Fired CEO to receive 3 million shekels: "Dafni" company dispute resolved

The Supreme Court rejected this week the cross-appeals in the dispute surrounding the electric hairbrush company "Dafni". The decision was made after judges Daphna Barak-Erez, Ruth Ronnen, and Alex Stein recommended that the parties withdraw their appeals, arguing that the original ruling given in the District Court was "correct and balanced".

The parties involved are the controlling shareholders of the company (Orly and Kobi Guy and their daughter Sharon Rabi), and Lilach Tal, a minority shareholder (9%) and co-CEO who was fired after 9 months in the position. As part of the ruling, the controlling shareholders were obligated to compulsorily purchase Tal's shares. The purchase will be carried out according to a company valuation of 25.1 million shekels, as of the date the lawsuit was filed in May 2019.

In this context, Tal will receive a total of about 3 million shekels (including the value of the shares, interest, and legal expenses totaling 180 thousand shekels). She will now receive the remainder of the payment that has not yet been transferred to her, according to the report in "TheMarker".

The controlling shareholders appealed the very determination of oppression and the company valuation according to which they were ordered to pay. Tal, for her part, appealed with a demand for a higher valuation (based on the company's peak success in 2015) and an increase in the amount of legal expenses. Both parties accepted the Supreme Court's recommendation and withdrew the appeals with no order for costs.

Economic judge Kobi Sharvit determined that Tal was oppressed "at the high end". The harm caused to her was expressed in the execution of interested-party transactions behind her back without the approval of the general assembly, and in the unfair distribution of company resources for the benefit of the controlling shareholders. The court rejected the defendants' claim that Tal is receiving an "exit" while they are forced to pay from their own pockets. The judge noted:

"The defendants have only themselves to blame for their oppressive conduct."

The fact that the company's business situation has deteriorated in recent years did not change the ruling, as it was determined that the oppression towards Tal began as early as 2016, a period when the company was thriving.

Lilach Tal was represented by attorneys Ron Dror and Ofir Manchel. The controlling shareholders were represented by attorneys Hagit Blayberg, Daniel Wollman, and Adar Soliman (Goldfarb Gross Seligman law firm).