A holder of 40% of a private company claimed oppression of the minority because of a non-distributed amount of ILS 4.5 million in the company’s treasure where the company did not distribute dividends for 20 years other than a small distribution 14 years ago.
The Supreme Court held that oppression is a situation of unfair distribution of the resources of a company between its shareholders. A shareholder of a company does not have a right to receive dividends and the Court will not interfere with a decision to that effect of the board of directors absent bad faith, fraud or usurpation of the discretion of the board. However, together with other circumstance the non-distribution of dividends may be deemed oppression, especially in a private company.
In this case the non-distribution is an oppression because the control holders withdraw high salaries, purchase real estate for the company and refuse to hire the services of the minority holder. Thus, the Court ordered the company to distribute dividends.