Administrative Petition (Tel Aviv) 55852-05-25 Retail Minds Technologies Ltd. v. Israel Securities Authority - part 3

Third, there is considerable difficulty in the fact that a company that complies with the rules of the TASE and reports in accordance with its duty that it has become a "shell company" is a company whose shares will be immediately transferred to the preservation list, while one that refrains from fulfilling its obligation in the hope that the ISA will not rush to declare it as such, and in the meantime will have time to add new content to the TASE skeleton, will receive an extension in order to do so.

42. Note: The Petitioner's adherence to various decisions given in insolvency proceedings, and in particular the aforementioned decision in the Envision case of September 25, 2024 (on which the Authority's appeal is pending, it noted). This is not the same as evidence.  When a public company ceases to operate, it remains on the main list (since it did not declare itself a shell company as required), and it has creditors, another group is created that has an interest in maximizing the value of the company: the group of creditors, whose concern is the question of whether it was appropriate for the company to declare that it is a shell company.  In the Envision case, an investor sought to purchase the stock exchange skeleton of such a company, in a manner that eliminates debts to creditors, but subjected the acquisition to a suspension condition whereby the company would not be included in the preservation list for a period of five months from the date of the allocation of the shares.  The trustee was in favor of the implementation of the insolvency proceedings, and the insolvency court saw fit to adopt this suspension clause (shortening it to three months), while intervening in the opposing authority's position on this matter.  However, the court (the Honorable Justice Lushi-Aboudi) explicitly stated: "My decision below does not interfere at all with the ISA's discretion in the matter of shell companies," and is based on the fact that the ISA "does not exercise its discretion on the broad issue of public companies that are in insolvency" (para.  25 of the decision).  It was further emphasized that the basis for the intervention is not by virtue of administrative law, but rather by virtue of the broad jurisdiction of the insolvency court in accordance with section 279 of the Insolvency and Economic Rehabilitation Law, 5778-2018, which, as emphasized (in the section itself, in the decision at paragraph 24), does not apply to "a decision concerning a decision in administrative proceedings".  However, our case, unlike insolvency proceedings, is clearly the question of the court's intervention in an administrative proceeding, one that is free of creditors.
43. The meaning of the aforesaid so far: The TASE Articles of Association are the same, so are their rules and guidelines. The Petitioner is unable to bring about their cancellation within the framework of a petition such as the one before me.  Claims such as discrimination or lack of proportionality, which in fact call for the authority to refrain from acting in accordance with the rules and defining a company as a shell company even when the conditions are ripe to do so, cannot be accepted.  All that remains to be examined, therefore, is whether there is unreasonableness in the Authority's decision to define the Petitioner as a "shell company", a decision that requires (despite certain claims by the Petitioner) that the CEO of the TASE will be transferred to the preservation list.  We will turn to this now.
44. There is no unreasonableness (or any other administrative flaw) in the Authority's decision
45. A shell company is defined as "a company that does not have, directly or indirectly, real business activity, which yields or is expected to generate revenues in the ordinary course of business that are not only financing income." The Petitioner's first line of attack is that even without connection to the merger, it does not meet the definition of a "shell company". The second line of attack is that in view of the "binding agreement" for the merger, the expected income of Mobility's activity is similar to that which excludes it from the category of a "shell company", if it was at all.  Neither this argument nor this argument has any power for the purpose of interfering with the Authority's decision.
46. The Petitioner's first argument that its activity continued in 2024, so that it should not be defined as a "shell company" - this is also irrelevant to the purchasers and the planned merger: this is a position that can only be based on a particularly selective reading of the company's reports. The Petitioner claims (para.  43): Here it invested ILS 1.3 million "in the preservation and development of the technology (source code) that it owns".  However, a review of the periodic report reveals (paragraph 4.1): "Towards the end of 2024, it ceased its research and development activity," which was omitted from its request.  It claims that in 2024 it employed "three to four programmers." However, what emerges from a review of the report is omitted: it stopped employing all of them until the end of 2024, and those who were "employed" by it as of the end of the year are only its manager, with 40% of the position, and the CFO with 20% of the position (paragraph 10.2 of the chapter on the company's business description).
