Polygon Real Estate Faces Year Without External Directors Amid Shareholder Deadlock
Polygon, a publicly traded real estate company controlled by Kobi Maimon with a 52.2% stake, has failed for the fourth time since September to appoint external directors (independent directors) at its shareholders meeting. This deadlock means Polygon is expected to complete a full year without serving external directors, a key governance requirement. The company is listed on the Tel Aviv Stock Exchange with a market value of 258 million shekels.
The ongoing trust crisis between Maimon and minority shareholders has prevented any of the seven candidates proposed from securing the necessary majority. Minority shareholders rejected the two candidates proposed by the company, while the controlling shareholder and his family voted against five candidates supported by the minority. This conflict stems from disagreements over the company’s dividend policy, concerns about efforts to increase share value, and disputes over the qualifications and alleged ties of some candidates to the controlling shareholder.
The absence of external directors has practical consequences: Polygon cannot legally approve its financial reports. Despite this, it approved its 2025 half-year and annual reports without meeting legal conditions, citing a desire to minimize harm to shareholders. By the end of August, Polygon must approve its 2026 half-year report, and failure to appoint external directors by then could result in the company submitting financial statements without proper legal approval for the third consecutive time.
Moti Yamin, a securities law expert and former head of the corporations department at the Israel Securities Authority (ISA), emphasized that operating a public company without two external directors is a serious corporate governance failure. He noted that external directors are legally required to ensure independent oversight, protect minority shareholders, and oversee sensitive matters such as related-party transactions and executive compensation. Yamin warned that the prolonged absence of external directors could prompt ISA intervention, raise questions about decision-making legitimacy, and damage investor confidence.
While the ISA could theoretically impose fines for the absence of external directors beyond 90 days, the ongoing attempts to appoint directors at shareholder meetings have so far prevented such penalties. Yamin also noted the possibility that financial reports approved without external directors might be deemed invalid, potentially leading to suspension of the company’s shares from trading, though no precedent exists for this. Currently, Polygon has not reported any ISA intervention, but market sources suggest behind-the-scenes discussions are ongoing.
Yamin added that minority shareholders could seek court orders to compel the appointment of external directors, but legal remedies are unclear when appointments are repeatedly blocked. In 2022, court intervention was required to appoint external directors after minority shareholders sued the company. Given the current impasse, Polygon may need to seek judicial relief to resolve the crisis, especially since it cannot approve related-party transactions or executive compensation without external directors. The ISA declined to comment on specific companies but noted it would act if necessary through company disclosures.
