Minority Shareholders Clash With Kobi Maimon Over Appointing Directors at Equitel

Minority shareholders are locked in a dispute with Kobi Maimon and Haim Tzuff, the controlling shareholders of the Equitel holding company, over the appointment of external directors. An upcoming shareholder meeting is set to vote on the appointment of two external directors for a three-year term. The minority shareholders, who hold stakes in real estate firm Airport City and the gas partnership Isramco, oppose Equitel's proposed candidates and have put forward their own nominee. The appointment of external directors requires a dual approval mechanism: a majority of all shareholders and a majority of minority shareholders. This could lead to a deadlock, where each side's nominees are blocked, leaving the company without external directors, a situation mirroring the Polygon real estate company, also controlled by Maimon, which has been without external directors for over a year due to similar disputes.

This is not the first time Equitel has faced opposition to its director appointments. In 2016, a group of minority shareholders, some involved in the current dispute, successfully blocked a proposed candidate, leading to the eventual approval of a third, compromise candidate. The current proposals include re-appointing incumbent director Yitzhak Ovadia, whose reappointment only requires minority shareholder approval, and Gilad Richman, who served for nine years until 2023 and is now seeking a new term. Richman was previously a defendant in a 2019 class-action lawsuit concerning the valuation of assets merged in 2018, which concluded with a settlement where the claims against executives were dismissed and the companies paid NIS 12 million.

A group of minority shareholders, representing 2.2% of Equitel's stock and led by Chaim Davidian, opposes both appointments. Following their demand, a third candidate, Emmanouil Avner, nominated by the minority shareholders, will also be brought for approval. Davidian attributes the minority's stance to the company's "foot-dragging in asset development and neglect of income-generating assets, which severely damages the company's reputation and consequently shareholder returns, the ability to realize fair and real value profits, or to enjoy dividend distributions." This criticism is echoed by tenant complaints regarding Equitel's properties, including significant delays and lawsuits from contractors and suppliers.

Davidian warns shareholders against apathy, noting the dispersed nature of public holdings, and urges all shareholders, including institutional investors like Menora (6.8%) and Harel (4.4%), to participate in the vote, as the controlling shareholders are determined to push their agenda. Equitel, which does not distribute dividends, has a market capitalization of NIS 4 billion. Its stock has fallen 32% since January, underperforming the TA-125 index, which has risen 14%. Over the past three years, Equitel shareholders have lost 6% of their holdings, while the index gained 123%.