Civil Case (Tel Aviv) 36962-05-23 Haim Tzuf v. Daniel Cohen - part 2

And later on:

"As has been clarified, the law does indeed harm the bondholders to a certain extent, but there is a parallel and no less severe harm to the controlling shareholders as well.  The legislature tried to balance these vulnerabilities - as for the controlling shareholders, they were given the opportunity to choose the date within the transition period and the manner in which the number of companies in the pyramid would be reduced to the permitted number (two layers)...  (ibid., at paragraphs 47 and 49).

54. The context of the Concentration Law requires, in our opinion, the adoption of a restrictive approach to the interpretation of the deceased as a "personal matter" with regard to the choice of the alternative of compliance with the provisions of the Law. The reason for this is that adopting an expansive approach will lead to the result whereby the controlling shareholder will be tainted by a personal interest in relation to any alternative to compliance with the law, except for the sale of control of the upper layer or the dilution of its holdings by issuing shares to the public.  The legislature, as stated, did not see fit to regulate the mechanism of "folding" the layers and left the decision on the matter to the controlling shareholders of the building.
55. It should be noted that it is possible, of course, that the specific outline that will be chosen will require the execution of a "transaction", perhaps one that will require certain approvals according to the law, but the choice itself in the compliance mechanism is therefore not a transaction, and in any case it is not one in which the controlling shareholder has a personal interest.

A "personal interest" in the merger deal?

