Incredimail 2012 Annual Report Download - page 56

Under the Companies Law, the chairman of the board of a company is not permitted to hold another position in the company or a
subsidiary thereof other than chairman or director of a subsidiary or, if approved by a special majority of shareholders, chief executive officer of
the company.
External Directors
Under the Companies Law, Israeli companies whose shares have been offered to the public in or outside of Israel are required to
appoint at least two individuals to serve as external directors. Our external directors under the Companies Law are Mr. Avichay Nissenbaum,
whose second three-year term commenced on September 27, 2012, and Mr. David Jutkowitz, whose second three-
year term commenced on
January 6, 2011.
Each committee of a company's board of directors that is authorized to exercise any powers of the board of directors is required to
include at least one external director. The audit committee and the compensation committee must include all the external directors.
External directors are required to possess professional qualifications as set out in regulations promulgated under the Companies Law.
Any individual who is eligible to be appointed as a director may be appointed as an external director, provided that such person, such person’
s
relative, partner, employer or any entity under the person’
s control does not have at the date of appointment, or has not had during the two years
preceding the date of appointment, any affiliation with
The term affiliation means any of:
No person can serve as an external director if the person
’s position or other business creates or may create a conflict of interest with the person’
s
responsibilities as an external director, or if it may adversely affect his ability to serve as a director. Until the lapse of two years from termination
of office, a company or its controlling shareholder may not employ or give any direct or indirect benefit to the former external director.
If at the time any external director is appointed, all members of the board are the same gender, then the external director to be appointed
must be of the other gender.
External directors are elected by a majority vote at a shareholders’ meeting, as long as either:
• the company;
•
a controlling shareholder of the company or a relative thereof; or
•
any entity controlled by the company or by its controlling shareholder on the date of the appointment or during the two years
preceding such date.
• an employment relationship;
•
a business or professional relationship that is not negligible;
• control; and
•
service as an office holder.
• the majority of shares voted on the matter, including at least a majority of the shares of non-
controlling shareholders voted on the
matter, vote in favor of election; or
• the total number of shares of non-
controlling shareholders voted against the election of the external director does not exceed two
percent of the aggregate voting rights in the company.
The initial term of an external director is three years and such director may be reappointed for up to two additional three-
year
terms. Thereafter, he or she may be reelected by our shareholders for additional periods of up to three years each only if the audit
committee and the board of directors confirm that, in light of the external director’
s expertise and special contribution to the
work of the board of directors and its committees, the reelection for such additional period is beneficial to us. Reelection of an
external director may be effected through one of the following mechanisms: (1) the board of directors proposed the reelection of
the nominee and the election was approved by the shareholders by the majority required to appoint external directors for their
initial term; or (2) a shareholder holding 1% or more of the voting rights proposed the reelection of the nominee, and the
reelection is approved by a majority of the votes cast by the shareholders of the company, excluding the votes of controlling
shareholders and those who have a personal interest in the matter as a result of their relations with the controlling shareholders,
provided that the aggregate votes cast in favor of the reelection by such non-
excluded shareholders constitute more than 2% of
the voting rights in the company. An external director may be removed only in a general meeting, by the same percentage of
shareholders as is required for electing an external director, or by a court, and in both cases only if the external director ceases to
meet the statutory qualifications for appointment or if he or she has violated the duty of loyalty to us.