The Finance Division of the District Court of Tel Aviv-Jaffa’s Recent Decision Regarding a Company’s Distribution of Dividends.
The Finance Division of the District Court of Tel Aviv-Jaffa recently determined that a court may permit a company to distribute dividends even if reasonable doubt exists as to the company’s long-term solvency, so long as it’s long-term creditors agree to such distribution. This decision enabled IronSource Ltd. to distribute dividends, despite its failure to meet the “Profits Test” and the existence of reasonable doubt regarding its ability to meet the “Solvency Test” in the long run, as required by law.
Yaniv Aronowich, partner and co-head of the firm’s Cross-Border and Domestic M&A practice group, and associate Rotem Koren Barnea cover all of the details of this ruling and explain its significance, in light of its apparent contradiction to the Israeli Companies Law, in a recent client update.