56. We will preface by noting that in our case, the claim of the existence of a personal interest does not relate to the merger transaction itself, but rather to the determination of the consideration mix therein, since the combination of consideration in the merger transaction affected the extent of the dilution of the shareholders in the company to the extent of impairing the ability of the controlling shareholder to continue to control the company.
57. As noted above, and as mentioned in the approval decision (paragraph 10), the Companies Law has established a flexible definition of the term "personal interest", which must be contextualized in accordance with the circumstances of the matter and the purpose of the legislation. The definition deviates from the definition of such a personal interest "arising from the very holding of the company's shares".  According to our approach, which is examined from what is implied in the approval decision, the control derives from the holding of the company's shares, and hence the interest in maintaining it is also the interest of the shareholder that derives from the very holding of the shares.  Therefore, even if we assume that it amounts to a "personal interest" (in the main part of the definition), by virtue of the diminutive definition ("except for a personal interest that derives from the very holding of shares in the company"), the case would fall within the scope of "personal interest".  This is true, in our opinion, whether the controlling shareholder assesses that the transaction by force will bring the threshold closer to the threshold of control, whether the transaction will lead to the crossing of the threshold (in his case: the '45% condition'), or whether his occupation is to the extent that his holdings fall below the threshold of control (in our case: the issue of the 'mix').
58. It is clear that in almost every case and in relation to each decision, different shareholders have individual interests, which are considerations that are not the domain of all the other shareholders, considerations that may also be related to the number of shares that the shareholder holds in the company (see: Opening Stimulus (Economic - Tel Aviv) 646-12-12 Starr in Tax Appeal v. Carl Gauss Ltd., at paragraph 21 (Nevo, January 31, 2013)).  The fact that a shareholder may have an interest that is different from that of the other shareholders does not exclude the possibility that this matter stems from his very holding of the company's shares (otherwise there would have been no need to exclude the term "personal interest", one that derives from the very holding of the company's shares).
59. However, it is doubtful in our case whether it is necessary to reach the narrow definition at all: the clear and understandable connection of the controlling shareholder to the scope of his holdings and the degree to which they are close to the threshold of control, it is difficult to say that in and of itself embodies a significant excess connection, which impairs his ability to see the best interests of the company before his eyes. In this context, it should be noted that with regard to the controlling shareholder, a particularly strong excess affinity must be identified, and the starting point is that the controlling shareholder, as the main factor invested in the company and the main factor that bears its losses, is also invested in its successes (the Givoni case, supra).
60. In our opinion, these conclusions are also required by the purposes of the law. At the basis of the arrangements set forth in the law regarding the approval of transactions with interested parties is the concern that the entity in charge of decision-making in the company will use its power in order to derive benefits for itself at the expense of the company and its shareholders (see the Vardnikov case, at paragraph 33 of the judgment of the Honorable Justice Amit).
61. In our opinion, a decision regarding the company's capital structure, including questions relating to the manner of financing transactions - through a share offering or debt raising - does not create an inherent concern of an unequal distribution of the company's resources, and similarly, the decision to approve the merger transaction and the structure of the consideration that the company will pay in the framework of it does not raise such a concern. Such a transaction, which involves the dilution of the shareholders' holdings in the company, is carried out in an egalitarian manner and does not involve the transfer of resources from the company to the controlling shareholder (this is said without derogating from the fact that in appropriate cases, it may be found that a decision by the company in matters of capital raising, despite its egalitarian appearance, contains, for example, discrimination against the minority shareholders: see, for example, Civil Appeal 8857/21 Ginzburg v.  Medipower Overseas Public Co.  Limited (Nevo 26.2.2023)).
62. An interpretation according to which the controlling shareholder has a "personal interest" in all decisions relating to the capital structure of the public company is contrary to the purpose of the law in another aspect. As the Honorable Justice Kabub noted in the Algor case (Criminal Case (Tel Aviv District) 40162/05 State of Israel v.  Aviv Ben Yosef Algur (Nevo 6.1.2009)): "The law seeks to create a proportional mechanism, which, on the one hand, will balance the need to protect the company from transactions with interested parties when the interested party has a personal interest in the transaction that may outweigh the interest of the company's interest; On the other hand, he wishes not to overburden the company with regard to its ability to operate autonomously and to produce transactions that benefit it without being dragged into too onerous costs involved in the approval process" (paragraph 167 of the judgment).
63. Here it is also appropriate to relate to the broad implications of the approval decision, with regard to the degree of control (or perhaps 'control' in name only) over what is happening in the company, an issue that in the approval decision it was found that "it appears that at this stage, and before the derivative claim is clarified, it is premature to relate to this claim" (paragraph 35 of the decision). In our opinion, certainly when we are dealing with a question that requires a position of principle and is not rooted in the circumstances of the case, it is correct to give consideration to the issue already at the time of the hearing of the application for approval.  The implication, therefore, is that defining the interest of the controlling shareholder not to be diluted as an interest that creates a personal interest, will lead to the result that any significant transaction of the company that is not financed from the company's existing cash balance and can be financed by debt or through the issuance of shares, will require (prima facie, and this is indeed only an interim decision) the approval of the general meeting, including the support of a majority of the minority.
64. In our opinion, this result is unreasonable. Beyond the great burden that this entails on the way the company conducts itself and its ability to promote transactions that benefit it without being dragged into the onerous costs involved in the approval process, the result is, in practice, the denial of a central pillar in the control of the company and its activities from the controlling shareholder, and the granting of veto power in the matter to the minority shareholders.
65. We raised this issue in the hearing, without receiving an exhaustive response from the respondent. In his summaries, he sought to appease the mind as to why the harm to the controlling shareholders in general would not be significant (paragraph 14 of his reply).  According to him, "...  In those cases where the raising of capital or debt amounts to an unusual transaction, but the controlling shareholder who is an officer did not act to limit the discretion of the board of directors, did not take upon himself the power to conduct the negotiations that would affect his holding rate, and did not show a clear interest in his control rate...  and in which the board of directors has considered, fearlessly and with an open heart, alternatives that will reduce the amount of the controlling shareholder's holdings, then the court will address the question of whether there is a substantial personal interest in the force."
66. The difficulty in this thesis is clear: examining the personal interest, instructing the officer-holding controlling shareholder to refrain from participating in discussions in the audit committee and the board of directors, or subjecting the transaction to the approval of a majority of the neutral shareholders, all of these are supposed to be done a-priori. It is not the degree of enthusiasm of the controlling shareholder-officer to act in his personal interest at the expense of the company, or the incompetence of other officers, that will determine retroactively whether he had a "personal interest" in the transaction.
