Civil Case (Tel Aviv) 22538-09-22 Chess – Maor Management and Investment Company Ltd. vs. Shlomi Netzach Gazit

Judgment

1. I have before me an action in which the plaintiff petitions for removal of discrimination by virtue of the provisions of section 191 of the Companies Law, 5759-1999 (hereinafter: the "Companies Law"), including declaring that Socrates' affairs in block 6164 in a tax appeal (hereinafter: the "Company"), are being conducted in a manner that deprives the rights of Shech-Maor Management and Investment Company in a tax appeal (hereinafter: "the Plaintiff") as a shareholder in the company. The court is asked to order the enforcement of a condition for the exercise of an option in a shareholder agreement between the parties, or alternatively, to order the liquidation of the company with a division of its assets in kind.

The parties to the proceeding

2. Shavit Cinema in a Tax Appeal (hereinafter: "Defendant 2") is a private company that holds all the rights to a single real estate property in Givatayim (Block 6164, Plot 230, Sub-Plot 8), which was previously used as a cinema and is now leased to commercial businesses (hereinafter: the "Property"). The controlling shareholder of defendant 2 is Nesher Baz in a tax appeal (hereinafter: "Nesher Baz"), which is held by Adv. Erez Aharoni (hereinafter: "Aharoni") and Adv. Shmuel Zisman (collectively: "the controlling shareholders of defendant 2").  Aharoni also serves as the CEO and sole director of defendant 2.
3. Socrates in Block 6164 in a tax appeal (hereinafter: the "Company") is a private company that holds approximately 25% of the issued share capital of defendant 2.
4. Shah-Maor Management and Investment Company ( hereinafter: "the Plaintiff") is a private company wholly owned by Mr. Hagai Maor (hereinafter: "Maor"), who serves as its CEO and sole director. The plaintiff holds 2,000 ordinary shares of the company, which constitute about 20% of its issued share capital.
5. Shlomi Netzach Gazit (hereinafter: "the defendant" or "Gazit") is the controlling shareholder of the company, and even serves as the company's manager and sole director thereof. Gazit holds 8,000 ordinary shares of the company, which constitute about 80% of its issued share capital.

