which it was possible to attribute the rights and obligations of the company (to raise the curtain) towards individuals as organs of the company. The significance of this amendment and an amendment in section 6 is that the lifting of the veil will be reserved for shareholders in the company.
- The Second Track Imposing Personal Liability - Section 54 of the Companies Law -
As stated, alongside the lifting of the veil, there is the possibility of imposing personal liability by virtue of Section 54 of the Companies Law , which states: