Incredimail 2008 Annual Report Download - page 43

In the event of a vacancy created by an external director, our board of directors is required under the Companies Law to call a shareholders’
meeting to appoint a new external director as soon as practicable.
External directors may be compensated only in accordance with regulations adopted under the Israeli Companies Law. The regulations
provide three alternatives for cash compensation to external directors: a fixed amount determined by the regulations, an amount within a range set
in the regulations, or an amount that shall not be lower than the compensation received by another director nor higher than the average
compensation to other directors. “Another” or “other” directors are defined in the applicable regulations as directors of the company that are not
external directors and who are not (1) controlling shareholders of the company or (2) employees or service providers of the company on a regular
basis or (3) serving at, or providing services on a regular basis, to a company that controls the company or to a company that is under common
control with the company or (4) directors who do not receive compensation from the company. A company also may issue shares or options to an
external director at an amount not lower than that received by another director (as defined in the applicable regulations) nor higher than the
average amount granted to other directors (as defined in the applicable regulations). Cash compensation at the fixed amount determined by the
regulations does not require shareholder approval. Compensation determined in any other manner requires the approval of the company’s audit
committee, board of directors and shareholders, in that order. Compensation of external directors must be determined prior to their consent to
serve as external directors.
Nasdaq Market Governance Requirements for Foreign Private Issuers
Assuming that we maintain our status as a foreign private issuer, under the Nasdaq Market Rules, a foreign private issuer may generally
follow its home country rules of corporate governance except for certain matters such as composition of the audit committee (as discussed below).
Nasdaq Marketplace Rules specify that the board of directors must contain a majority of independent directors and that the independent directors
must have regularly scheduled meetings at which only independent directors are present. Our board contains two independent directors in
accordance with the provisions contained in Sections 239-249 of the Israeli Companies Law – 1999 and Rule 10A-3 of the general rules and
regulations promulgated under the Securities Act of 1933, rather than a majority of independent directors. Israeli law does not require, nor do our
independent directors conduct, regularly scheduled meetings at which only they are present. See “Item 10.B Memorandum and Articles of
Association – Nasdaq Marketplace Rules and Home Country Practices” and “Item 16G – Corporate Governance” for a summary of the significant
ways in which our corporate governance practices follow the requirements of Israeli law rather than Nasdaq governance requirements for domestic
companies. Investors are cautioned that there are other Nasdaq governance requirements with which, as a foreign private issuer, we may elect not
to comply. If we so elect, we will provide disclosure of any Nasdaq governance requirements we elect not to comply with in accordance with
Nasdaq
’s disclosure requirements, as may be in effect from time to time.
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Committees of the Board of Directors
Our board of directors has established an audit committee, a compensation committee and a nominating and governance committee.
Audit Committee
Our audit committee is comprised of David Jutkowitz and Arik Ramot and operates pursuant to a written charter. The second external
director will be a member of the Audit Committee upon being elected by our shareholders at our extraordinary general meeting. See Item 4.A. –
“Recent Developments”.
Nasdaq Requirements
Under the listing requirements of the Nasdaq Stock Market, a foreign private issuer is required to maintain an audit committee that has
certain responsibilities and authority (such as being directly responsible for the appointment, compensation, retention and oversight of the work of
the issuer’s public accountants). In addition, applicable Nasdaq Marketplace Rules require that a foreign private issuer can maintain an audit
committee that meets the requirements of Rule 10A-3(b)(subject to the exemptions provided in Rule 10A-
3(c)) under the Exchange Act, instead of
an audit committee composed solely of independent directors. We currently maintain a board of audit in accordance with Israeli home country
–
they violate their duty of loyalty to the company;
–
the director is unable to perform his or her post on a regular basis; or
–
during his or her tenure, the director was convicted in a court outside of the State of Israel on accounts of bribery, deceit,
offenses by managers of a corporate body or offenses involving misuse of inside information; or
—
If the board of directors determines that the external director has ceased to meet the statutory qualification for appointment or that
the external director has violated his or her duty of loyalty to the company, the board shall call a general meeting of the
shareholders and any such external director may be removed for such reason(s) by a resolution of the general meeting approved by
the same special majority as required for such external director
’
s election.