I will add that in the agreement there is a "rubrica" that is crowned with the title of "personal guarantee", but the rubric was not fulfilled and was not signed by anyone.
- I also considered the plaintiff's argument that Uri should be obligated to pay the debt of Prestige by virtue of the grounds for lifting the corporate veil, I also considered it to be rejected.
Section 4 of the Companies Law, 5759-1999 (hereinafter: the "Companies Law"), states as follows:
"A company is a legal entity capable of any right, duty and action that is consistent with its character and nature as an incorporated body."
The principle according to which a company is a separate legal entity from its shareholders constitutes the basis of corporate law in Israeli law.
To this principle, there is an exception set forth in section 6(a) of the Companies Law:
"6. (a)(1) A court may attribute a debt of a company to a shareholder therein, if it finds that in the circumstances of the case it is just and correct to do so, in the exceptional cases in which the use of the separate legal personality is made in one of the following:
(a) in a manner that may defraud a person or deprive a creditor of the company;
(b) in a manner that harms the purpose of the company and while taking an unreasonable risk as to its ability to repay its debts,
provided that the shareholder was aware of such use, and taking into account his holdings and the fulfillment of his obligations to the company under sections 192 and 193, and taking into account the company's ability to repay its debts."
As the language of the section indicates, the court may "lift the corporate veil" - that is, attribute to a shareholder in the company a debt of the company, in exceptional cases.
Other Municipal Applications 3807/12 Ashdod City Center K.A. In Tax Appeal v. Shmuel Shimon (given on January 22, 2015), the court referred to the fact that it has been held more than once that the remedy of lifting the veil must be used very carefully, while clarifying that after the amendment of section 6 of the Companies Law, the cases in which it is possible to lift the veil have been significantly reduced: "In the rulings of this court it has been determined more than once that the remedy of lifting the veil is an extreme and far-reaching remedy, It should be used with extreme caution in exceptional cases and not as a routine matter, since it means the abolition of the separate legal personality of the company and a retroactive change in the array of legal rivalries by the court. This determination gained further validity after section 6 of the Companies Law was amended in the framework of Amendment No. 3 to the Companies Law of 2005, and as part of the amendment, the cases in which the court may lift the corporate veil between the company and its shareholders were significantly reduced" (hereinafter: "the Ashdod City Center Case").
- In our case, Uri was not the shareholder of Luxury, but of Weisbord Holdings, which on some of the relevant dates of the lawsuit, was the shareholder of Luxury.
The plaintiff did not sue Weisboard Holdings, and did not claim at all that a two-stage curtain lift should be carried out - i.e., between Prestige and Weisboard Holdings, and then between Weisboard Holdings and Uri.