It is evident that the year 2021 was a remarkable one for the Israeli tech industry. Multiple companies turned into unicorns and many already coined unicorns either went public or merged with Special Purpose Acquisition Companies (SPACs) on various stock exchanges worldwide. Still today, nearing the final quarter of 2022, Israeli-based companies continue to be a point of attraction and focus for domestic and foreign investors and strategic and financial acquirers alike, even amidst what some would consider a borderline-recession and during declines in the stock markets globally. Through this whirlwind, some of the desirable sectors we have seen continue to grow and entice interest from investors are data centre services, cyber security, artificial intelligence (AI) based technologies, online shopping and delivery services, agriculture technology and the food-tech industry.

Covid-19 led to a significant surge in demand for data centre services capable of hosting and channelling the enormous volume of cloud-based data and services being created. With social distancing mandates in force, countless employees, students, and consumers were required, or chose, to work, study and shop from the comfort and safety of their homes. The natural effect of this was the further shift of physical interactions to the online realm, resulting in companies and governmental agencies and organisations grappling to maintain operations despite use overload, or adapt to a practically virtual-only world. Data centres came into play as a solution for internet traffic, providing organisations with backup components and infrastructure for power supply, data communication connections, environmental controls, and various security matters. A recent significant transaction in this sector was the sale of 49% of Med-One Ltd’s share capital from the Livnat family (represented by our firm) to the prominent American private equity firm Berkshire Partners and the van Rooyen Group, for a consideration reflecting a company valuation of approximately NIS1.5bn, and we expect to see continued growth in all that is related to data centres and solutions. Continue reading “Sponsored briefing: Popular tech sectors of today’s transactions”

For many years, most (practically almost all) of the publicly traded companies in Israel have been controlled by a single shareholder (or by a group of shareholders, acting in concert) – not unlike many other jurisdictions in the world (with the substantial exceptions of the US, Canada, Australia, and the UK)¹.

Therefore, for decades the Israeli legislator has been focused on agency costs in general² and more specifically on horizontal agency costs.³ Among other things, publicly traded companies were required to appoint at least two external directors (who have no linkage to the company and/or to its controlling shareholder/s, whose tenure is limited, whose compensation is subject to statutory caps and whose appointment is to be approved by: (i) a simple majority of all of the shareholders and by (ii) a simple majority of the non-interested shareholders, or with the objection of non-interested shareholders who hold less than 2% of the company’s voting rights – hereinafter a ‘Special Majority’⁴ and ‘External Directors’). Also – the approval of interested-party transactions involving or related to directors or officers is conditioned upon the approval of any or all (depending on the type and scope of the transaction and the seniority of the office holder in question) of the following organs: the board of directors (the ‘Board’), the Compensation Committee of the Board (in case of approval of terms of employment), or the Audit Committee and the shareholders (and where the interested party is a controlling shareholder – the approval of the Special Majority)⁵. Continue reading “Sponsored briefing: Towards better corporate governance of publicly traded companies with no controlling shareholder(s) – The current situation in Israel and the outstanding bill”