47. But in any event, the main issue is, of course, the income, an issue to which the Petitioner has demonstrated an inconsistent and clearly tendentious argument. Interestingly, when the petition dealt withMobility (the private company owned by the purchasers who wish to merge it into the Petitioner), the emphasis should have been on the profitability of that company (for the purpose of valuing its activity) and not necessarily on its revenues.  However, the Petitioner was careful to refer repeatedly (paragraph 53 as an example) and even in its immediate reports (Appendix 5 as an example) toMobility's revenues (ILS 37 million per year), ignoring the fact that the same company remains at a loss year after year.  On the other hand, with regard to the Petitioner itself, the question of income is, of course, cardinal, in view of the definition of a "shell company" as one that does not have "real business activity, which yields or is expected to generate income in the ordinary course of business...".  But precisely when the Petitioner turned to deal with her own situation, any focused attention was absent on the issue of income.
48. Well, the company has in fact no revenue, since it ended its operations in May 2024, a year before the Authority's decision. This arises from a comparison of the periodic report (which was attached, indicating revenues of ILS 0.72 million throughout the year) with that of the first half, in which the amount is almost identical (a report that only the Authority attached).  They clearly arise from the request for the distribution of profits under Section 303 of the Companies Law that the company filed in June 2024 (and only the Authority added), where it was noted that the said sum of ILS 0.72 million in revenues originated from the same agreement for the provision of services, which was terminated.  It was further noted that "due to the cessation of business activity, a conservative assumption was made that in 2025 and in the first four months of 2026, the company is not expected to receive any revenues" (Appendix 4 to the Response, paragraph 1).  There is therefore no basis for intervening in the Authority's conclusion that this is a company that does not yield or is expected to generate income in the course of ordinary business.
49. And another matter that was kept modest in the petition: the question of the cessation of real business activity. The reader will put himself in the shoes of the Authority's staff when reviewing the company's periodic report for 2024, and will try to identify whether he could have reached the conclusion that this is actually a company that has real business activity, one that can generate revenue.  Thus it is stated in Note 1(a) to the financial statements that accompanied the periodic report, reports signed by the Chairman of the Board of Directors, the CEO and the Petitioner's Deputy CEO: "The Company has no active business activity in its field of business".  Let us therefore turn to the auditor's audit report: he determined that at the time of the approval of the financial statements, "the company has no active business activity in its field of business".  It is therefore difficult to identify how the authority should intervene in determining that the company in question is a company with no business activity, according to its own description.  It should be noted that the Petitioner's attempt to construct Reference 115.14, regarding "indications of the existence of real business activity" that a company would exclude from the category of a "shell company", simply because it noted in the chapter on the business description of the corporation that the company "focused on examining business opportunities".  Amorphous focus on the other, and realistic business activity generating revenue.
50. We will turn to the Petitioner's alternative argument that it is not a shell company in view of the "new activity merged into it": the Petitioner mixes reality with hopes, between a general intention to merge and binding agreements, and then accuses the Authority for not heeding its arguments that the merger is similar to one that is expected to generate revenue , so that it is not a "shell company". In particular, it deals with the "new merged activity" for the Petitioner, in the present tense (heading of Chapter D4 of the Petition), even though there is no "merged activity" but only hope for a merger, and with the "binding agreement relating to the acquisition of the activity" dated March 27, 2025, even though there is no obligation for the merger.
51. The fact that this is a publicly traded skeleton in which an entrepreneur expresses an interest in acquiring it leads to the fact that, in addition to all the business and legal caution required in the acquisition of such a company, the entrepreneur is concerned about the ISA's intervention by way of determining that it is a "shell company", which will immediately lead its shares to the preservation list. Thus begins the race to bring the activity into the company, but with caution on the part of the entrepreneur, who fears that eventually the shares will be transferred to the conservation list and the money invested will go down the drain.  This was also the case here: moves that were intended to eventually promote a merger, but while the buyers constantly maintained for themselves the legal ambiguity required regarding their obligation and the possibility of escape required if the Authority insists on defining the company as a "shell company." Even if it is clear that the logic of the matter here from the perspective of the entrepreneurs is to take a multi-stage process that includes due diligence, specifying a tender offer, its success, and then a process of merging the private activity into the company (paragraph 19 of the petition), this is not an obligation, and there is no "expected" income for the Petitioner.
