ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira, Liron Hacohen and Nataly Margalit, Arnon, Tadmor-Levy
ance and may require the board of directors to retain the flexibility to accept superior offers. There have been no real changes to the regulatory environment that have impacted the length of interim periods. 6.8 Additional Governance Rights Israeli law does not restrict the governance rights that shareholders may agree to. Accordingly, a bidder buy - ing less than 100% ownership of a target company may seek to appoint members to the target compa - ny’s board of directors and may require that the tar - get company refrain from certain actions or decisions without the bidder’s prior written consent. 6.9 Voting by Proxy Shareholders can vote by proxy in Israel and voting by proxy is commonly used by shareholders in Israel. 6.10 Squeeze-Out Mechanisms As noted in 2.1 Acquiring a Company , tender offers are rarely used to acquire all of the issued shares of a public company in Israel, for two primary reasons: • holders of at least 95% of the target’s issued shares must accept the offer; and • appraisal rights continue for six months following the closing. A statutory merger (requiring the consent of the hold - ers of a majority of each class of shares of the merging company) is typically used instead to acquire Israeli public companies, as well as certain private compa - nies. With respect to private companies, the Israeli Compa - nies Law creates a squeeze-out mechanism pursuant to which, if the holders of at least 80% of each class and series of a target’s share capital agree to sell their shares, the remaining shareholders can be forced to sell their shares as part of the transaction. The Israeli Companies Law additionally provides that the 80% threshold can be changed by the sharehold - ers of a company in the company’s charter. However, the statutory squeeze-out provision is drafted unclear - ly and there has been no case law interpreting it. As
a result, many acquirers are reluctant to rely on it and opt to use a statutory merger if there is a concern that not substantially all of the target company’s share -
holders will support the transaction. 6.11 Irrevocable Commitments
It is common for acquirers to require principal share - holders to sign supporting agreements undertaking to vote in favour of the transaction. 7. Disclosure 7.1 Making a Bid Public Bid disclosure obligations and timing vary, depending on the type of transaction and entities involved. Public Companies Acquisitions Disclosure is typically required upon the signing of a memorandum of understanding or a definitive agree - ment (depending on the material nature of the deal). If the transaction is material, disclosure may be required once key terms are agreed upon. Mergers Disclosure is required when the board approves the merger, or earlier if a preliminary agreement is signed. Tender offers The parties to a tender offer must publish a tender offer description upon submitting the offer, or earlier if a preliminary agreement exists. The relevant reports are submitted to the ISA and the Tel Aviv Stock Exchange (the “TASE”) and made pub - licly available. Private Companies In the case of a merger, there is an obligation to inform the public and creditors about the intention to carry out the merger, a certain period in advance. Other - wise, as a general rule, no immediate disclosure is required. Should a deal result in changes to the corporate details (such as changes in the company’s capital, board of directors, articles of association, etc), the
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