A shareholder in a public company claimed that shareholders who voted on the approval of a transaction with a personal interest should be classified as having a personal interest despite declaring that they have no personal interest and thus the transaction should be cancelled.
The Court held that in order to approve a “conflict of interest” transaction in a public company the company must approve the transaction in the general meeting of shareholders by a majority of the shareholders who are not affected by the conflict of interest. If an Israeli company is traded on a non-Israeli stock exchange, as long as the foreign stock exchange mechanisms ensure the fairness requirement, the Israeli company may follow the foreign mechanism instead of the Israeli one. The obligation of a shareholder to report a personal interest does not require a shareholder to detail the personal interest and it is sufficient to so on the voting form. The Court will be extremely careful in classifying a shareholder as having personal interest when the shareholder testified no to have a personal interest and the Court will do so only upon certain contradicting data. In this case, the information on the shareholder’s personal interest was circumstantial and it may well be that a reasonable explanation to it exists and therefor the Court dismissed the claim.