57 the committee must be authorized to negotiate the terms of the deal proposed by the controlling shareholder, to examine alternatives, and protect the interests of the company and its minority shareholders. The committee is required to keep its deliberations confidential and not to reveal its business strategy to the controlling shareholder or its advisors. Furthermore, all its meetings must be properly documented, and the minutes of such meetings should properly reflect the discussions. Additionally, the committee must act based on complete information, especially information which relates to the determination of the fair value of the company. Creditors’ rights: Creditors also have a position to challenge a merger. The creditors of a merging company have the right to apply to the court and request to hold or delay the merger, or to request other protections of their rights. A creditor must show the court that there is a reasonable concern that, following the merger, the surviving entity will not be able to pay the debts of the surviving entity when they become due. Upon the application by a creditor of either party to the proposed merger, the court may delay or prevent the merger. Procedure: The merger is effected through a formal process conducted by the Israeli Registrar of Companies. In order to effect a merger, the parties are to submit to the Registrar, a Merger Proposal - a form signed by both parties which outlines the terms of the merger and includes a declaration of each of the board of directors of the merging entities that the merger does not give rise to a reasonable concern that the surviving entity will not be able to meet its debt obligations towards creditors as a result of the merger, the rationale for the merger and a description of the merger consideration. The merger may not occur unless at least 50 days have elapsed from the submission of such Merger Proposal to the Registrar and at least 30 days have elapsed from the approval of the merger by the shareholders of each of the merging parties. Taking into consideration, in addition to the abovementioned waiting periods, the 35 days period needed for summoning a general meeting, the minimal waiting period between the signing of a merger agreement and its closing is 65 days. Once these waiting periods have elapsed, the Registrar of Companies will issue a merger certificate, which would mark the closing of the merger. FULL TENDER OFFER Structure: A controlling shareholder holding more than 45% of the issued and outstanding share capital of an Israeli company may acquire
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