Capital Market Authority Draws New Boundaries for Institutional Investors
Amit Gal, head of the Capital Market Authority, has questioned the involvement of the Meitav investment house in the company Orion. This move has sparked a debate over the limits of institutional activism and the balance between protecting savers and market structure.
Two days ago, it was revealed that Amit Gal, head of the Capital Market Authority, approached the Meitav investment house seeking clarifications. Gal expressed concern over the firm's interest in appointing four directors to Orion, a company holding three real estate assets in Poland with a market value of approximately 94 million shekels.
According to Calcalist, Gal wrote that "there is a concern that the scope and nature of Meitav's involvement exceeds what is expected of an institutional body and may amount to management influence inconsistent with applicable restrictions." The letter has caused turmoil, with groups like Lobby 99 warning of a "chilling effect" that could curb institutional oversight of public companies, ultimately harming the saving public.
Institutional investors manage pension and savings funds totaling about 3.4 trillion shekels, with 500 billion shekels invested in local stocks. This creates a public interest conflict: while savers want institutional investors to maximize profitability, there is a fear that a few giant entities could dominate the economy, potentially raising prices and stifling competition.
Israeli law limits institutional investors to a 20% stake in any public company, yet they are expected to ensure proper corporate governance. In recent years, the regulator has encouraged "institutional activism," including monitoring CEO compensation and scrutinizing related-party transactions.
The Capital Market Authority maintains that this is a principled issue, regardless of company size. "The Authority's role is not limited to caring for savers, but also ensuring the proper functioning of the entire financial system," sources close to the Authority stated. However, critics argue that if there is a systemic problem, the regulator should act through orderly research and new circulars rather than targeting specific investment houses over small-scale interventions.
