Incredimail 2011 Annual Report Download - page 67

Corporate Governance
As stated above, the Israeli legislature, the Knesset, approved an amendment to the Israeli Companies Law which came into effect during 2011. The main
purpose of the Amendment is to revise and enhance existing provisions governing corporate governance practices of Israeli companies, and the principle changes in
the amendment were incorporated into the above discussions of the Company. Additional changes to the Companies Law pursuant to the amendment include:
Although we expect to be in compliance with the Companies Law, there is no assurance that we will not be required to adjust our current corporate
governance practices, as discussed in this annual report, pursuant to the provisions of the amendment as aforesaid.
Anti-Takeover Provisions; Mergers and Acquisitions
Merger. The Israeli Companies Law permits merger transactions with the approval of each party’
s board of directors and shareholders, except that when the
merger involves one of the following companies, the approval of the shareholders of these companies is not required:
At the general meeting of a merging company which shares are held by the other party to the merger or by any person holding at least 25% of any control
measures of the other party to the merger, a merger shall not be deemed approved if the shareholders holding the majority of the voting power present at the meeting
object to the merger. In calculating this majority, (i) the abstaining shareholders and (ii) shareholders that are part of the other party to the merger or hold 25% or more
of any control measures of the other party to the merger are excluded. Shares held by relatives or companies controlled by a person are deemed held by that person.
The term "control measures" of a company includes, among other things, voting power or means of appointing the board of directors.
Under the Israeli Companies Law, a merging company must inform its creditors of the proposed merger. Any creditor of a party to the merger may seek a
court order to delay or block the merger, if there is a reasonable concern that the surviving company will not be able to satisfy all of the obligations of the parties to the
merger. Moreover, a merger may not be completed until all of the required approvals have been filed by both merging companies with the Israeli Registrar of
Companies and (i) 30 days have passed from the time both companies’
shareholders resolved to approve the merger, and (ii) at least 50 days have passed from the time
that the merger proposal was filed with the Israeli Registrar of Companies.
Tender Offer.
The Israeli Companies Law requires a purchaser to conduct a tender offer in order to purchase shares in publicly held companies, if as a result
of the purchase the purchaser would hold more than 25% of the voting rights of a company in which no other shareholder holds more than 25% of the voting rights, or
the purchaser would hold more than 45% of the voting rights of a company in which no other shareholder holds more than 45% of the voting rights. The requirement
to conduct a tender offer shall not apply to (i) the purchase of shares in a private placement, provided that such purchase was approved by the company’
s shareholders
as a private placement that is intended to provide the purchaser with more than 25% of the voting rights of a company in which no other shareholder holds more than
25% of the voting rights, or with more than 45% of the voting rights of a company in which no other shareholder holds more than 45% of the voting rights; (ii) a
purchase from a holder of more than 25% of the voting rights of a company that results in a person becoming a holder of more than 25% of the voting rights of a
company, and (iii) a purchase from the holder of more than 45% of the voting rights of a company that results in a person becoming a holder of more than 45% of the
voting rights of a company.
•
Code of Corporate Conduct. A code of recommended corporate governance practices has been attached as an annex to the Companies Law. In the
explanatory notes to the legislation, the Knesset noted that an "adopt or disclose non-
adoption" regulation would be issued by the Israeli Securities
Authority with respect to such code. As of the date of this Annual Report, the Israeli Securities Authority has not issued any regulations yet with respect
to this code, and it has not been determined to what extent this code will be relevant to Israeli companies that are also listed on non-
Israeli stock
exchanges.
•
Fines. The Israeli Securities Authority shall be authorized to impose fines on any person or company performing a violation, in connection with a
publicly traded company which reports to the Israeli Securities Authority, and specifically designated as a violation under the amendment.
• an absorbed company which is under the full control and ownership of the surviving company; or
•
a surviving company, if all of the following conditions are met: (i) the merger does not entail an amendment of the articles of association or
memorandum of association of the surviving company, (ii) the surviving company does not issue in the course of the merger more than twenty percent
of the voting rights in the company, and as a result of the share issuance no person shall become a controlling shareholder in the surviving company,
and (iii) circumstances that would otherwise mandate an approval by a special majority of the shareholders (as described in the following paragraph)
do not exist.
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