52. The Memorandum of Understanding (Appendix 1 to the Petition) concerns the tender offer, which is subject to due diligence. Defining it as a "binding" document (paragraph 19 of the petition) is empty of content, since merger is not mentioned in it.  The definition of the agreement between the company and the purchasers from March 27, 2025 for the execution of the tender offer as "binding" (paragraph 20 of the petition) is also empty of content: there is no mention in the report on the agreement (Appendix 2 to the petition, and the agreement itself is absent from the petition) of any element of an undertaking or even an intention regarding the merger.  When the ISA wondered on April 3, 2025, whether it was not a shell company, the Petitioner sought to reconcile Da Tea and announced in its letter of April 9, 2025 that it would detail a tender offer on its way to publication and that it would include "a reference to the expected introduction of activity, according to which 'the bidders will act to merge into the company shortly after the tender offer significant activity' (paragraph 8).  A day passed, and here is the specification of the tender offer published by the company (which was not attached to the petition), in which it was noted in the chapter "The bidder's plans in relation to the company", before that quote, which was problematically omitted from the letter: "As of the date of this specification, the bidders have no concrete commitments and/or intentions in relation to the company or concrete plans in relation to the company".  It is therefore not surprising that on May 13, 2025, the ISA reached the conclusion that this is a shell company, devoid of real income-generating business activity, and even one that is "expected" to bring in revenue.  It should also be noted that even after the Authority's decision, the Petitioner notes, the purchasers and the Petitioner expressed a willingness in principle to sign more binding documents (which it is highly doubtful whether they would have helped, certainly in retrospect), but in any event, they did not do so, until the date of publication regarding the position of the Authority's staff, and the petition.
53. In this context, the Petitioner wishes to rely on the aforesaid in Question 115.10 published by the Authority in July 2020 (Appendix 15 to the Petition), which deals with situations in the process of purchasing a publicly traded skeleton, and leaves the Authority with discretion (the one that the Petitioner claimed it does not have) with regard to the timing of the declaration of a company as a "shell company". There was a request from another public company (which the ISA agreed to wait before declaring it a "shell company"), which sought to clarify whether, in the opinion of the Authority's staff, a corporation that does not conduct realistic business activity but announces its "intentions" to begin such activity in the near future and "carry out preliminary actions for this purpose" (i.e., to promote the flow of private activity into the company), will be exempted from the definition of a "shell company".  The ISA replied: "As a rule, no," since the question is the situation "at the time of the examination", but "notwithstanding the aforesaid, in the event that the corporation entered into a binding agreement for the acquisition/acquisition/establishment of activity and is in the advanced process of obtaining the relevant approvals and/or licenses, it is sometimes possible to view the engagement in the agreement as a realistic business activity." However, there is no "binding agreement" here, even if the Petitioner calls any conditional agreement that is free of obligation to merge as "binding".  All of the above is even more true when even the merger agreement approved by the Audit Committee and the Board of Directors on June 23, 2025 - long after the Authority's decision - is contingent on the Petitioner not being on the Conservation List, i.e., that the petition will be accepted.  If it is not accepted, Mr. Ben Simhon clarified at the beginning of the discussion, the merger will not be carried out.
54. To summarize this chapter: there is no unreasonableness (or other administrative flaw) in the Authority's decision of May 13, 2025 that it is a "shell company", both because it itself has been inactive, for a full year, and because the possible merger with Mobility has not yet been executed at the time of the decision. The ISA exercised its discretion carefully, collected and examined the relevant data, and finally made a decision that is deep within the realm of reasonableness, a decision whose continuation necessitates the transfer of the shares to the preservation list.  This is sufficient to dismiss the petition.

