Incredimail 2011 Annual Report Download - page 66

Approvals.
The Israeli 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 and then it requires the audit committee approval prior to the approval of the board of directors. If the transaction is an extraordinary transaction, or if it
concerns a transaction with an office holder who is not a director regarding his terms of service and employment, including, exculpation, indemnification, insurance,
an obligation for indemnification or indemnification, then in addition to any approval stipulated by the articles of association, approvals of the company’
s audit
committee and the board of directors is required. Exculpation, indemnification, insurance or compensation of a director would also require shareholder approval. 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 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 directors or the audit committee has a personal interest in the transaction, shareholder approval is also required.
Shareholders
The Israeli Companies Law imposes the same disclosure requirements, as described above, on a controlling shareholder of a public company that it imposes
on an office holder. 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. Two or more shareholders with a personal
interest in the approval of the same transaction are deemed to be one shareholder.
Approval of the audit committee, the board of directors and our shareholders is required for:
Under the Israeli 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:
A shareholder has a general duty to refrain from depriving any other shareholder of their rights as a shareholder. In addition, any controlling shareholder, any
shareholder who knows that it possesses the power to determine the outcome of a shareholder or class vote and any shareholder who, pursuant to the company’
s
articles of association has the power to appoint or prevent the appointment of an office holder in the company, is under a duty to act with fairness towards the
company. The Companies Law does not describe the substance of this duty of fairness, but provides that laws applicable to a breach of contract, adjusted according to
the circumstances shall apply to a breach of such duties. With respect to the obligation to refrain from acting discriminatorily, a shareholder that is discriminated
against can petition the court to instruct the company to remove or prevent the discrimination, as well as provide instructions with respect to future actions.
•
extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; and
• direct or indirect employment of or receipt of services by the company from a controlling shareholder or a relative of a controlling shareholder.
The shareholder approval must include the majority of shares voted at the meeting. In addition, either:
•
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 (excluding abstaining votes); 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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