Shareholder Appeals High Court Over Veto Power in Director Appointment Dispute
Gabriel Magnazi, a significant shareholder in the public company Iberot, is appealing to the Supreme Court after a lower court ruling invalidated his veto rights in the appointment of an external director. Magnazi, who holds 28% of the company through Magnazi Industries, seeks to overturn the District Court's decision that prevented his votes from being counted towards the required majority for appointing Ayelet Nachmias-Verbin as an external director. He argues that an external director should possess the skills to act as a control mechanism, particularly concerning Iberot's relationship with the Shapir group, its controlling shareholder.
The District Court's ruling came after a deadlock between shareholders, where each side exercised its legal veto power. The court had previously ordered a temporary appointment of an external director pending the main lawsuit's resolution. Magnazi's current appeal to the Supreme Court aims for immediate intervention, requesting the court to either cancel the lower court's decision or appoint a temporary external director with specific accounting, financial, and industry-relevant experience.
Magnazi contends that the District Court's decision effectively nullifies his veto rights as a minority shareholder while allowing the controlling shareholder, Shapir, to exercise its own. He asserts that Nachmias-Verbin lacks the necessary accounting and financial expertise, and her appointment could lead to decisions favoring Shapir over Iberot. He further claims that Shapir, a large conglomerate whose activities have been restricted by the Antitrust Authority, operates in overlapping sectors with Iberot, necessitating stringent oversight.
Iberot, represented by Fisher & Co., stated that the company acted in accordance with a previous District Court ruling that was not appealed. They argue that the current appeal challenges a temporary decision implementing a mechanism designed to break the deadlock and ensure the appointment of an independent external director. Iberot maintains that appointing an additional external director is crucial for legal compliance, proper corporate governance, and the company's ongoing operations, and they will present their position to the Supreme Court.
This dispute is the latest in a series of control battles between Shapir, which holds 55% of Iberot, and Magnazi. A previous attempt to appoint an external director in September 2025 also led to litigation, with Magnazi arguing Shapir was pushing through decisions detrimental to the company. The District Court's recent decision to disregard Magnazi's votes is seen as an exceptional step in resolving the ongoing stalemate.