67. Therefore, it is not possible to escape the significance of adopting the respondent's position in the motion for approval (which he tried to moderate in his proposal above): any transaction that requires consideration from the company will require a decision on how to finance it; Each choice reflects on the scope of the controlling shareholder's holdings and can bring him closer to the past or even beyond the threshold of control in the law, a matter that is unique to the controlling shareholder alone and not to the other shareholders; According to this thesis, he will necessarily have a "personal interest", one that prevents him from participating in the design of the transaction and in the meetings of the board of directors, and in any significant enough transaction requires the approval of a special majority. In other words, since almost every material transaction in the life of a public company requires financing, and the choice of the method of financing can affect the scope of the controlling shareholder's holdings and the degree to which he is close to the control threshold and therefore will be considered according to this thesis as a "personal matter", then control of any such transaction will pass from the hand of the so-called "controlling shareholder" to the hands of the minority shareholders.  This conclusion should not be taken lightly.
68. In our opinion, where doubt arises as to whether there is a "personal interest" in a specific case, such that justifies the use of the tripartite mechanism, the court must examine the source of that doubt; the conflicting interests at stake; whether it is a "legitimate" or improper personal interest; How was that personal interest created, whether at the request of the controlling shareholder or perhaps in external circumstances (as in our case, the imposition of the Concentration Law). This is not an exhaustive list, and in our opinion, the matter should be seriously considered and conclusions should be drawn, inter alia, in accordance with the circumstances of such a case; to the language and purposes of the law; for the need for proper corporate governance; to the reality of daily business life; to the position of the regulator (if any); and for considerations of benefit, justice and fairness in the light of proper legal policy.
69. On the basis of the aforesaid, we are unable to adopt the position in the approval decision, that in relation to that "'gray' segment of the spectrum", the legislature's choice to leave the definition of a personal interest vague, means that the legislature's directive should be seen as stating that "in the event of doubt, there is no doubt", i.e., "if doubt arises as to the existence or non-existence of a personal interest, it is ordinarily correct to exercise extreme caution as if it were a matter of the existence of a personal interest" (paragraph 10 of the approval decision). Even if this approach is useful, for example, in preventing any fear of acting in a conflict of interest (see: Amir Licht, "Tie Breaker - Conflicts of Interest in a Divided Board of Directors", point at the end of a sentence (Nevo, July 11, 2018)), it is broken by its side: any "connection" to the transaction can be perceived as surplus - perhaps not excessive, any "excess connection" can be perceived as significant - perhaps insignificant.  However, according to the "there is doubt - no doubt" approach, the law of all of them is the same: the suspension of the officer or the controlling shareholder, and the approval of exceptional transactions in which the controlling shareholder has a "doubtful personal interest" (and there will be many) - transferring the decision in them to the minority (and see, regarding the necessary balances between encouraging control and protecting the minority:   Goshen and A.  Hamdani "Corporate Control and Idiosyncratic Vision." 125 Yale Law Journal 560, 594-597 (2015) ).
70. In this context, in our opinion, the words of the Honorable Justice Ronen in the Leibowitz case, according to which "care must be taken not to expand the scope beyond what is necessary, while classifying too many transactions as transactions of unnecessary stakeholders - in light of the price that such a classification has on the course of the company's business and its ability to make a profit" (ibid., at paragraph 98). We should be aware of the concern that too many transactions will be transferred to the approval of the minority, the risk of extortion, and the multiplicity of litigation in connection with the aforesaid (see: Opening Stimulus (Economic) 44660-12-11 EEL Israel Equity in Tax Appeal v.  Taddafik in Tax Appeal at paragraph 39 (Nevo, January 10, 2012); Zohar Goshen, "Voting in a Conflict of Interest in Corporate Law," Mishpatim 29, 17, 46 (1998)).  The same is true of the significant impact that may be caused with regard to the willingness of companies to engage in such transactions and to forgo good transactions financed by debt, the issuance of shares or their mix.  Thus, one must be aware of the possible impact on the motivation to become a 'controlling shareholder' in a public company, which is supposed to be based on the belief that the controlling shareholder will be able to act in a manner that promotes the company (and, as a result, him, and all the shareholders in the company).  Harming the incentive to become a controlling shareholder may not serve the shareholders from among the public, which are protected by the rules of approving 'interested parties' transactions.
71. It therefore follows that the determination of the existence of a "personal interest" must therefore be carried out in a proportionate manner (see: the Arad case, at paragraph 49). As we have noted, this is especially true with regard to the controlling shareholder, who is incentivized to increase the value of the company due to the size of his holdings in it, and therefore only a particularly strong personal connection may distort his judgment (Givoni, at paragraph 497).
72. We will emphasize on the last point - the purpose of the Companies Law is, inter alia, to anchor a general framework of proper corporate weight - and inter alia, to protect the minority shareholders and the creditors. In this context, the triple approval mechanism is intended to enable effective coping with the difficulty inherent in the transaction in which the controlling shareholder has a personal interest.  This difficulty is an expression of the "representative problem", which arises due to the lack of identity between the decision makers in a public company and those who are affected by the results of these decisions in light of the separation between the control, which is given to the corporation's managers, and the ownership, which is in the hands of the shareholders.  The triple approval mechanism is intended to restrain the power of the controlling shareholders of public companies by ensuring that actions tainted by a personal interest will be approved only if they are consistent with the interests of the company and the shareholders (Arad, supra, paragraphs 47-49).
73. The representative problem between the majority and the minority exposes the minority to the danger that the majority will make decisions that will be beneficial to the majority but harm the minority. However, the statutory approval mechanism, which comes to provide a solution to this problem, and requires, inter alia, the approval of the general meeting by a majority of the votes of all shareholders who do not have a personal interest in approving the transaction (a majority from among the minority), does not negate the requirement for a general majority and does not have the power to force the majority to make transactions in which it is not interested.  Accordingly, the approval mechanism set forth in section 275 of the Law is not intended to enable the minority shareholders to force the controlling shareholder of the company to make a transaction that would expropriate his control, whether it constitutes a "proprietary asset" (Goshen and Eckstein, pp.  313-314, 321; The Verdnikov case, paras.  55-56) or some other (legitimate) interest of the controlling shareholder.
74. From the aggregate it emerges that in the absence of a "personal interest" in the selection of the mechanism for compliance with the provisions of the Concentration Law, or in the selection of the particular outline that was chosen, then the argument that in view of this personal interest requires the merger transaction to require triple approval to be rejected, in our view, is lawful. It should be emphasized that all of the above is fine even when Tzuf sought to maintain his level of holdings above the 45% threshold; We therefore do not need to address the additional significance that the applicants sought to attribute to the fact that in any case Tzuf waived the 45% condition and it would have been right to lower his holdings below this threshold.

