Incredimail 2012 Annual Report Download - page 24

If we were to lose our foreign private issuer status under U.S. federal securities laws, we would incur additional expenses associated with
compliance with the U.S. securities laws applicable to U.S. domestic issuers.
We are a foreign private issuer, as such term is defined under U.S. federal securities laws, and, therefore, we are not required to comply
with all of the periodic disclosure and current reporting requirements applicable to U.S. domestic issuers. If we lost this status, we would be
required to comply with the reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the
requirements for foreign private issuers. The regulatory and compliance costs to us under U.S. securities laws, if we are required to comply with
the reporting requirements applicable to a U.S. domestic issuer, may be significantly higher than the cost we currently incur as a foreign private
issuer.
The rights and responsibilities of our shareholders are governed by Israeli law and differ in some respects from the rights and
responsibilities of shareholders under U.S. law.
We are incorporated under Israeli law. The rights and responsibilities of holders of our ordinary shares are governed by our
memorandum of association, articles of association and by Israeli law. These rights and responsibilities differ in some respects from the rights
and responsibilities of shareholders in typical U.S. corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith
in exercising his or her rights and fulfilling his or her obligations toward the company and other shareholders and to refrain from abusing his
power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters. Israeli law provides
that these duties are applicable in shareholder votes at the general meeting with respect to, among other things, amendments to a company’
s
articles of association, increases in a company’
s authorized share capital, mergers and actions and transactions involving interests of officers,
directors or other interested parties which require shareholders’
approval. There is little case law available to assist in understanding the
implications of these provisions that govern shareholder behavior.
As a foreign private issuer whose shares are listed on NASDAQ, we follow certain home country corporate governance practices instead
of certain NASDAQ requirements.
As a foreign private issuer whose shares are listed on NASDAQ, we are permitted to follow certain home country corporate governance
practices instead of certain requirements contained in the NASDAQ listing rules. We follow the requirements of the Companies Law in Israel,
rather than comply with the NASDAQ requirements, in certain matters, including with respect to the quorum for shareholder meetings, sending
annual reports to shareholders, and shareholder approval with respect to certain issuances of securities. See “Item 16.G – Corporate Governance”
in this Annual Report for a more complete discussion of the NASDAQ Listing Rules and the home country practices we follow. As a foreign
private issuer listed on NASDAQ, we may also elect in the future to follow home country practice with regard to other matters as
well. Accordingly, our shareholders may not be afforded the same protection as provided under NASDAQ’
s corporate governance rules to
shareholders of U.S. domestic companies.
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