Incredimail 2013 Annual Report Download - page 71

Fiduciary duties. An office holder’
s fiduciary duties consist of a duty of loyalty and a duty of care. The duty of loyalty requires the
office holder to act in good faith and to the benefit of the company, to avoid any conflict of interest between the office holder’
s position in the
company and any other of his or her positions or personal affairs, and to avoid any competition with the company or the exploitation of any
business opportunity of the company in order to receive personal advantage for himself or others. This duty also requires him or her to reveal to
the company any information or documents relating to the company’
s affairs that the office holder has received due to his or her position as an
office holder. The duty of care requires an office holder to act with a level of care that a reasonable office holder in the same position would
employ under the same circumstances. This includes the duty to use reasonable means to obtain information regarding the advisability of a given
action submitted for his or her approval or performed by virtue of his or her position and all other relevant information pertaining to these
actions.
Compensation.
Every Israeli public company must adopt a compensation policy, recommended by the compensation committee, and
approved by the board of directors and the shareholders, in that order. The shareholder approval requires a majority of the votes cast by
shareholders, excluding any controlling shareholder and those who have a personal interest in the matter (similar to the threshold described
below under " – Shareholders"). In general, all office holders’ terms of compensation –
including fixed remuneration, bonuses, equity
compensation, retirement or termination payments, indemnification, liability insurance and the grant of an exemption from liability –
must
comply with the company's compensation policy. In addition, the compensation terms of directors, the chief executive officer, and any employee
or service provider who is considered a controlling shareholder generally must be approved separately by the compensation committee, the board
of directors and the shareholders of the company , in that order. The compensation terms of other officers require the approval of the
compensation committee and the board of directors.
Approvals.
The Companies Law provides that a transaction with an office holder or a transaction in which an office holder has a
personal interest may not be approved if it is adverse to the company’
s interest. In addition, such a transaction generally requires board approval,
unless the transaction is an extraordinary transaction, in which case it requires audit committee approval prior to the approval of the board of
directors. A person, including a director, who has a personal interest in a matter that is considered at a meeting of the board of directors or the
audit committee may not attend that meeting or vote on that matter; however, an office holder who has a personal interest in a transaction may be
present during the presentation of the matter if the board or committee chairman determined that such presence is necessary for the presentation
of the matter. A director with a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee may
attend that meeting or vote on that matter if a majority of the board of directors or the audit committee also has a personal interest in the matter;
however, if a majority of the board of director has a personal interest, shareholder approval is also required.
Shareholders
Approval of the audit committee, the board of directors and our shareholders is required for extraordinary transactions with a
controlling shareholder or in which a controlling shareholder has a personal interest. For these purposes, a controlling shareholder is any
shareholder that has the ability to direct the company’
s actions, including any shareholder holding 25% or more of the voting rights if no other
shareholder owns more than 50% of the voting rights in the company. The shareholdings of two or more shareholders with a personal interest in
the approval of the same transaction are aggregated for this purpose.
The shareholder approval must include the majority of shares voted at the meeting. In addition, either:
Under the Companies Law, a shareholder has a duty to act in good faith towards the company and other shareholders and to refrain
from abusing his or her power in the company including, among other things, when voting in a general meeting of shareholders or in a class
meeting on the following matters:
•
the majority must include at least a majority of the shares of the voting shareholders who have no personal interest in the
transaction voted at the meeting; or
•
the total shareholdings of those who have no personal interest in the transaction and who vote against the transaction must not
represent more than 2% of the aggregate voting rights in the company.
• any amendment to the articles of association;
•
an increase in the company’s authorized share capital;
•
a merger; or
• approval of related party transactions that require shareholder approval.
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