And more about the refusal of directors to register the transfer of shares. The decision of a company's directors, or any of them, to refuse to register a transfer of shares must be made in good faith, and only for the benefit of the company. This power may not be exercised arbitrarily or in deprivation of the rights of other shareholders, whether they are a minority, equal or a majority; This is what the scholar Felman says in his aforementioned book:
"The power of the directors to refuse to register the transfer of shares is a presumption of fiduciary power, and they must use it in good faith, that is, for the legal purpose for which the power was granted, this power may not be used by oppression, or arbitrarily or maliciously, or for a side purpose... They must act in good faith in the best interests of the company, while preserving the right of the shareholder to transfer his shares... In all cases, the directors must reasonably discuss the transfer at the board meeting before deciding on a refusal..." (ibid., at pp. 434-435).
Since the shares were purchased in a legitimate and legal manner from the foreign companies, and it was not claimed otherwise, and since the shares were offered to the respondents, first, according to the first right of refusal, and the respondents did not take advantage of this right, I do not see what is the reason for the refusal to register the transfer of the shares in the name of Milmus. Every claim is retroactive, but because the liquidation request came more than six years after the purchase of the shares – it has no basis. An estimate, a hypothesis or a guess, in the sense of "we knew that Milmus came with the intention of liquidating the company", are mere statements, and at most they can be raised in the discussion of the liquidation request, but they do not contain a reason to refuse the transfer of the shares. Plainly, that the respondents did not know and could not know about the intentions of Milmus. The respondents managed the company with the foreign companies, and even then they raised overt or covert allegations against the foreign companies about their intentions to liquidate the company or "swallow" it and deprive Benny Cohen of their rights. The aforementioned "pairing" of members of one family as founders of a private company, whose every lobe and fortune is concentrated in the hotel, and whose interests are only to him, with a foreign company, is a pairing that may not in any case be a recipe for success. However, the respondents should not complain about this matter, since they had previous experience with the foreign companies, and what can they complain about when Milmus replaced the foreign companies in the purchase and holding of the shares. Not only that, but since Milmus came in place of the foreign companies, and even after a request to register the transfer of shares to which it was refused by the Respondents, the Respondents continued to view Milmus and its representatives as having rights and obligations in the company. Its representatives even signed the company's checks. The Respondents' claim that Milmus representatives were in its eyes, but that the representatives of the foreign companies that had sold their shares to Milmus for about seven years, is an "unserious" and arbitrary claim.
- The registration of shares in the name of their owner or the person who holds them is not a theoretical matter, but rather has practical implications, inter alia, as in our case, in an application for the liquidation of a company. In order to request liquidation, the shares are required by law to be registered in the name of the liquidation applicant at least six months prior to the liquidation request. What is the law when the non-registration stems from "improper conduct" on the part of officers of the company, including directors? Prof. Tzipora Cohen responds to this in her book "Liquidation of Companies", Israel Bar Association Press, 2000, on page 156, as follows:
"The question of what is the law of a shareholder who is not registered in the Register of Members due to an unlawful refusal by the company to register him, has not yet been discussed in local case law. In English case law, disagreements arose on this question. There is a case law that supported the calculation of the six-month period from the date on which a defect in the company's conduct can be found – and not from the date on which the shareholder's name was actually registered in the register of members. In contrast, the opposite ruling was given there, which placed the date of registration as the determining date... I have already expressed my opinion in another source [Z. Cohen, Shareholders in the Company – Rights of Claim and Remedies, 5751, section 234], that it is not possible to ignore the statutory requirement to register the name of the shareholder for six months prior to the filing of the application for liquidation. However, the party obligates not to deny the shareholder's right, when the absence of registration in his name stems from improper behavior on the part of the company's officers. The solution that I have proposed, which I still think is the appropriate solution, is for the court to issue an order to register the name of the shareholder in the register of members starting from the date on which the company should have registered."