Israel Rail Demands Immediate Appointment of Missing Board Directors from Transport Ministers

Israel Rail has petitioned the Supreme Court demanding the urgent appointment of missing directors to its board, which currently lacks external directors and a member with accounting and financial expertise as legally required. The petition requests that Transport Minister Miri Regev and Minister for Regional Cooperation Dudi Amsalem exercise their authority under the Government Companies Law to complete the necessary appointments without delay. The legal action follows a series of resignations that began in early June when an external director with financial expertise ended her term, and escalated in mid-July when two additional directors, retired judge Sarah Frish and Shlomit Geller, resigned in protest against the appointment of Yaakov Marciano, the passenger division deputy CEO, as acting CEO. Although the board initially approved Marciano’s appointment by a 4-2 vote, the Government Companies Appointment Committee later invalidated it, citing insufficient experience for the role.

These departures have left the board without external directors and financial expertise, impairing its ability to form statutory committees such as the financial reports review committee. The petition highlights the regulatory deadlines Israel Rail faces and the critical need to fill these positions promptly. The company is also grappling with complex infrastructure projects, including electrification efforts, delays, and operational issues, compounded by recent senior management turnover. Since CEO Shiko Zana’s departure in August 2023, no permanent CEO has been appointed, and other key executives have left, including the chairman Moshe Shimoni in July, who was replaced by Avner Flor. Flor, previously acting CEO, had to step down from that role to become chairman, necessitating a new acting CEO appointment after Marciano’s rejection, leading to Avi Elimalach’s return as acting CEO.

Israel Rail’s letter to the court stresses that the absence of qualified directors prevents the lawful establishment of board committees and undermines corporate governance amid ongoing operational and strategic challenges. The company has requested an expedited hearing to address the urgent need for board appointments and stabilize its leadership structure.