A company for investment in high-tech was financed by funds injected into it by the shareholders. Upon the outbreak of a dispute between the shareholders, one of them demanded a full refund of the shareholders loan while the other contended that the money was an investment rather than a loan and that funds that were withdrawn 15 years ago as repayment of loans were taken without the shareholder who managed the company disclosing this to the other and thus must be repaid.
The Court held that a shareholder may act to finance a company by means of shareholders' loans, at which time the company has a liability that is recorded as a financing cost in the Company's books and the repayment of the loan is required in accordance with the conditions and dates agreed upon by the parties. Restrictions applicable to withdrawal of dividends do not apply to withdrawal of shareholders loans. Shareholders loans should be documented, including their terms, and without a document it is hard to show that they are indeed loans and not investment and what are their terms. Here the first funds transferred to the company and returned that year were not documented in any form and therefore the company is entitled to receive them back. However, some 15 years have passed since the withdrawal of funds. As a rule, the statute of limitations on a corporation's right to claim will begin when it the organ of the company that was not involved in the tortious act knew, or could have known, of the facts that establish the cause of action and the cause of action will not be limited when the corporation is controlled by organs that prevented the realization of the right of claim. Here the other shareholder had signatory tights in the company and therefore even if he did not know about the withdrawal of funds, he could have known about, and therefore the right of the claim expired and that specific claim was rejected.