Real Estate Firm Best Faces Regulatory Probe Over Improper Fund Withdrawals

Israeli real estate company Best is under scrutiny after its controlling shareholders, the Tanous family, improperly withdrew over 2 million shekels from company funds for private work on their properties and those of relatives. The irregularities were discovered less than three months after the company's public offering on the Tel Aviv Stock Exchange. Initially reported as a 0.7-1 million shekel mistake, the amount was later revised upwards, with the company admitting the payments were made "unlawfully and not in accordance with company procedures."

Following the revelation, Best's stock dropped 5%. The company has stated that all funds have been returned with interest and that it will restate its 2025 and first-quarter financial reports to correct the "quality issue" in its accounting. Market sources anticipate that the Israel Securities Authority (ISA) will launch an investigation into the matter to determine if the withdrawals were intentional or negligent.

Best attempted to downplay the incident, calling it a "mistake" and a "negligible sum" from when the company was private. However, experts emphasize that any transaction involving controlling shareholders is material for public companies due to inherent conflicts of interest. The incident has likely damaged investor confidence, and market participants suggest it points to deeper corporate governance problems.

This case is the latest in a series of similar incidents involving new companies joining the Tel Aviv Stock Exchange, raising concerns about the oversight of firms transitioning from private to public status. These include withdrawals from companies like Simad, Kohan Properties, and Tomer Food, highlighting a pattern of irregularities that regulators are now expected to address more rigorously.