Breaches of Officers' Duties - Tzuf's participation in the discussions of compliance with the Concentration Law and the merger transaction and subordinating the discretion of the Board of Directors to the controlling shareholder

75. As stated, the second track in which the Respondent sought to attack the decisions of the Board of Directors concerning the choice of the alternative of compliance with the Concentration Law and the approval of the merger transaction, is by claiming that the controlling shareholder, as an officer of the Company and the other members of the Board of Directors, breached their duties by virtue of Section 254 of the Companies Law. According to the claim, the controlling shareholder, Tzuf, breached the obligations imposed on him, inter alia, by participating in discussions on the subject of the alternatives to compliance with the Concentration Law and the merger transaction and the obligation, set forth in section 254 of the Law, by seeking to grant himself a significant economic benefit that it is doubtful that he would have otherwise received, certainly to the extent that this benefit involved a deterioration of the terms of the merger transaction from the company's point of view.  With regard to the other members of the board of directors, it was claimed that they breached their obligations under section 254 of the Companies Law by dissolving themselves from independent discretion and subordinating their discretion to the interest of the controlling shareholder, and did not at all examine alternatives that did not reconcile with the interests of the controlling shareholder.
76. In the approval decision, it was determined in these matters that there is a reasonable chance that Tzuf or Yahak allegedly intervened in the selection of the mechanism for compliance with the Concentration Law, even though they had a personal interest in the selection of the mechanism and the manner in which it was carried out, in a manner that caused the company prima facie economic damage due to the need to raise capital to finance the cash component of the merger transaction. In addition, it was held that since there is no dispute that only after Tzuf returned from the condition he presented to the company and the members of the board of directors, did the parties reach an agreement with regard to the terms of the merger transaction, this shows that the directors of the company or any of them allegedly subordinated their discretion to the interest of the controlling shareholder, and in any event, evaded their duty to consider the best interests of the company in choosing the mechanism for compliance with the Concentration Law and the manner in which it was carried out.
77. In addition, the officers' argument that they were entitled to rely on the opinion of Hamdani, in which it was determined that Tzuf had no personal interest, was rejected by the court in light of Prof. Procaccia's preliminary opinion, while noting that the Applicants' (the Respondents in the Motion for Approval) with regard to ordering the additional opinion were not convincing.

Did the controlling shareholder of the company breach his duties as an officer of the company by taking part in the compliance discussions with the Concentration Law and in the merger transaction?

