Investors in a company contended that the share purchase agreement was an apparent contract because it hid the fact that the company allocated to one of the shareholders against a shareholders loan.
The Court rejected the claim and stated the contract is not an apparent one. A contract entered into for appearance is a contract that outwardly relies on a certain arrangement, while the intention of the parties is different, and is therefore void. However, when the agreement described in the contract is legal and correctly expresses the intention of the parties and the second agreement described in the contract does not reflect their intentions and is meant for a purpose unrelated to the execution of the contract, the true intention of the parties shall be given effect. Here, the data recorded in the agreement does not change the true intention of the parties to the agreement according to which the investors shall purchase shares at the price set in the agreement, even if the contract contains elements that do not reflect the real state of affairs. Therefore, the contract is not an apparent one and is therefore valid.