III.       The Expedited Procedure for Approval of the Merger as Illustrating Concerns about Harm to the Interests of Investors and the Rules of Corporate Governance

54. The Petitioner wishes to cling to the developments after the petition was filed: the "in-principle" approval of the board of directors for the merger, the appointment of the alternative directors, the approval of the audit committee and the board of directors of the merger transaction prior to the approval of the general meeting, and in the hearing (and even afterwards) - it requested that it present the number of ballot papers it collected for the meeting, which is scheduled for July 29, 2025, in support of the transaction.
55. As stated in my decision of July 6, 2025, the court must examine the administrative decision on the day it was made, May 13, 2025, and not in light of later developments. However, it is also appropriate to address the steps taken by the Petitioner after the filing of the petition, not as those that can change the required outcome, but rather as demonstrating the reasonableness of a decision to declare a TASE skeleton as a "shell company" with discretion but without too long a delay, as well as the concerns of the ISA and TASE regarding the remaining of TASE skeletons on the main list, in an expedited attempt to fill in new content: Concerns about ineffective disclosure and corporate governance mechanisms, harm to the investing public, and damage to the stock exchange as a reliable and efficient trading platform.
56. We will begin with the issue of the Petitioner's acceleration of the external directors, and what was foreseen as the Petitioner's impediment to them from fulfilling their duties for the benefit of the Company and by the way the entire public holding its shares, due to the Petitioner's conduct and the haste that gripped the purchasers to evade the sword of the "Shell Company".
57. A public company is supposed to have at least two public directors, who have no connection to the controlling shareholders (sections 239-241 of the Companies Law). The directors are members of the audit committee (all of whose members are independent directors), and often constitute a majority of it.  Among the functions of this committee is to approve transactions of interested parties, and to determine "the obligation to conduct a competitive procedure under the supervision of the committee" with respect to irregular transactions with controlling shareholders - such as the merger transaction that the purchasers-controlling shareholders are currently seeking to advance (section 117 of the Companies Law).  The importance of the external directors to society and indirectly to the investing public is great, as explained in the Verdnikov case:

"The external director serves as an independent gatekeeper, and he has no connection to the various functionaries in the company.  A decision on his appointment is made by the general meeting, by a majority intended to neutralize the controlling shareholder's power of influence (section 239(b) of the law).  ...  The power and great importance of the director of directors therefore lies, inter alia, in his independence and skills, in his ability to balance conflicting interests on the board of directors, and in his ability to prevent abuse by interest groups in the company, as he is an obstacle to the approval of transactions with interested parties..." (Civil Appeal 7735/14 Radnikov v.  Elovitch, para.  156 (December 28, 2016); and see also: Yosef Gross, Directors and Officers in the Era of Corporate Governance 130-133 (5th February, 2018) (hereinafter: Gross)).

58. When they come to approve such a material transaction of the merger of a private company of the controlling shareholders against a private allocation of the company's shares to the controlling shareholders to a considerable extent, it is clear that the role of the external directors, who have no connection to the controlling shareholder, within the framework of the audit committee, is significant in order to deal with the inherent conflict of interest in which the controlling shareholder does business with himself. It is possible: by ensuring the existence of an appropriate mechanism that will simulate as much as possible negotiations under market conditions between independent parties, which will often take on the form of an independent committee, sometimes one in which the directors themselves are members (see: Criminal Appeal 5955/22 State of Israel v.  Elovitch, at paragraph 64 (July 13, 2023); Class Action (TA-Economic) 26809-01-11 Kahane v.  Makhteshim-Agan Industries in Tax Appeal (May 15, 2011)); Class Action (Tel Aviv-Economic) 40404-03-16 Atzmon v.  Osem Investments in a Tax Appeal (August 4, 2020); Assaf Hamdani and Sharon Hanas, "Full Fairness! Further Study of Judicial Review of Conflict-of-Interest Transactions" Mishpatim 77 (2018)).
59. As for here, first of all, it was the previous external directors with whom the purchasers "inherited" the company, and the purchasers held contacts with them, in the words of their counsel, "with the intention of persuading them to remain in the company and approve the introduction of Mobility's activity", but the external directors "did not want to hear beyond that" and resigned in coordinated letters on May 9, 2025, the day after the completion of the tender offer, and in the "worst timing" from the perspective of the purchasers, described (pp. 5-6 of the proclamation).  Shortly thereafter, the Authority's decision came to the conclusion that the Petitioner does not and is not expected to have income from business activity in the foreseeable future; and the need to appoint new external directors (a matter that requires 35 days to convene a general meeting on the matter) before it is possible to apply for the examination of the merger by the Audit Committee.
