The appointment of an independent director at Migdal Insurance Company Ltd. was about to expire. Before the end of her term, the board of directors recommended her appointment for two consecutive terms of office of 3 years each.
The Court held that the fact that the company approved the appointment is not sufficient to extend the term and the approval of the supervisor on behalf of the Capital, Insurance and Savings Authority is also required. Israeli Law and the rules promulgated thereunder stipulate that the appointment of an independent director of an insurance company must be approved by the supervisor prior to the commencement of each three-year term, including in case of renewal of appointment of an independent director by the company. Here, the appointment of the director for a consecutive term of six years is at the level of the director and the company’s relationship only, but it does not derogate from the level of the relationship between the supervisor on behalf of the Authority and the candidate for appointment by reviewing the appointment of the director every three years. Therefore, the approval of the board of directors does not derogate from the need for consent of the supervisor to extend the term before each three-year term.