Legal Updates

A decision of all shareholders obligates the company in all respects

February 22, 2022

A company signed a middleman agreement with an entity that located a purchaser for the company's shares and undertook to ensure that out of the consideration paid to the shareholders, the commission would be deducted and transferred to the middleman. All shareholders approved the agreement. Following the completion of the transaction, the company, under the new shareholders, refused to pay the commission from the company, partly in light of the fact that the middleman agreement expired and was not renewed, even though the shareholders requested the middleman to continue finding a purchase for the shares.

The Supreme Court found that the company is obligated to pay the commission. A unanimous decision made by all the shareholders of a company obliges the company in all respects. Although the middleman agreement has expired, the middleman is entitled to count on the rule regarding the superiority of the shareholders acting together as one body and when the authorized representative of all shareholders informed the middleman that the agreement was extended and requested him to find an investor, the middleman is entitled to the commission. In addition, even had there not been an agreement in force, a middleman is entitled to receive a reasonable consideration and there is no more reasonable amount than that which rate is anchored in the prior agreement of the same parties. To the extent that the new shareholders of the company are not interested in bearing the middleman commission, they may demand it from the selling shareholders but not from the middleman.