French Real Estate Company's Controlling Shareholders Seek Approval for Private Business Activities Amid Profit Decline
Two years after committing to devote their full time to managing French Real Estate, co-CEOs and controlling shareholders Rafi and Moshe Tzarfati, each holding 18.15%, are now requesting minority shareholders' approval to run private real estate businesses alongside their company roles. This request comes as the company, traded on the Tel Aviv Stock Exchange with a market value of 610 million shekels, faces weakening performance, including a sharp decline in net profit and a stock price lagging behind industry indices.
At a shareholders meeting scheduled for Thursday, minority shareholders will vote on a proposed delimitation arrangement intended to define which private transactions the controlling shareholders can conduct independently and which must first be offered to the company. The vote follows revelations of undisclosed private real estate activities by the controlling shareholders, which led to a derivative lawsuit request against them. Minority shareholders argue the arrangement is manipulative and misleading, enabling the controlling shareholders to continue extensive private operations in the company’s core business areas.
Previously, the company had emphasized that Rafi and Moshe Tzarfati were key figures dedicating their full efforts to the company and its subsidiaries. However, the new proposal seeks permission for them to engage in additional private activities, which the company claims are unrelated, though some minority shareholders dispute this. The delimitation agreement includes a significant exemption for projects involving fewer than 10 residential units where the shareholders participate only as investors, and it does not cover existing private projects already reported or other private real estate assets allegedly held by the controlling shareholders.
Financially, the company reported a 15% revenue decline and a 61% drop in net profit for 2025, with the downward trend continuing into the first quarter of 2026. Compared to 2023, net profit fell by 46%. The stock has underperformed, rising only 34% over three years versus 65% and 73% gains in related indices, and it dropped 26% in the past year.
The need for the delimitation approval arose after the August 2024 derivative lawsuit alleging undisclosed private real estate dealings. The controversy also led to the resignation of a director unaware of these activities. Attempts at mediation failed, but the audit committee agreed to a 6 million shekel compensation from the controlling shareholders to resolve the dispute. However, minority shareholders and their legal representatives criticized the delimitation draft as retroactive, flawed, and deceptive, arguing it renders the shareholders’ commitment ineffective. Minority shareholders will decide this week whether to approve or reject the proposal.
