Civil Case (Haifa) 29536-07-26 SP STRATEGIC HOLDINGS LLC v. Inmod Ltd. - part 4

And later in paragraph 223:

"There are situations in which shareholders hold a small part of the capital, and even so, in a certain situation they will hold power that allows them to have a real influence on the direction of the activity [...].  The existence of the ability to direct the activity of the corporation can have various indications, such as the percentage of voting power held by the shareholder, the type of shares he holds, the power given to him to appoint directors, cooperation agreements in which he enters with other shareholders for the purpose of forming a controlling group (as implied by the definitions regarding 'holding', 'purchasing' and 'holding or purchasing securities together with others'), his ability to prevent decisions on material issues, the extent to which the corporation's shares are dispersed, and so on [...] ".

48. Thus, for example, case law in the context of tender offers recognized the possibility that a shareholder would be considered a controlling shareholder by virtue of a voting agreement, whether or not the existence of the agreement was lawfully reported. This is despite the fact that the proportion of shares held by him personally is lower than the threshold that would have allowed him to direct the company's activity himself.  See: Civil Appeal 5105/09 Shapira v.Dexia Credit Local, Paragraph 21 (17/06/12).
49. In the circumstances of our case, it was not claimed by the Applicant that there is a voting and cooperation agreement between any of the parties and Mr. Mizrahi, according to which they agree to vote in an identical manner in the decisions on the company's agenda, and they become joint holders of shares, similar to a single holder. Moreover, Mr. Mizrahi in his affidavit (Article 17) He denied the existence of a voting agreement, and as part of his cross-examination, he was not investigated on this issue at all.
50. The Applicant's claims that Mr. Mizrahi is a similar controlling shareholder are based on the claims that he is one of the founders of the company, that he is the CEO of the company and has a real ability to direct the company's activities, and that he is one of the 5 directors on the company's board of directors. In addition, it was argued at length that the fact that the company's articles of association stipulate a gradual board of directors, the power of the board of directors and the consequent effect of Mr. Mizrahi to control the entrance gate to the board of directors, and this makes it difficult for the shareholders to bring about a material change in the composition of the board of directors, and certainly not in the immediate term.
51. Without setting any precedents at this stage of the proceeding, it would appear that it would be difficult for the Applicant to establish even in the framework of the claim that By virtue of these arguments Mr. Mizrahi should be regarded as a controlling shareholder in the company. It is doubtful whether the claims that Mr. Mizrahi is the founder of the company, serves as CEO and director, and even served for years as chairman of the board of directors are sufficient to tip the scales, since the definition of control in the Securities Law explicitly excludes from the application a person whose ability to direct the corporation's activity derives only from fulfilling the position of a director or another position in the corporation.
52. Moreover, at this time, it has not been proven that Mr. Mizrahi has a majority in the general meeting, and the Applicant has not made any other claim. In addition, The Applicant has not been able to establish that Mr. Mizrahi has the power to ensure that directors proposed by him to serve in the Company will indeed be elected by the General Meeting, just as it has not been able to establish that it has the power to prevent the appointment of a director proposed by another shareholder.  Finally, the connection between the manner of the gradual board of directors mechanism, even if it is claimed that it makes it difficult for the shareholders to replace the members of the board of directors, and the claim that one of the five directors supposedly has control over the appointments to the board of directors and that Mr. Mizrahi should be considered a controlling shareholder in the company.
53. In view of the aforesaid, and since there is prima facie difficulty in accepting the Applicant's argument that Mr. Mizrahi is a controlling shareholder in the Company, it appears that the issue of the competence of respondents 4-6 to serve as independent directors, a central argument in the Applicant's arguments, should be discussed in accordance with foreign law, This was not claimed and was not proven in the framework of the Applicant's claim or in the application for interim relief.
54. More than necessary, I will also briefly address the Applicant's arguments that respondents 4-6 are unfit to serve as members of the Special Committee due to a personal or business relationship that exists between them and Mr. Mizrahi, which raises a concern that they cannot fairly examine a transaction with him.
55. I am of the opinion that even if the qualifications of respondents 4-6 are examined according to the criteria set in relation to For Transactions with a Controlling Shareholder, that is, according to the principle of independence established in the Osem judgment, the Applicant has not been able to point to a personal, economic or commercial connection that is likely to create a relationship of dependency between Respondents 4-6 and Mr. Mizrahi. In this context, I will note that I do not believe that the mere employment of Mr. Mizrahi, and/or any of the respondents 4-5 serving as directors in other companies in which Mr. Mizrahi also serves, in itself creates an affinity or concern that the independent judgment of any of the independent directors will be harmed, especially since as detailed in the response of respondents 4-6, most of the companies on which the claim regarding the connection between Mr. Mizrahi and respondents 4 and 5 was based are no longer active and are in the process of voluntary liquidation.  Similarly, the fact that the appointment of Dr.  Shlomo Ness has not yet been brought to the approval of the General Assembly in accordance with the provisions of the Articles of Association does not impair his eligibility to serve as an independent director and a member of itSpecial Committee.
56. In addition, it should be noted that the Applicant's claim regarding the improper connection between Mr. Mizrahi and the Respondents, which is likely to skew their professional judgment, is difficult in view of the fact that the first special committee in a similar composition, which included Respondents 4 and 5, and whose dependence on Mr. Mizrahi, the Applicant expanded in her application and in the lawsuit convened only a few months ago, examined and rejected a purchase offer made by the Shamir Group, of which Mr. Mizrahi is a member, along with other purchase offers, and in a manner that casts a shadow over the Applicant's claim that the members of the Special Committee are biased in favor of Mr. Mizrahi.
57. And if the aforesaid is not enough, it appears that it was the Applicant who as recently in March 2026 chose to bring her complaints in relation to Mr. Mizrahi's conduct to the Board of Directors and to ask the Board of Directors to examine these claims, as also arose From his interrogation of Mr. Martin in the hearing held on July 30,2026.
58. In light of all of the above, It appears that the Applicant did not present sufficient evidence to support her claims, and that there are significant hurdles before the Applicant with regard to proving her claim. Therefore, , As to the chances of the Applicant's claim, it can be said with due caution that these are clearly not biased in favor of the Applicant.

