Israeli Companies Face Legal Battles Over Independent Director Appointments

The struggle over appointing independent directors has concluded at infrastructure firm Everate, while it continues at real estate company Poligon. In both companies, a conflict is ongoing between controlling shareholders and other shareholders regarding the appointment of these directors. In Everate, a judicial decision has been reached, while in Poligon, the legal battle persists with serious allegations being made.

Supreme Court Justice David Mintz rejected an appeal request from Gabi Magnezi, the former controlling shareholder of Everate, who currently holds 28% of its shares. This decision allows former Knesset member Ayelet Nachmias-Verbin to continue serving as an independent director, a position she was appointed to by the District Court. Magnezi had sought to appeal this appointment. Magnezi has been in a prolonged dispute with Everate and its current controlling shareholder, Shapir Engineering, using his influence as the main minority shareholder to oppose proposed independent director appointments and other company matters, including the CEO's terms and compensation policies.

Last year, the court intervened to establish a mechanism for appointing independent directors at Everate, which lasted until one vote in December. In July, with only one independent director remaining, the parties clashed again, leading Everate to seek court intervention. District Court Judge Ariel Zimmerman approved the company's request, overriding Magnezi's objection to Nachmias-Verbin's appointment, a decision Magnezi appealed unsuccessfully.

While the Everate situation has reached a temporary resolution, the saga at Poligon, controlled by Kobi Mimun, continues. The company has been operating for over 14 months without independent directors, in violation of the law, as minority shareholders and the company itself have long opposed the candidates proposed by each side. In August, Poligon petitioned the court to intervene in the dispute with minority shareholders and facilitate the appointment of directors, seeking interim relief. However, the minority shareholders are opposing this.

Poligon, represented by Liran Bar-Shalom and Tomer Fox, claims that one defendant, Aharon Cohen, is acting with improper motives to harm the company. The company stated it has no other way to resolve the situation due to disagreements with minority shareholders over director appointments. The defendant shareholders, represented by Golan Kashi, strongly criticized the company's conduct in their court response. They alleged that Mimun exploits regulatory indifference and weak enforcement for minority shareholders, that current directors neglect company assets, and that corporate governance officials serve the controlling shareholder's interests. They rejected claims against Cohen, stating that other minority shareholders' unanimous support for his stance indicates he acts for the company's benefit and that his 3.6% stake is insufficient to block appointments. The response also detailed that Poligon approved its first-half 2025 financial reports without any independent directors and with a deficient board composition, violating company bylaws and the law. Furthermore, the defendants claim Poligon is delaying a lawsuit against Nitzba, where Mimun is also CEO and controlling shareholder, due to conflicts of interest. This lawsuit stems from a derivative claim filed by Cohen in 2024 concerning Nitzba's use of Poligon's land without payment. They argue Mimun's opposition to minority shareholder-proposed candidates for independent director violates his duty of fairness, as these directors are intended to oversee the lawsuit against Nitzba, which is under Mimun's control.