ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira and Moshe Pasker, Arnon, Tadmor-Levy
6.9 Voting by Proxy Shareholders can vote by proxy in Israel and vot - ing 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 pri - mary reasons: • holders of at least 95% of the target’s issued shares must accept the offer; and • appraisal rights continue for six months fol - lowing the closing. A statutory merger (requiring the consent of the holders 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 companies. With respect to private companies, the Israeli Companies Law creates a squeeze-out mecha - nism 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 shareholders of a company in the company’s charter. However, the statutory squeeze-out pro - vision is drafted unclearly and there has been no case law interpreting it. As a result, many acquir - ers 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 shareholders 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 enti - ties involved. Public Companies Acquisitions Disclosure is typically required upon the sign - ing of a memorandum of understanding or a definitive agreement (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 ten - der 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 publicly available. Private Companies In the case of a merger, there is an obligation to inform the public and creditors about the inten - tion to carry out the merger, a certain period in advance. Otherwise, as a general rule, no imme - diate disclosure is required.
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