An investor in the company demanded that the company manager repay his investment therein as a shareholder. The question that arose was whether the plaintiff is entitled to a refund of his investment as a shareholder in the Company and to compensation for the cessation of the activity of the venture in which he invested? The court held that, in principle, there is no impediment to imposing a duty of conceptual caution on a company manager, and sometimes even on a controlling shareholder, towards an ordinary shareholder therein. For this purpose, the plaintiff had to prove the causal connection between the breach of duty and the alleged damage. As such, the court held that although the issue in question is of a personal nature, it is in essence a claim by the company supplier (in the case of a shareholder) for damage caused to him and loss of income. However, with regard to the loss of his investment in the Company and his claim for the return of the investment, the Court determined that a business investment, like any other investment, carries risks and prospects. In such a case, the secondary loss of the investment and the decline in the value of the Company, and in respect of these components, the plaintiff would have to turn to a derivative claim or another procedure in which the company will sue directly in a manner that will be required to act in favor of its minority shareholders.
Published in Afik News 119 06.02.2013
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