52 The Bill In June 2022 the government has submitted the Companies Law (Amendment No. 36) (Corporate Governance in Public Companies without a Controlling Shareholder) Bill, 2022 (the "Bill"). One of the more significant amendments proposed by the Bill is the enhancement of the term "control" (as defined in the Israeli Securities Law, 1968 and applied to the Companies Law) – basically defining a presumption of "minority control" under certain circumstances (and thus shifting the onus from minority shareholders, who were to prove "de facto control" to the holders of 25% or more of the voting power in a company (where no other shareholder holds at least 50% of such company's voting rights) – to show lack or effective control notwithstanding such holdings). Also, according to the Bill, in a company without a controlling shareholder(s): • The majority of the members of the Board should be Independent Directors14 who have a Professional Capacity or an Accounting and Financial Expertise, and at least one of them shall possess Accounting and Financial Expertise. . • A director may serve for terms of up to three years each. • The majority of the directors must retire no later than the time of the second annual meeting held after their appointment. • The Board should form a policy with regard to the composition of the Board and the required qualifications of its members (the "Nomination Policy"). • The Audit Committee shall be composed of at least three directors, it shall be chaired by an Independent Director (as such term is defined in the Companies Law), most of its members shall be independent directors and at least one of them shall possess Accounting and Financial Expertise15. 14 Currently this is merely a "best practice" recommendation, as per the first addendum to the Companies Law. 15 A "Professional Capacity" is defined under the Companies Regulations (Conditions and Criteria for a Director with Accounting and Financial Expertise and for a Director with Professional Capacity), 2005 (the "Professional Capacity Regulations") as either a professional (law, economy, business management, accounting or public management) academic degree, an academic degree which is relevant to the respective company and/or the respective role, or sufficient experience in senior positions). "Accounting and Financial Expertise" is defined in the Professional Capacity Regulations as the ability to thoroughly understand and discuss financial statements – given the director's academic and professional background, as evaluated by the Board. 3.
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