Justice Official Questions Shareholder-Deadlock Remedy as Feuds Escalate
The Israeli Supreme Court recently settled a long-running, accusation-filled dispute between the founders of fintech company Panda, upholding the District Court’s order that the partners split up and the company be sold to a third party. The case is one of several recent shareholder fights that have ended in forced separation rather than continued co-ownership.
Against that backdrop, District Court Judge Helit Silsh criticized the use of Section 191 of the Companies Law, the provision meant to address oppression claims and help resolve deadlocked partnerships. Speaking this month at the annual Israeli Bar Association conference on corporate litigation, she said the practice has become too routine: “The phenomenon is gathering pace. It has become a trick.” She added that courts should not automatically push every dispute toward a sale or breakup, and that sometimes the right answer is simply to fix the specific problem and tell a shareholder, “Mr. dear sir, learn to operate within the company’s framework.”
Silsh warned that these cases can drag on for two to three years, even though many companies cannot afford that length of turmoil. She argued that lawyers and judges should lower tensions early and look for creative solutions that preserve the business where possible, while still protecting the parties’ interests.
The article notes that shareholder disputes are especially common in private, smaller companies and startups, where a sale usually requires the others’ consent. If one investor wants out and the others refuse, the result can be a legal stalemate. Courts have used Section 191 in cases including Yad HaMelech, where CEO Yossi Bakhar was ordered to sell his shares to partners Moti Kooperli and Zaki Shalom, the Ramat Golan boutique winery dispute between vintner Yoav Levy and businessman Gabi Magnazi, and the Elsint and Elbit Imaging case, which ended in a settlement and a NIS 50 million payment to public shareholders.
Lawyers interviewed agreed that creative solutions are preferable, but said deep mistrust or prolonged breakdowns often make separation unavoidable. Some urged courts to adopt faster, structured exit procedures, including neutral mediators or valuation experts, to avoid years of costly litigation.
