The Knesset Finance Committee hardened the terms in the pending bill on limiting economic concentration on Wednesday, adding clauses designed to increase oversight on controlling shareholders.
The change, which received approval in principle during Wednesday's committee discussion, states that publicly held companies will need approval from the company board's control committee in order to carry out transactions involving the controlling shareholder. As part of the approval, the company will have to consider alternative transactions in a process that resembles a tender offering. The draft terms this as a "competitive process."
The original draft had been much more lenient regarding interested party transactions.
But the committee members pushed to toughen the draft bill, and the Justice Ministry agreed to their demands.
The draft also states that privately held companies that have issued bonds on the stock exchange will have to go through a similar process. These regulations apply to all transactions with the controlling shareholder, including salary agreements.
The committee's decision is another stumbling block for Nochi Dankner, who controls the IDB group. For months, Dankner has been trying to advance the sale of Clal Insurance to Koor, an interested-party transaction expected to give the IDB group a NIS 2 billion windfall. IDB is currently in dire straits vis-a-vis its lenders, and Dankner is struggling to maintain his control over the business pyramid.
Committee chairman Nissan Slomiansky also delayed the vote on the so-called economic concentration bill until Monday, because it had not finished discussing the section on economic pyramids. It had been scheduled to start voting on clauses in the bill on Wednesday.
The government late Monday backed down on a measure aimed at limiting the power of some of Israel's biggest conglomerates, backtracking on a plan that would restrict pyramid groups to no more than two levels of subsidiaries. Most members of the committee back the two-level ceiling, according to a survey by TheMarker. The cabinet's compromise would have exempted companies including IDB from having to sell off subsidiaries.
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