78. Section 278 of the Companies Law prohibits anyone "who has a personal interest in approving a transaction...... which is brought for approval by the Audit Committee or the Board of Directors", to be present at the discussion or to participate in a vote in the Audit Committee and the Board of Directors.  The term "personal interest", which is mentioned in various sources in the Companies Law, is defined in Section 1 of the Law, which is entitled "Definitions" and its application is not limited to specific sections of the Law.  This definition is therefore not limited to examining the need for the mechanism of triple approval, and it extends to the entire law, including section 278 of the law (see and compare: the Arad case, supra, at paragraph 46, and see also what is stated in paragraphs 47-49 above).
79. Accordingly, and since we have come to the conclusion that Float, as the controlling shareholder, there was no personal interest in the choice of the alternative to compliance with the Concentration Law, in the merger transaction or in determining the consideration mix therein, the conclusion is therefore necessary that he should not have refrained from attending the discussion of the company's board of directors or from participating in the voting of the board of directors regarding these matters. We further note that we do not share the position that the Applicants were not entitled to rely on a greedy opinion in light of the preliminary opinion of Procaccia, nor on the reservation expressed in the approval decision regarding the very order of the additional opinion.
80. Procaccia's opinion, despite the fact attributed to it by the Respondent, focuses on the Nasdaq alternative (see, for example, paragraphs 8, 16 and 48 of the opinion). The outline examined in the opinion is the Nasdaq alternative, and Prof.  Procaccia's determination is that " Haim Tzuf, the controlling shareholder of the company, has a 'personal interest' in approving the outline examined in this opinion" (paragraph 50).
81. Hamdani's opinion, on the other hand, was invited in relation to other questions, only after the Nasdaq alternative was abandoned, and among other things, Prof. Hamdani expressed his opinion on the questions of whether the rights issue is a transaction in which the controlling shareholder has a "personal interest"; whether the board of directors, when deciding on the consideration components of the merger transaction, is entitled to take into account the controlling shareholder's objection to being diluted; and whether the controlling shareholder has a personal interest in choosing to deal with the Concentration Law.  It should be noted that Prof.  Hamdani was also asked about his opinion by the Audit Committee.
82. It should also be noted that in our view, the existence of a "personal interest" in the Nasdaq alternative does not mean that the controlling shareholder was prevented from participating in determining the manner of compliance with the Concentration Law. The fact that there is a possible transaction theory on the agenda in which the controlling shareholder has a specific "personal interest" does not mean that if such an alternative has ceased to be on the agenda, then the entire proceeding is necessarily tainted by that "personal interest" and reflects on the required approval for the alternative transaction or on the ability of the controlling shareholder to participate in discussions about it.  In our case, when the Nasdaq alternative was removed from the agenda, we did not find - as stated in the Hamdani opinion - that there was any impediment to Tzuf participating in discussions regarding the manner of compliance with the Concentration Law, including alternatives in which the controlling shareholder had no personal interest, including the merger transaction and the determination of the consideration mix therein.

Did the board of directors dissolve from its independent discretion and subordinate it to the controlling interest?