Background and sequence of events

6. The company was established in 2006 by the defendant. For more than a decade, the company has been used for activities related to holding shares in defendant 2.
7. Over the years, disputes arose between the defendant and the controlling shareholders of defendant 2. First, a question was discussed regarding the scope of the company's holdings in defendant 2 in civil (economic) case 7499-02-14, [Nevo], which was conducted before the Honorable Judge Ronen.  A few years later, the company, then wholly owned by the defendant, applied to the court to request permission to conduct a derivative action against the controlling shareholders of defendant 2, in a derivative action (Tel Aviv-Yafo) 32874-01-18 [Nevo] that was conducted before me (hereinafter: the "Derivative Claim Proceeding").
8. The Ottoman Settlement [Old Version] 1916On June 3, 2019, an agreement was entered into between the plaintiff and the defendant entitled "Agreement of Principles for the Sale of Shares" (hereinafter: the "Agreement"), in which it was determined that the plaintiff would purchase 2,000 ordinary shares of the company from the defendant for a payment in the sum of ILS 1.1 million.
9. 12-34-56-78 Chekhov v. State of Israel, Pis.    51 (2)After a while, disputes arose between the parties.  Among other things, disagreements between the parties regarding their obligations to the company as stipulated in the agreement were exposed; regarding the plaintiff's responsibility to bear the company's legal expenses; and regarding the attribution of a debt on the part of the company to the defendant as a "related party".
10. On January 18, 2022, the plaintiff's counsel sent a warning letter to the defendant, detailing a demand to liquidate the company with a division of its assets in kind. In the letter in question, the plaintiff insisted that the defendant's conduct amounted to discrimination against her.  According to her, the defendant, on the one hand, excludes her from the company's activities, and on the other hand, demands that she inject personal funds into the company in contravention of the agreement between the parties.  Moreover, it argued that the parties are at a "dead end" with regard to the management of the company, so that the separation of powers between them should be carried out by way of a division in kind.
11. In the defendant's response letter dated January 25, 2022, the defendant questioned the factual basis according to which the plaintiff seeks to liquidate the company's assets in kind and asked for clarifications regarding the compartmentalization claims raised by the plaintiff; This, according to him, is in order to carry out repairs and supplements accordingly. Alongside the aforesaid, the defendant discussed the plaintiff's alleged breach of the agreement and the difficulties inherent in it.
12. On July 14, 2022, the plaintiff updated that an offer had been received on July 5, 2022, for the sale of its shares in the company to a third party (hereinafter: the "potential purchaser") for a total of ILS 1.5 million. This is in view of the right of the first refusal granted to the parties by virtue of the agreement.
13. On August 14, 2022, the defendant responded to the plaintiff's letter. In his response, the defendant waived his rights to purchase the plaintiff's shares by virtue of the first right of refusal as defined in the agreement.  In addition to the aforesaid, the defendant noted that the provisions of the articles of association require the approval of the board of directors for any transfer of shares in the company.  According to him, approval from the board of directors is essential for the purpose of executing the purchase, especially in light of the concern that this is a third party that is connected, directly or indirectly, to the controlling shareholders of defendant 2.  Moreover, the defendant noted that it is possible to raise financing against the allocation of shares in the company.
14. A copy of the defendant's reply letter was sent by the plaintiff's counsel to the potential buyer. On August 17, 2022, about three days after receiving the response letter from the defendant, the potential buyer's attorney canceled his offer to purchase the plaintiff's shares in the company - this, according to him, due to the defendant's response letter and what is stated therein.
15. On September 11, 2022, the action was filed with this court regarding the removal of discrimination under section 191 of the Companies Law. On December 14, 2022, the defendant filed a statement of defense, in which it was argued that the claim should be dismissed, both in limine and on the merits of the matter.
16. On July 17, 2023, the parties agreed to apply for a mediation proceeding. After about nine months, the parties announced that the mediation process had ended without a settlement.

Copied from Nevo

17. On August 11, 2024, the plaintiff filed a motion to amend the statement of claim in the present proceeding. This, according to her, is in light of the defendant's objection to the exercise of the terms of the option agreed upon between the parties in clause 4.3 of the agreement, whereby the defendant will purchase from the plaintiff its shares in the company for ILS 700 per share or according to the value of the company as determined by an agreed real estate appraiser, whichever is higher.  After submitting responses and holding a hearing, and without addressing the plaintiff's arguments on their merits, I found in the decision of November 13, 2024, that the amendment of the statement of claim should be allowed as requested.
18. On December 12, 2024, the plaintiff filed an amended statement of claim in the present proceeding. Alongside the original claims regarding minority discrimination and loss of trust between the parties, the plaintiff insisted on her right to exercise the terms of the option set out in the agreement.  As a result, this court was asked to order the enforcement of clause 4.3 of the agreement and the appointment of a real estate appraiser for the purpose of valuing the shares in the company.  Subsequently, the plaintiff waived the demand to appoint an appraiser as described.
19. On January 26, 2025, the defendant filed an amended statement of defense, in which it was argued that the plaintiff's claims should be rejected in full, both in limine and on their merits. Without derogating from what was written in the original statement of defense, the defendant replied that there was no reason to order the enforcement of the terms of the option.  This, according to him, is because the plaintiff did not activate the mechanism as required for the exercise of the option and that the date for its exercise has passed; It was further argued that the plaintiff is not entitled to petition for the exercise of the option when she is in breach of the agreement under which she is suing.  If the plaintiff's claim regarding the exercise of the terms of the option is accepted, he was asked to offset the amounts of damages that according to him were caused to him by the plaintiff.
20. On March 17, 2025, the plaintiff submitted an affidavit of the main witness of Mr. Hagai Maor, the only witness in the present proceeding. About two months later, the defendant filed an affidavit of primary witness as his sole witness.  On June 9, 2025, the evidentiary hearing was held.  Summaries on behalf of the plaintiff were filed on September 21, 2025, and summaries on behalf of the defendant were filed on November 23, 2025.

The parties' arguments