Israeli
law sets forth general rules of responsibilities applicable to any
manager of
the company.
Managers
are subject to three main obligations:
- Obligation
of competence and of
diligence. This responsibility
in tort is rooted in law of negligence. It
requires the manager to be competent and to act in a reasonable way,
after
being fully informed concerning the opportunity to strike the
contemplated deal.
- Obligation
of loyalty. It
includes the obligation to act in the interest of the company and avoid
situation raising a possibility of conflict of interest or competition
with the
company. In this respect, voting agreements between managers are
prohibited.
- Obligation
to act within the
purpose of the company, as set
forth in the articles of association.
The
company may use three legal techniques in order to mitigate above
responsibilities:
- Exemption
of responsibility
may be applied only to the obligation of diligence. It requires
drafting appropriate legal
clauses in the articles of association.
