Finally, it was noted that the requested temporary relief is an injunction – intended to prevent the operation of the protection plan, and not an injunction that interferes with the content of the plan; and that this is not the same remedy as the final remedy, since it relates only to preventing the operation of the plan due to an agreement to convene a meeting during the period of time until the claim is decided, and not afterwards. It was also clarified that the Respondents' position that they do not object to the protection plan itself does not attest to their agreement to implement the plan on shareholder agreements for the purpose of convening a special meeting.
In light of all of the above, the court ordered the issuance of a temporary injunction that will prevent the Applicant from activating the protection plan if the Respondents join forces with other shareholders in the company to demand the convening of a special meeting. It was emphasized that this prohibition applies only to shareholders' consent to convene a special meeting – and not to agreements Possibilities Others of shareholders who jointly hold 10% of the company's shares.
Application for Leave to Appeal
- The application for leave to appeal against this decision was filed before me. In summary, the company reiterated the argument that the permitted receivership mechanisms do not infringe the right to receivership, but rather regulate it, in order to ensure the transparency required for the purpose of protecting the company. According to the company, the trial court ignored the limitations of American law that apply to it as it is traded on the American stock exchange, without being presented with an expert opinion regarding foreign law; and made determinations that are not required for a decision on interim relief, inter alia, based on foreign law. It was further argued that the purpose of the Relief Regulations is to protect companies subject to a system of laws that are subject to an additional system of law than the Israeli one, from abuse of the advantage that Israeli law grants to shareholders in relation to the convening of a special meeting – and this purpose should also be learned with regard to the interpretation of section 63 ofthe Companies Law.
The company argued that the court also erred in its assessment of the balance of convenience, since the respondents would not be harmed by conducting a public solicitation proceeding; Alternatively, even if such damage is caused, it will be limited and can be compensated financially. On the other hand, it was argued that the expected damage to the company is a concrete threat from a takeover by the respondents, as they are activist hedge funds with a history of hostile takeover attempts at the company; As well as damage from decisions made at the shareholders' meeting, which may be irreversible. Finally, it was argued that the temporary relief is not an injunction but rather an injunction, since it actively interferes with the protection plan and excludes its application to certain agreements. Therefore, according to the company's approach, it was necessary to examine the respondents' request with more stringent standards.
- The respondents, on the other hand, argue that the application should be dismissed. According to them, the chances of the lawsuit being accepted are high, since a board decision that violates a cogent right is invalid. They claim that the permitted mechanisms of convening do not "regulate" their right to convene the meeting, but rather set preconditions for it; and that these mechanisms are not at all necessary to maintain the transparency that exists in any case in the process of convening a special meeting. It was also argued that if the company wishes to comply with the provisions of American law, it must prove it in an expert opinion; In any event, this law is irrelevant with regard to the requirement to convene a special meeting by virtue of the Israeli Companies Law .
00 According to the respondents, the trial court's reference to the foreign law was made more than necessary only and in response to the Applicant's reference to this law. It was further argued that the Applicant's argument with respect to the purpose of the Relief Regulations is a new one; In any event, this is a erroneous claim, since the proposer of the Regulations chose to protect companies subject to an additional system of laws by raising the threshold of holdings required for receivership – and only in doing so, and did not seek to impose additional restrictions.