Civil Case (Haifa) 4806-06-22 Shmuel Gutman v. Maor Lahav

I have before me three motions that require a decision - a motion on behalf of the plaintiff to remove the defendant (a director and owner of half of the shares in the company) from the company's board of directors; A request on behalf of the defendant to instruct the plaintiff (who is a director and CEO) to provide information to the board of directors; and a request on behalf of the company to provide instructions regarding the granting of exemption and indemnification to officers of the company.  The applications were filed as part of a fierce dispute between the shareholders that brought the company to an impasse.

Summary of the history of the case

1. The three motions were filed as part of a legal proceeding centered on a claim for "separation of powers" under section 191 of the Companies Law, 5759-1999 (hereinafter: the Companies Law). The pleadings include additional remedies that do not need to be detailed.
2. Gutman and Lahav hold shares of Panda Trading Applications (hereinafter: the Company), which is engaged in the field of financial technology (Fintech), and provides technological services to various financial entities. The company was founded by Gutman and Lahav, and since its inception, the two have held its shares in equal shares and served as directors of the company (until he was appointed by the court as a decisive director - more on that later).  Gutman manages the company's affairs and serves as CEO, while Lahav has not held any managerial position in the company since the beginning of the proceedings - and more on that later.
3. The court is frequently asked about the company's affairs, in light of a serious dispute that broke out between Gutman and Lahav, which as the legal proceedings dragged on, even deepened and intensified. The conflict between the parties, along with the equivalence in the balance of power, brought the company to a dead end.  This situation has made the management of the company very difficult, and therefore the court is frequently required to deal with issues related to the management of the company, until a decision is made regarding the separation that both parties wish for - each in its own way.
4. At a certain point, and in light of the paralysis in the company's board of directors, I ordered the appointment of Yair Shalhav, CPA, as a decisive director, and he was given the powers of chairman of the board of directors (decision of April 13, 2023). The decisive director led to the promotion of a number of burning issues that were on the agenda (for example, the approval of financial statements and the submission of reports to the tax authorities), which clouded the company's functioning and even its existence, but did not blunt the sharp dispute between the parties, which continued to make it difficult to manage the company - and even harm it.
5. I do not see the need to elaborate further on the details of the dispute, since the main points were detailed in a number of decisions that have been given so far, the most important of which are decisions from October 18, 2022, April 13, 2023, and September 18, 2023. Needless to say, in addition to these decisions, the court was required to address a number of issues in the course of the proceeding.  In general, the portfolio suffers from overactivity, which can be assessed as a result of the sharp rivalry between the shareholders.
6. Many attempts have been made to bring the parties to agreements or to bring their positions closer together. Mediation that took place prior to the filing of the lawsuit and many attempts at conciliation made by the court, among other things, all of these, unfortunately, did not bear fruit.  The court was again required to refer to a series of mutual motions filed by the parties.  Before I address the applications before me, I will review the main proceedings that have been conducted so far.
7. The decision is dated October 18, 2022.

Upon the opening of the proceedings, Gutman filed a request for temporary relief in which he sought to prevent Lahav from being present at the company's offices or contacting the company's employees, suppliers, customers and other parties, claiming that Lahav had harmed the company and its functioning by a series of unusual actions that he had taken.  After several intensive attempts to bring the parties to an agreement, there was no choice but to issue a decision.