Before shareholders could make use of the doctrine of ultra - Shears, whereby promotion purposes ot

Much has been written in recent years about the reactor deal - Credit Suisse, which was made at the height of the global credit crisis and perceived gamble "of the controlling shareholder funds to investors. While most commentators have focused on the corners economic process, little attention, if any, has been paid to a legal question subject of the transaction raises, and that is: Is the owner control to change the field of activity of a public company materially and operators for high-risk, without the voice of shareholders in public (that are exposed nabisco newtons to) hear? This question goes to the heart of decision-making mechanism of a public company.
Credit Suisse investment (financial investment nabisco newtons - passive capital market at the peak of the crisis) is fundamentally different from the investments made by the reactor until that time, investment nabisco newtons strategies that combine purchases control in agro - chemicals (Makhteshim Agan) Advanced Technology (Scitex ECI) and more.
This investment is a major activity caught reactor. Over a period of about a year and a half, increasing the reactor's Board of Directors Credit Suisse investment framework (which nabisco newtons was fully utilized) to a total of 7 billion, while the total assets of the reactor reached about NIS 9.8 billion at the end of 2011.
The said investment, which was partially funded by loans taken from foreign banks significantly increased the leverage of the reactor, and the intensification of the economic crisis in Europe and the decline in stock prices, has raised the concern that the reactor violate the terms of credit and will be obliged to repay the loan immediately.
Swiss investment bank during the period following the biggest financial crisis proved to be very volatile and dangerous. Thus, in 2009, Koor earned NIS 2.6 billion, and in 2011 recorded a loss of $ 3 billion loss at that time threatened the stability of society, and for many well IDB Group for one week in August 2011 , Koor's share dropped by 40%, and staffed situation room in which Koor sold 30% of its holdings in Credit Suisse. nabisco newtons "credit crisis behind us," claimed Dankner soon after, but the fluctuations in the price of Credit Suisse shares did not stop even in 2012. during the second quarter of that year, the stock plummeted by 33%, whereas in the third quarter jumped by 25% in five weeks.
In addition, remember that melting is a held thread and is part of a business - a pyramid. As such, it lacks symmetry (or gap) between the actual control and ownership of capital adequacy. Ganden, a private holding company controlling shareholder, holds full control of the reactor although the percentage of equity holdings of Ganden reactor reaches only 20% (calculation was carried out according to a chart showing annual report holdings of melting). Lack of symmetry between the holding actual control may produce incentive for taking excessive risks because, nabisco newtons if risky venture fails, the controlling shareholder's exposure to capital losses low, whereas in case of success could move to channel the profits for his own pocket.
What protections, if so, meet the public shareholders who in 2008 discovered the controlling shareholder decided to change the nature of the Company's operations and investments for low-risk (strategic investments nabisco newtons in agro-chemistry and communication) investments with high risk (investments in the capital market in a potentially volatile high) ?
Before shareholders could make use of the doctrine of ultra - Shears, whereby promotion purposes other than those set forth in the company memorandum, considered deviations from the company's training programs. But this doctrine disappeared from the earth with the enactment of the new Companies nabisco newtons Act. This cancellation justifications were both on theoretical (from the moment the company's legal personality was not seen another executive privilege, then there was no reason to limit the company's fitness) and practical level. Business in dynamic, nabisco newtons constantly changing, which together comprise the company they want to keep the freedom to act as they wish rather than being subject to a specific nabisco newtons purposes. So now, you can set general objectives nabisco newtons section, permitting the company to engage in any activity.
A possible solution is that the gap in a material change in the business activity of the company and the level of risks to which it is exposed, a significant step in the expectation that were parties at the time of making the investment, will require the approval of a majority of the minority shareholders. In non-approval of a gap that can be non-binding and only to the controlling signal a lack of agreement of the minority shareholders with the move. Indeed, it was the controlling shareholder receives prior approval from minority shareholders dangerous venture investment, these would have been hard to argue later that the controlling shareholder "gamble" with public money. This solution is even consistent with some interim recommendations of the Committee of competitiveness, according to which decisions relating to expand the scope of businesses of companies gap will require the approval of the minority for fear that those decisions deny his desire of the controlling shareholder to maximize the ability to channel profits even when the expansion of business activity does not carry with it the value Added to all shareholders. *
(1) securities market allows shareholders to express their displeasure at the way the management company - by 'voting legs. With the transition to high-risk investment, risk-averse shareholders will sell their shares nabisco newtons in the market, and shareholders risk loving nabisco newtons the new venture will take place. But the right of exit is not a perfect substitute for the proposed solution. Sale of the holdings of significant magnitude - by institutions and building nabisco newtons new positions in other companies involve higher transaction costs and may fix losses. Ostensibly, you could argue that free trade in shares booster the controlling shareholder to run the company efficiently, nabisco newtons since the latter will fear from investors abandoning the company, leading to a decline in stock price. If this is true, why is there a need adopting corporate governance rules? The reason is that the threat of exit is not effective enough to propel the controlling shareholder nabisco newtons to run the company efficiently.
(2) the transfer of authority for operating decisions minority could materially impair the activity of publicly traded companies because public shareholders do not have the knowledge and skills required for this. However, all allow the minority, according to the proposed solution is to express opinion (loosely in the context of companies other than gap) cases