In his cross-examination, the defendant claims that he informed Maor about the management fees as aforesaid:
Q: Okay. Tell me, did you present this entire mechanism of the agreement to Hagai before the signing of the agreement?
A: So I'll tell you very simple. 1. It is not a sophisticated mechanism, it is a very simple mechanism. And when we sat down with Hagai before the agreement was signed, I explained to him in a very simple way that Socrates ultimately has heavy legal proceedings against Attorney Erez Aharoni, and these proceedings require me to work quite a few hours, require quite a bit of effort, including financial expenses, and therefore I will receive management fees" [Transcript of the hearing of June 9, 2025, at p. 51, lines 13-21].
- On the other hand, the financial statements for 2018, which detailed the debt to a "related party", were sent months after the signing of the agreement between the parties [Appendix D to Gazit's main witness affidavit] and no exhaustive explanation was given - neither in the correspondence between the parties, nor in the agreement or in the financial statements themselves - for the calculation of the debt as aforesaid. When asked why the management fee agreement in question was not written in the agreement, the defendant replied that "[he - M.A.] Explanation" [ibid., at p. 52, line 24]. Moreover, in his cross-examination, Maor presented a completely opposite picture, according to which "[Gazit - M.A.] He never said" that the company owed him money [ibid., at p. 9, lines 16-18]. All of this, alongside the unexplained increase in the amount of the debt in 2019, which contradicts the defendant's announcement that the distribution of the management fees as aforesaid had been stopped. From the totality of the matter, I find preference to the plaintiff's version that the management fees were burdened, and even more so after the agreement was signed on the company by the defendant, not in an orderly proceeding or by agreement in a manner that could constitute discrimination against the minority.
Compartmentalizing the plaintiff from the company's activities
- According to the plaintiff, the defendant excludes her from the company's activities and refrains from providing it with financial statements as required by law. This compartmentalization is expressed, inter alia, in the defendant's control over the preparation of the company's financial statements; the defendant's lack of cooperation in all matters relating to the filing of an appeal in the derivative claim proceeding; and the ongoing delay in the delivery of the company's financial statements to the plaintiff.
- Regarding the plaintiff's participation in the preparation of the company's financial statements. Admittedly, the plaintiff has a legitimate expectation of joint management of the company's affairs, but this is not an absolute expectation. Section 92(a) of the Companies Law states that the board of directors will be responsible for the preparation and approval of the company's financial statements. The rule is that the board of directors is obligated to approve the financial statements, sign them and present them to the company's annual meeting of shareholders [see: Civil Appeal 8548/06 Haim Indig v. Premier Club Ltd., at paragraph 13 of the judgment of Deputy President E. Rivlin (Nevo, August 31, 2008)]. Alongside the aforesaid, nothing was stipulated in the company's articles of association that excluded the defendant's responsibility to prepare the financial statements.
- In light of the above, I am of the opinion that the plaintiff did not meet the burden of proving that she had a legitimate expectation to participate in the preparation of the company's financial statements, and that the defendant's conduct was capable of harming her expectations as aforesaid. It was agreed by the parties that the defendant would act as the sole director of the company, which grants him the right - and as aforesaid, the obligation - to prepare the company's financial statements. I have not found in the plaintiff's arguments and in the evidence presented by her to lift the burden of proof in this matter, especially where the provisions of the law and the language of the agreement indicate a duty that is imposed on one party to the proceeding at hand.
- Regarding the plaintiff's participation in the defendant's intentions to file an appeal in the derivative claim proceeding. In my understanding, the issue of filing the appeal first arose between the parties on July 28, 2021, through their WhatsApp correspondence , in which the defendant updated that the "Green Light" attorneys were allowed to move forward with the submission of the appeal to the Supreme Court [see Appendix 6 to Maor's main witness affidavit, at p. 70]. Specifically, the testimonies show that the appeal was filed on September 13, 2021 [Appendix H to Gazit's main witness affidavit, at p. 92], about a month and a half after Maor learned of the defendant's desire to file an appeal on the matter. In the evidence before me, I did not find that during the said period of time, Maor's objection was presented to the very filing of the appeal in the derivative claim proceeding or to his non-participation in the decision-making process.