60. In order to expedite the process and ensure that the new directors would support the merger, counsel for the Petitioner did not hesitate to note that "we presented the activity to the designated external directors and they supported the proposal" (p. 6 of the minutes).  It turns out that the controlling shareholders supported the appointments of these to the external directors.  They were appointed on June 23, 2025.  Since the "Am Kalvi" operation had not yet been completed that evening, the meeting was convened on Zoom and thus they were appointed, at 5:00 p.m.  But the Petitioner had a quick way to demonstrate how close the completion of the merger was, a matter that is subject to the approval of the Audit Committee first.  Therefore, only about an hour had passed since the appointment of the directors, as it became clear in the hearing before me, and here the audit committee, which includes the two directors and an independent director, has completed its work: in an immediate report that the petitioner saw fit for the court's review (its notice of June 30, 2025), it became clear that already on the evening of that day, when the storm was raging, the audit committee had already convened (via Zoom), and defined itself as an independent committee for the purpose of the transaction.  "The principles of the transaction were determined by way of negotiations between the controlling shareholders and the company," at which time the audit committee "examined the reasonableness of the terms and found that the consideration was reasonable and in favor of the company's shareholders" (paragraph 2.3.4 of the immediate report of June 24, 2025).  In addition, an external valuation appraiser provided the company with a fair opinion, which "satisfied the members of the audit committee and the company's board of directors in relation to the fair value of Mobility and the amount (rate) of the allocation of shares in the transaction" (ibid.).  After this impressive harvest, the Audit Committee was able to lay out its many reasons why this was a transaction "that benefits the Company and its shareholders" (paragraph 2.3.5 of the report), and since not only the approval of the transaction was on the agenda, but also the approval of the remuneration policy, and the approval of the terms of office of Mr. Ben Simhon and even of his sister were on the agenda, the Audit Committee was able to discuss these as well.  to examine, confirm, and reason.  And after an hour (as noted in the hearing), the audit committee completed its work.  At that time, the external directors and the DBT even convened (via Zoom) for a meeting of the board of directors (while the personal stakeholders are careful not to attend that meeting, as a virtue for the sake of proficiency), and approved the transaction and the rest of the aforementioned in this cap as well.
61. This is a conduct that is ostensibly considered to be difficult (and compare: Civil Case (Tel Aviv Department) 2193/06 Metuk Ephraim & Sons in Tax Appeal v. Avivi at paragraphs 57-63 (April 2, 2013)).  It should be emphasized that this is being said in the context of the conduct of the Petitioner and the purchasers (who are the parties here), and not to the External Auditors themselves (who are also not a party to the proceeding and whose position was not heard).  The Petitioner's explanation for this problematic conduct did not appear in the hearing of the petition, even when it was requested, except for the explanations that the purchasers were in contact with the designated directors even before their appointments, and that the Petitioner sought to hasten and approve the transaction by the Audit Committee and the Board of Directors in order to advance for its approval at the general meeting.  This is an answer that is not an answer.  The haste that gripped the Petitioner and the purchasers led to the creation of a concern that the new directors, despite what is certainly their good will, was prevented from the possibility of maintaining "complete independence in relation to decisions related to the company", independence that is "the lifeblood of the position - harm to the independence [of the external director] undermines the very fact of his appointment" (Gross, at p.  130).
62. Another expression of the way in which corporate governance and the interest of shareholders among the public may be harmed, in light of the buyers' race against the clock of the "shell company" and their interest in bringing activity into a stock exchange skeleton: the issue of the company's valuation for the purpose of the merger transaction.
63. After all, the value of the private activity is supposed to affect the scope of the private placement, and it would have been possible to believe that a valuation would precede a 'principled' decision by the company's board of directors to make a private allocation of 75% of the company's shares to the controlling shareholders in exchange for the holding in the private company they own. But here the same allocation of 75% was predetermined.  It is clear, and this is how the petitioners' counsel confirmed in the hearing, why this percentage of allocation was set as an upper limit: an allocation on a larger scale would have been considered a "large private allocation" that would also lead the company's shares to the preservation list, in accordance with the TASE Regulations.
