The informal engagement of the parties was expressed in other ways as well. The company, for example, emphasized in its articles of association that it is "not obligated to hold annual general meetings except to the extent necessary for the appointment of an auditing accountant and/or at the request of one or more of the company's shareholders or directors" [see section 6 of the company's articles of association], and no evidence was presented regarding the formal convening of board meetings or annual meetings.
Moreover, as part of the management of the company's affairs, they relied on each other regarding the independent conduct of negotiations with external parties [for example, see Appendix 6 to Maor's affidavit of the main witness, at p. 51, lines 7, 11-12; pp. 58-60]; regarding engagement with financial entities for the purpose of obtaining loans to the company [for example, see ibid., at p. 58, lines 21-22; p. 61, lines 8-13]; and regarding the conduct vis-à-vis the Registrar of Companies [for example, see ibid., at p. 65 (regarding Maor's reliance on Gazit regarding the error in reporting to the Registrar)].
- The language of the agreement, against the background of the actual conduct of the parties, indicates the tendency of the parties to jointly manage the company's business alongside the formal management by Gazit. In the agreement, it is agreed between the parties that "the parties undertake to assist in the advancement and prosperity of the company as much as possible and that they will act towards each other in all matters related to the management of the company's affairs in good faith, transparency, cleanliness and loyalty, and will provide a full and accurate report on every action relating to the company and its matter" [clause 5.1 of the agreement; Emphasis not in the original - M.A.]. The language of the agreement indicates a common expectation on the part of the parties to manage the company's affairs in cooperation.
- The agreement between the parties imposes restrictions on the transfer of shares in the company. With regard to the share offenses, the agreement stipulates that "the buyer and the seller will have the right of first refusal to sell each other's shares, as well as the right to join the sale of shares (tag-along) of the other" [clause 4.2 of the agreement]. In other words, both parties voluntarily limited the ability of foreign parties to join as shareholders in the company without the consent of the other [compare: the case of Individual Industries, at para. 17]. Furthermore, the Company's Articles of Association state that "any transfer and allocation of shares must be approved by the Board of Directors" [Section 5 of the Company's Articles of Association]. It can be understood from the language of the documents in question that the parties acted in advance to preserve the relationship between them against external interference [compare: the Bondorovsky case, at para. 8(f) for the discussion of the judgment].
- The company's financing policy indicates a shared expectation to cover its expenses. To the extent that the company is required for additional financing, the parties undertook in advance "[to provide M.A.] the capital required by the company, each in accordance with the proportion of his share in the issued capital of the company's shares, as owners' loans or against the allocation of shares..." [Clause 4.4 of the Agreement]. In other words, the parties undertook to cooperate in raising funds for the company's coffers from their own pockets, according to the proportion of their relative ownership therein [for an example of the implementation of this condition, see: The Individual Industries case, at para. 17].
- This is a private company with only two shareholders.
- In light of the above, I found that the company should be classified as a kind of partnership for the purpose of discussing the provision of relief for the removal of discrimination and/or the separation of powers between the parties. Even if the relationship between Maor, on behalf of the plaintiff, and Gazit was expressed in power disparities between them with regard to the management of the company and Gazit being formally the sole manager, the other characteristics of their relationship attest to continuous cooperation and the expectation of joint management of the company. This is where we are dealing with a private company with two main shareholders, and the management of the company involves a relationship of trust and friendship [compare: Haski, at para. 4].
Has there been a loss of trust between the parties?
- As may be recalled, the court may order a remedy of separation of powers if there is a loss of trust between shareholders in a company that is characterized as a kind of partnership. Since I have found that the company was conducted as a kind of partnership, the question of the crisis of trust must be examined, whether it has indeed been proven.
- The defendant argues that the conduct of the parties does not establish a claim of loss of confidence or a deadlock that entitles the plaintiff to the remedy of separation of According to him, there was no expectation from the outset for joint management of the company's affairs, and there was no material change in the parties' relations from the beginning of the dispute in question until today. The parties act by virtue of common interests, and the plaintiff receives all the required information about the company's affairs as to which she is entitled. Therefore, the defendant insists that there is no reason to order a remedy of separation of powers due to a loss of trust and reaching an impasse in the management of the company's affairs, including because Gazit is a sole manager.
- After reviewing all the relevant documents and claims, I found that there is evidence of a loss of trust between Maor and Gazit, which has implications at the level of shareholders and at the level of the company and its management. It seems that this fracture requires and justifies the granting of relief by the court. Here are the main indications:
- The statements of the parties indicate a significant rift between them regarding the company's affairs, which apparently intensified as a result of the ongoing legal proceedings. Some of their statements are presented as follows:
"Look, I was naïve. I really thought I had entered the business with a normal, normative person. And I was wrong..." [Transcript of Maor's cross-examination of June 9, 2025, at p. 13, lines 13-14].