The Balance of Comfort

59. After considering the entirety of the parties' arguments, I am satisfied that the balance of convenience is clearly tilted in favor of the rejection of the application. And as is well known, the balance of convenience is a central consideration in the question of whether to grant a request for temporary relief If No. See: Civil Appeal Authority 4491/22 Realty Ltd.  v.  Mordechai Aviv Construction Enterprises Ltd., Paragraph 19 (02/08/22).
60. The temporary relief to which the Applicant petitioned in her application is directed against the very convening of the special committee, which is intended to examine and evaluate the various acquisition proposals, including the proposal of the Mizrahi Group and the proposal of the Applicant herself, and against the performance of the functions of the special committee, which include analyzing the proposals accompanied by external professional consultants, conducting contacts in favor of improving the proposals and their terms, and finally making a decision whether to recommend to the company to proceed with the approval of any of the proposals or not.
61. As already noted above, the mere convening of the Special Committee does not create an irreversible situation. It is also clear that the actions that the Special Committee is supposed to conduct, including examinations, discussions, consultation with external consultants and any other move taken by the Special Committee, including a recommendation or lack thereof of a recommendation on one proposal or another, do not create an irreversible situation.  In particular, this is true, since any decision, to the extent that it is made, requires additional corporate approval procedures, including the approval of the Company's general meeting, and therefore there is no justification for granting an injunction that prevents the convening of the Special Committee or limits its activity.
62. On the other hand, granting the requested temporary orders and preventing the convening of the special committee will cause certain and real damage to the company, leaving the company unable to examine proposals submitted to it that may serve the best interests of the company and the shareholders. In practice, the granting of temporary relief will thwart the possibility of examining engagement in the proposals, and it is even reasonable to assume that until the end of the investigation of the main claim, which may continue A considerable amount of time, these proposals will no longer be on the agenda.
63. Beyond what has been said, there is substance to the respondents' argument that an examination of the remedies requested in the framework of the claim shows the identity between them and the temporary remedies. This is true with regard to the main remedy that concerns "Declaratory order stating that defendant 2 is the controlling shareholder of the company" and for the additional remedy concerning "Declaratory order stating that the company's decision to establish the special committee was made unlawfully" and to the temporary relief requested Prevent convening the special committee on the grounds that Mr. Mizrahi is the controlling shareholder of the company and therefore the members of the special committee are not qualified to serve as independent directors.  In these circumstances, it is clear that the requested temporary relief is not intended to serve the final remedy, but rather the temporary remedy is the final remedy, and this is sufficient to constitute a reason for rejecting the request for temporary relief.  See: Civil Appeal Authority 6685/17 Mountain of Success and Blessing Ltd.  v.  Bank Hapoalim Ltd.  (10/09/17).
64. In addition, it appears that the application was submitted even with considerable delay, since two members of the Special Committee: Dr. Hadar Ron and Mr. Nadav Kenneth, in respect of whom the Applicant raised claims of dependency, served as members of the first Special Committee, the convening of which was published in February 2026, and they examined a proposal by the Shamir Group, of which Mr. Mizrahi is a member.  The Applicant certainly knew the identity of the first Special Committee, since the Applicant also submitted her first proposal at that time.  Notwithstanding the aforesaid, the Applicant delayed and submitted her application only on July 10,2026, while during the entire said period of time she did not raise any claim regarding the composition of the Special Committee.  Given the aforesaid, I therefore accept the Respondents' argument that the Applicant took a considerable delay in filing the application without pointing to the justification for the timing of the filingThe The delay of her request, a delay that is sufficient accordingly Regulation 95(d) To the Civil Procedure Regulations, 5779-2018 to bring about the rejection of her application.  Also See: Civil Appeal Authority 8630/05 Nir Cooperative - National Association for the Settlement of Hebrew Workers in Israel Ltd.  v.  Hod Hasharon Municipality, Paragraph 6 (10/04/07)
65. Finally, it cannot be denied that the application was submitted while concealing material data, the most prominent of which is the failure to disclose the fact that the first special committee in a similar panel rejected a purchase offer received from the Shamir Group, of which Mr. Mizrahi is a member, a circumstance that is significant for examining the claim of dependency claimed by the Applicant in relation to respondents 4 and 5.

Conclusion

66. In light of all of the above, The law of the application for temporary injunctions to be rejected.
67. The Applicant will bear the expenses of Respondents 1-3 in the total sum of ILS 15,000 and will also bear the expenses of Respondents 4-6 in the total sum of ILS 15,000 ₪ (Together ILS 30,000). To these amounts will be added linkage differentials and interest as required by law from today until the full payment is actually made.
68. The Secretariat will provide a copy of the decision to the parties.

Granted today, August 10,2026, in the absence of the parties.