Moreover, the plaintiff did not lay a normative foundation that establishes her right to take part in the decision-making process relating to filing appeals on behalf of the company. As a rule, the starting point is that the authority to file claims on behalf of a company is vested in the company's board of directors [see: Civil Case (Economic) 43013-03-17 Polina Hassin v. Max Lubband, at paragraph 32 of the judgment of Judge R. Ronen (Nevo, June 19, 2018)]. In the absence of an explicit provision in the company's articles of association, the company's board of directors has residual authority in this context [see: Tzipora Cohen, Shareholders in the Company: Rights of Claim and Remedies, Vol. 3, p. 450 (2010)]. I am not convinced that the plaintiff bore the burden of persuading that the defendant should have cooperated with her before filing the appeal in question, and that the defendant's conduct violated her legitimate expectations. Even if the company's affairs were managed in cooperation for the purpose of identifying it as a kind of partnership, this finding does not detract from the balance of power between the parties, as Gazit is a sole director and controlling shareholder who holds 80% of the voting power. Against the background of the lack of objection from Or, I find that the decision to continue the appeal proceedings does not attest to the deprivation of the plaintiff. The defendant's claim that the proceeding was intended to maximize value for the company and for its benefit was not contradicted, while the plaintiff's claim that this was a move motivated by personal considerations was not proven. This is without making a positive finding one way or the other regarding the necessity of the appeal process taken by the company.
- Finally, with regard to the delay in the delivery of the company's financial statements. The submission of full financial statements and on the relevant dates is necessary for the proper management of a company, especially when there are information gaps between shareholders regarding their content [for example, see: Civil Case (Jerusalem District) 34835-01-16 Yitzhak Levy v. Micha Levy, at paragraphs 1438-40 of the judgment of Judge M. Drori (Nevo, July 29, 2019)]. In a company that is not a reporting corporation, a shareholder in the company has the right to receive a copy of the company's financial statements, without conditions [for a full description of the law on the matter, see: Civil Case (Tel Aviv District) 62181-10-21 Assaf Shoham v. Eyal Raz, at paragraphs 46-47 of the judgment of Judge Rosen Ozer (Nevo, April 23, 2026)]. Failure to submit full financial statements on time, as determined by law or the company's articles of association, may lead to information gaps between a shareholder who is a director of the company and the other shareholders. In this way, a minority shareholder may be harmed, especially when it comes to a company that is a kind of partnership and in which there is a legitimate expectation of joint management of its affairs.
With regard to the plaintiff's claims regarding the delay in the financial statements for 2019: on the one hand, the evidence shows that the reports for 2019 were completed only at the end of August 2021, and then transferred to the plaintiff shortly afterwards [see Appendix F to Gazit's main witness affidavit, at pp. 68-69]. This means that the reports were delivered to the plaintiff within a reasonable period of time from the moment they were completed. As for the actual completion of the reports only in August 2021, this is a long delay in completing a financial statement that included material information regarding the scope and calculation of the debt to a "related party", about a month after a dispute broke out between the parties regarding the existence and scope of the debt in question. On the other hand, the defendant explained that the illness of the company's accountant and the process of replacing him led to such delays [paragraph 65 of Gazit's main witness affidavit]. Maor admitted in his interrogation that he knew throughout the relevant period about the delay and its circumstances [see the minutes of the hearing on June 9, 2025, at p. 27, lines 16-31 and p. 28, lines 3-12]. Moreover, the parties cooperated in taking steps to resolve the delay, including referring the defendant to an accountant on behalf of Maor. In the circumstances, it appears that the delay in the reports for 2019 does not discriminate against the minority.