A Shufersal (A supermarkets company) shareholder requested information about Shufersal’s business activities in order to review the possibility of filing a claim on behalf of the company against its officers, but objected to receiving data from Shufersal’s internal auditor's report.
The Court enabled the receipt of most of the audit report and determined that it can be relied upon. Israeli law stipulates that generally, an internal audit report made by the company’s internal auditor cannot be relied upon as part of a legal proceeding. However, it is possible to rely on the very preparation of the report and its operative determinations, especially if the report may assist in determining whether to file a lawsuit on behalf of the company or not. Here, the report was prepared, among other things, following the complaints of the shareholder and the statements in it may have an effect on the possibility of filing a claim on behalf of the company. Therefore, it is allowed to at least make indirect use of the actual preparation of the report and its operative conclusions.