Legal Updates

Forced acquisition is a viable remedy upon showing of oppression due to loss of faith among ‎shareholders ‎

November 15, 2016

An owner of a third of the shares of a company filed a claim on the grounds of oppression due to loss of confidence between shareholders, inter alia with respect to ceasing to repay a loan that he took for the company, ending his tenure as chairman of the board of directors and professional manager and refusal to allow him to sell his shares to another company.

The Court held that a situation was created under which the company is managed by two of the three shareholders by creating a "veto" that gives them control and oppresses the third shareholder. In light of this, in the specific circumstances the relevant remedy is separating the shareholders to ensure proper operation of the company by forcing a compulsory acquisition to be conducted by a Court expert who will assess the value of the deprived shareholder's shares and based on this valuation the acquisition will be carried out.