Legal Updates

A shareholder can not expect the company’s articles not to change unless he agrees to the change

January 9, 2019
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A company's articles of association included an arbitration clause, but a shareholder contended that the clause does not apply to her because it was included in an amendment to the articles of association that was adopted after she joined the company.

The Court held that the arbitration clause applied even though it was introduced in a later amendment to the articles. A person who becomes a shareholder of a company accepts the company's articles of association as amended and changed from time to time and accepts the possibility that the articles will change in the future. A shareholder does not have a "reasonable expectation" that the articles will be changed only with its consent, and Israeli law, as is the case under Common Law, sets that a company is not entitled to sets condition on its ability to change its articles.