A local council sought to obligate a person in the city tax debt of a company although such person was not a shareholders at all but his wife and son were but he in fact ran the company.
The Israeli Economic Arrangements Law states that the local authority is entitled to collect the definitive property tax debt from a controlling shareholder of a private company in certain circumstances. The Court held that in determining that a person is a controlling shareholder there is no requirement that such person actually holds shares in the company and it is sufficient that he is in fact the holder of control. The definition of "controlling party" in the Israeli tax code sees a person as a control holder if owning, directly or indirectly, alone or together with relatives, the right to appoint a director.
In the present case, one shareholder's husband and a second shareholder’s father was the actual manager of the company and his position is such that certainly gave him the possibility to appoint a director of the company, whether by himself or with "relatives." Thus, he should be personally accountable with the shareholders of the company to the property tax debt.