Caselaw

Civil Appeal 4024/13 Tikva – A Village for Vocational Training in Giv’ot Zaid Ltd. vs. Arie Pinkovich - part 21

August 29, 2016
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Indeed, Gutwein and Horn's long stay abroad does not in itself justify neglecting their duties as directors or their refusal to give notice to the company of a change in the terms of their qualifications.  With regard to Gutwein, for example, the trial court accepted what was stated in his affidavit that he had spent most of the year in Switzerland in recent years and that from time to time he would receive reports from Pinkowitz or from officials and external consultants of the village, regarding the financial strength of the village and that he had never heard of any problems.  However, as has already been stated in the Bank of North America case, the fulfillment of a director's duties cannot be carried out by "remote control", and an essential part of the proper functioning of the board of directors is the holding of meetings and the active presence of the directors in them:

"The board of directors is a central organ of the company.  It operates through the officers (directors) who are appointed as members of the board of directors.  Every director is obligated to participate in the fulfillment of the duties of the Board of Directors.  The Board of Directors fulfills its duties, inter alia, through meetings of the Board of Directors and its committees.  Hence, it is the duty of every director to participate in the meetings of the board of directors when he convenes.  Sometimes he is even obligated to demand that the board of directors convene where he refrains from convening.  A director cannot fulfill his duties by remote control.  He must attend the meetings of the Board of Directors.  Of course, the obligation to attend board meetings is not an absolute obligation.  A director shall not breach the duty of care imposed on him towards the Company, if for proper reasons he refrains from participating in this or that meeting of the Board of Directors.  It's all a matter of measure and reasonableness.  It all depends on the number of meetings of the board of directors held in a year, the number of directors, the size of the company, the nature of the company's business, the matters discussed in it, and the number of director's shortcomings" (Bank of North America case, paragraph 44, emphases added, Z.Z.).

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