83. Section 254 of the Companies Law states that an officer owes a duty of loyalty to the company and is obligated to act in good faith and act in its favor. Additional sections of the law set out additional duties, the breach of which constitutes a breach of the fiduciary duty.  Relevant to this matter are sections 106(a)-(b) of the Companies Law, which impose on a director the obligation to exercise independent discretion and prohibit others from harming this independence.
84. In the framework of the approval decision, it was held that "there is no dispute that only after Mr. Tzuf withdrew from the condition he presented to the company and the members of the board of directors, did the parties reach an agreement regarding the terms of the merger transaction, shows that the directors of the company or any of them allegedly subordinated their discretion to the interest of the controlling shareholder, and in any case evaded their duty to consider the company's best interests in choosing the mechanism for compliance with the Concentration Law and the manner in which it was implemented." We do not share this position, which embodies, in our opinion, an assumption that is difficult to adopt, according to which all options are open to the company and subject to the decision of the board of directors.
85. Since we have found that the controlling shareholder is entitled not to support a merger transaction in a certain outline, it is clear that there is no point in advancing the merger transaction by the board of directors, which is subject to the approval of the general meeting of each of the merging companies, and which the controlling shareholder, who has the power to vote against the transaction at the general meeting, has announced that he will not support it. Therefore, taking into account the condition set by the controlling shareholder in the company does not mean that the board of directors has evaded its duty to consider the best interests of the company, but rather its recognition that the alternatives available to the company are limited.
86. It should be recalled that the triple approval mechanism in Chapter 5 is intended to protect the minority, but is not intended to force the controlling shareholder to execute transactions against his opinion. Accordingly, it includes not only a requirement that an untouched majority support the resolution, but also that a regular majority support it at the meeting, and it is clear that if the owner of 73% of the company's shares does not support the decision, it will not be approved.  The merger transaction was subject to the approval of the general meeting, and therefore the controlling shareholder could vote against it and thwart it.
87. The respondent sought to argue for alternatives that did not require the approval of the controlling shareholder, which then prima facie the controlling shareholder could not have brought about the postponement of the decision to adopt, since they did not require approval at the general meeting. This argument of the Respondent is already difficult because it is difficult to identify its consistency with the rest of his arguments: according to him, as recalled, any outline chosen for the controlling shareholder has a personal interest, i.e., apart from excluding him from the discussions on the matter he outlines, the decision will require his approval at the general meeting, approval that the Board of Directors knows in advance will not be granted.  In any event, however, the Respondent had difficulty pointing to any relevant alternatives that were before the Board of Directors, and were not examined.  The one he mentioned: the distribution of Yoel's shares as a dividend in kind to the company's shareholders.  This issue was not discussed in the approval decision, but from the material submitted (as detailed in paragraphs 29 and 95 of the company's summaries in the approval proceeding, and the references therein) it clearly emerges that this alternative was thoroughly discussed by the board of directors, and was rejected, especially in view of the high tax costs involved in its implementation.
88. It therefore follows that in choosing the officers to act on the merger path in an outline that will not be thwarted in any case at the general meeting, and in their initial choice to pay attention to the 45% condition (which, according to the opinion in their possession, the controlling shareholder was not prohibited from imposing it, see the Leibowitz case), does not constitute a dissolution of their independent judgment and in any case a breach of duties towards the company. The Board of Directors was allowed, in the circumstances of the case, to take into account Tzuf's announcement, inter alia, in view of the alternatives that were on the agenda; In view of the voting power of the controlling shareholder at the general meeting; and in view of the early discovery, which is intended to enable the examination of practical alternatives only.  Moreover, the approval decision (which did not elaborate on this matter) does not negate the impression, which arises from the text, that the board of directors held professional discussions and matters, invited legal and economic opinions, and consulted with leading experts, each in its own field.  Therefore, according to our approach, there is no room for a determination that the board of directors dissolved at its discretion, and as a result, there is no basis for the claim of breach of trust or any other obligation.

A note regarding the reasonableness of the transaction and the alleged damage

89. As part of the approval decision, it was determined that the clarifications made by Mr. Vadim Portnoy, the Company's Economic Advisor, at the meeting of the Company's Audit Committee on January 15, 2017, indicate that to the extent that the merger transaction included a larger consideration in cash, due to the need not to reduce the dilution rate of Tzuf, the Company suffered damage that entails the cost of raising capital to finance the cash component of the transaction. In view of these clarifications, the court did not see fit to rule out the existence of the damage claimed by the applicant in the application for approval.  The arguments of the Applicants (the Respondents in the Motion for Approval) that if the Applicant's arguments in the Motion for Approval with respect to the damage caused to the Company due to the choice of the cash component in the merger transaction are accepted, this will have a harmful lateral effect and this is absurd, have not been clarified and their decision has been postponed to the stage of clarifying the derivative claim.
90. Since the officers in our case have letters of exemption whose validity is not in doubt, since the approval decision was not recognized on the ground of breach of the contract of care recklessly, and since we have come to the conclusion that the officers of the company, including the controlling shareholder, in his capacity as chairman of the board of directors, did not breach the fiduciary duties imposed on them, it seems that the discussion of the question in the title is superfluous. In examining the above and beyond what is necessary, we note that it is doubtful whether it is possible to base the statements of Mr. Portnoy, the company's economic advisor, even a prima facie conclusion regarding the existence of damage to the company as a result of the increase in the cash component of the transaction.
91. A review of the minutes of the Audit Committee's hearing on January 15, 2017 shows that Mr. Portnoy's remarks relate to the sources required for the purpose of the merger transaction, which can be shares or cash, without the change in the mix affecting the amount of the total consideration, and they do not relate to the question of whether increasing the cash component, even if it involves raising debt, will cause damage to the company.
92. In light of the conclusions and determinations that we have reached so far, there is no need to discuss the standard of judicial examination required in the case at hand and the question of the application of the business judgment rule.

Conclusion

93. On the basis of the above, the requests for a rehearing are granted, and as a result, the approval decision is canceled. The Respondent will pay legal expenses that include the fee as paid and the transcription expenses, bearing linkage and interest differentials from the date of their payment until the full refund is actually made; In addition, the respondent will pay each group of applicants attorneys' fees in the sum of ILS 30,000, and in the case of business limitations, ILS 60,000.

Given today, 29 Kislev 5785, December 30, 2024, in the absence of the parties.