An Israeli company purchased Chinese goods via a foreign company controlled by an Israeli. The Israeli company claimed that the foreign company breached the agreement and caused damage but because the foreign company was closed and replaced by a new foreign company the claim was filed against the foreign company that replaced it and the Israeli who was both shareholder and director thereof.
The Court held that personal liability will be imposed on a director for debts of the company only if fraudulent intentions can be shown and it is not sufficient to show negligent management. In this case the foreign company was indeed closed and replaced by a new company but this was not concealed from the Israeli client who in fact was requested to sign an agreement with the new company. Thus, the director or the new company cannot be sued and the claim was dismissed