Ashdod Oil Refinery Shareholder Seeks Court Disclosure on Shapir Engineering Agreements
A shareholder in the Ashdod oil refinery has filed a petition with the Tel Aviv District Court demanding disclosure of documents related to the relationship between the refinery and Shapir Engineering. The request precedes a potential derivative lawsuit against the company and its nine board members, alleging they allowed Shapir to gain extensive influence over the refinery’s management despite holding only about 10% of the shares. Central to the petition is Shapir’s consulting agreement, recently extended by three years, along with additional agreements granting Shapir options to increase its stake up to 65% in the future.
The petition, submitted through the law firm Ronen Edini & Co., seeks full disclosure of the consulting agreement’s terms, the investment agreement, option agreements, a lease agreement for approximately 43 dunams of company land, and minutes from board and committee meetings. The plaintiff claims Shapir effectively controls the company far beyond its formal role as a business consultant, noting that Shapir appointed a director and holds advisory powers covering nearly all key company operations. The petition highlights a conflict of interest, arguing Shapir has an incentive to suppress the company’s share price to keep option exercise costs low, thus facilitating control acquisition.
Supporting the petition are allegations from former director Shimon Gal, who criticized Shapir’s unusual involvement in CEO appointments and the executive committee. Additionally, a late July opinion by the Concentration Reduction Committee recommended against allowing Shapir to gain control due to concerns over energy sector concentration. Despite this, the board and audit committee approved the consulting agreement extension days after the opinion’s release without shareholder approval, violating rules governing transactions with controlling shareholders.
The petitioner argues the board effectively handed control to Shapir without requiring it to purchase a controlling stake or pay a control premium, breaching fiduciary duties. The disclosure of these documents is deemed essential to evaluate the feasibility of a derivative suit against the company’s officers. It is also noted that the approval of the extension was not immediately reported to the public but only disclosed in the following quarterly report.