64. But the question is why the allocation of 75% of the company's shares to buyers is even a lower limit, i.e., why a lower percentage of shares was not allocated to the buyers, while the public retains holdings on a larger scale in the merged company. The significance of the allocation of 75% to the owners of the private activity (who are the controlling shareholders of the public company) means that the public holdings in the Petitioner will be reduced by a quarter (from 42% to about 10.5%), and thus the public will lose three quarters of the value of its holdings in the company prior to the merger, in particular its cash fund.  On the other hand, the public will indirectly receive about 10.5% of the value of the private company's activity.  Understandably, if the value of the entered activity is at least three times higher than the value of the company prior to the merger, the public has  In such a case, the same practical limit of 75% in private allocation actually transfers wealth to the public, a price that buyers may be willing to pay in order to complete the merger process and turn the private company public.  However, in order for it to be possible to determine that the public will benefit from the merger, as the Petitioner reiterated in her petition that it will happen, it is imperative to know the value of the merged private activity.  In our case, this is impossible to know.
65. At the time of the hearing of the request for interim orders on May 29, 2025, there was no fairness opinion. On June 30, 2025, the Petitioner announced (without being asked) that the transaction had been approved by the Audit Committee and the Board of Directors, and referred to the immediate report in the "Maya" system of June 24, 2025 regarding the summoning of the general meeting to approve the merger.  From this report it emerged (paragraph 2.3.4 of the report) that some opinion had already been prepared.  But who evaluated, who hired his services, what he estimated, what was his conclusion regarding the valuation of Mobility - we cannot know, but only that such an assessment was made and that it satisfied the opinion of the audit committee "in connection with the fair value of Mobility and the amount (rate) of the allocation of shares in the transaction" (ibid.).  Nothing more.
66. In the hearing of the petition, it became clear that the expert did not put Mobility's value at all, but only "said that the transaction was worthwhile for the shareholders." And the explanation for a valuation that does not contain a valuation: "It's all because of the pressure of time," according to the Petitioner's counsel. To the question of how we would know if the value of Mobility was at least ILS 24.6 million, three times the market value of the company on the day the subpoena was published, he replied: "In the circumstances in which a valuation would have been carried out, the value would have been significantly higher than the court [noted]" (All - p.  13 of the minutes).  Words are spurs, but there is no backup.
67. Support for Mobility's value was required, particularly in light of the recurring motif in the petition and the Petitioner's arguments that Mobility's activity is worth ILS 170 million, has revenues of tens of millions (see: paragraph 16 of the petition, paragraph 2 of the response to the response, pp. 12, paras.  3-9 of the minutes), and that the Authority's decision will cause "damage" to the Petitioner and the investing public prevents Mobility's merger with the Petitioner (paragraphs 1, 75-76, 85 of the Petition as an example).).  How will both the public and the court know that this is the deal that the Petitioner is avoiding? The "ILS 170 million" thesis was based entirely on the fact that "the last investment transaction executed in Mobility was executed at a value of ILS 170 million" (paragraph 6 of the petition).  The immediate report added to the summons to the general meeting, on the basis of which the public is supposed to approve: the same investment was in fact made by way of a loan conversion of ILS 17 million "in a manner that reflects to Mobility a company value of ILS 170 million" (clause 2.3.4), i.e., no infusion of new funds.  and added the financial statements and showed (what the Petitioner's ISA initially denied, p.  12, paras.  23-25 of the protégé) that this was a loan conversion of a related party - Prof.  Gazundheit himself, one of the two purchasers (for the definition of a "related party", see IAS 24).  A perusal of the reports further shows that the same loan was converted on December 31, 2024, i.e., after the purchasers began to express interest in the purchase of the Petitioner.  The conversion of a loan ostensibly reflecting a company value of ILS 170 million was carried out, with Mobility having negative equity that became positive only due to that conversion, a cash fund of ILS 5,000, and annual losses.  The conversion of the loan related to equity capital is therefore a problematic indication of the company's value, certainly when it stands alone.  In particular, as the Petitioner's counsel clarified in response to the Court's questions, that related party "is the creditor, and therefore it could have made a conversion according to ILS 100 million, or ILS 50 million if it thought that the value of Mobility was less than ILS 170.  It is entirely in his hands to decide at what rate the conversion is to be made" (p.  13, paras.  1-3 of Pruitt).  If the related party had only asked for itself the half percent in Mobility's shares (and not 10%) in exchange for the ILS 17 million loan, which is not clear how it could have been deactivated, the Petitioner would have immediately become a unicorn according to this 'valuation' method.
