Shareholders in a public company whose holdings are less than 5% sought to review the proxies for the company's general meeting, at which a management agreement with the company's controlling shareholder was approved after the Israeli Securities Authority contended that it was not duly approved.
The Court accepted the claim and allowed review of the proxies. Israeli law stipulates that a holder of 5% of all voting rights in the company, ignoring those of the controlling shareholder, may review the voting proxies. The circumstance to be considered when examining a motion for review are the scope of the holdings of the person seeking the review, the degree of importance of the decision, the degree of involvement of the controlling shareholder in the vote as well as the extent of influence on the company and its ability to supervise the voting process, and other circumstances that may vary depending on the case. Here, it is a decision of fateful significance and the controlling shareholder has the ability to receive full information and act to achieve the required majority while communicating with the opponents and it is an exceptional case on in which the Israeli Securities Authority saw fit to interfere. Therefore, the shareholders have the right to review the proxies.