68. We therefore return to that obscure "fair opinion" (paragraph 2.3.4 of the report): we will not know how it was prepared, or on the basis of which model. We will not know how that valuation weighed Mobility's almost empty cash coffers for the end of 2024; or the negative equity, had the loan not been converted into share capital at that time; or a ILS 20 million lawsuit filed against her and her lawyers cannot assess her chances; or the fact that despite the revenues that the Petitioner saw to note, this is a company that consistently accumulated losses, before and after tax, on an annual basis and even in the first quarter of 2025; or its guarantee for loans of ILS 10 million to other companies of Mr. Ben Simhon (paragraph 8 of the report); or that Mobility "finances its activities, mainly by credit and loans from related parties, as well as from a third-party loan" (paragraph 7 of the report).  All that was reported to the public (paragraph 2.3.6 of the report) was that the share price embodied in the merger was "about 562.9%" higher than the share price on TASE prior to the approval of the transaction (and the ISA's concern about fluctuations in the share prices of TASE skeletons that are still traded on the main list, based on speculation).
69. In the hearing, counsel for the Petitioner explained how these difficulties can be dealt with: the public will decide, and here are the ballots that were collected indicating its expected support for the merger decision (and even after the hearing, he asked to update the court on this matter in the ballot papers that are being collected). An argument of insufficient power, especially when the public has no alternatives, has no possibility of criticizing the nature of the transaction, and when the procedural aspect of approving the transaction with the controlling shareholders was seen to be improper and as such was taken from the days prior to Amendment 16 of the Companies Law of 2011, which deals with streamlining corporate governance, and the extensive case law that follows, regarding the method of approving and examining transactions with controlling shareholders.
70. Even if it is understood that the value of Mobility will not be determined here, the aforesaid undermines a central pillar of the petition (see, for example, paragraph 85 of the petition), namely, that the Authority prevented in its decision the realization of a transaction that would bring an enormous blessing to the petitioning company and all of its shareholders.
71. In addition, the aforementioned illustrates the reason for the ISA's concerns regarding stock exchange skeletons, such as ineffective disclosure mechanisms and corporate weighting, possible harm to the investing public, and the opening of the door to speculative trading in shares (paragraph 29 of its response). The conduct described ostensibly illustrates what can happen when a public company whose activity has ceased remains as a stock exchange skeleton whose shares are actually traded on the main list, and the company and the purchasers who wish to merge their private activities into it act urgently to approach the merger prior to the Authority's declaration that the Petitioner is a "shell company".  The Authority's decision therefore constitutes only an application of the rules that came to deal with these concerns.  If the purchasers do not wish to promote a merger and do not trust in their ability to remove the company from the preservation list, they have the right not to proceed with the merger.  However, it is not because of their hasty moves, or their warning that if the Authority's decision is upheld, that the merger will not be carried out, will they be able to persuade the court to intervene in the administrative decision to declare the Petitioner a shell company.

Conclusion

72. There is no reason to intervene in the Authority's administrative decision to consider the Petitioner as a shell company; and in any event, in the Stock Exchange's necessitating decision to transfer the Petitioner's shares to the Conservation List. The petition is therefore dismissed.  The Petitioner will pay the Israel Securities Authority its attorneys' fees in this comprehensive proceeding, in the sum of ILS 80,000, and will also bear the expenses of the TASE in the amount of ILS 5,000.

Granted today, 2 Av 5785, July 27, 2025, in the absence of the parties.