General
The Directors recognize the importance of good corporate governance and intend that the Company will comply with the main provisions of the Combined Code insofar as they are appropriate given the Company’s size and stage of development.
Board
The Board is responsible for formulating, reviewing and approving the Company’s strategy, budgets and corporate actions. Following Admission, the Company intends to hold Board meetings at least four times each financial year and at other times as and when required.
Committees and Internal Auditor
The Company will establish with effect from Admission properly constituted audit, and remuneration and nomination, committees of the Board with formally delegated duties and responsibilities.
The audit committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on. It will receive and review reports from the Company’s management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Group. The audit committee will meet not less than three times in each financial year and will have unrestricted access to the Company’s auditors. Members of the audit committee will be Yael Hershtik, David Rubin and Ronnen Yitzhak. Under Israeli law, the audit committee must consist of at least three directors, including all of the external directors but excluding the chairman of the board of directors, any controlling shareholders or his relatives and any director employed by the Company or who provides services to the Company on a regular basis.
The remuneration and nomination committee will review the performance of the executive directors and make recommendations to the Board on matters relating to their remuneration and terms of employment. The remuneration committee will also make recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. The nomination committee will meet as and when necessary to assess the suitability of candidates proposed for appointment by the Board. In exercising this role, the Directors shall have regard to the recommendations put forward in the Combined Code. Members of the remuneration and nomination committee will be David Rubin, John Porter and Ronnen Yitzhak.
Under the Israeli Act, the board of directors of a public company must appoint an internal auditor proposed by the audit committee. The role of the internal auditor is to examine whether such public company’s actions comply with the law, integrity and orderly business procedure. The internal auditor must not be an interested party or office holder, or a relative of any interested party or office holder, nor a member or representative of the Company’s external auditors. The Israeli Act defines the term “interested party” to include a person who holds 5 per cent. or more of the Company’s outstanding share capital or voting rights, a person who has the right to appoint one or more directors or the general manager, or any person who serves as a director or as the general manager. The internal auditor will be appointed by the Directors following Admission pursuant to the recommendation of the audit committee.
Share Dealings
The Company will adopt upon Admission a model code for directors and employees in relation to share dealings which, taking account of the fact that the Company is incorporated in Israel, is appropriate for a company whose securities are traded on AIM.
External Directors
Under the Israeli Act, companies incorporated under the laws of Israel whose shares have been offered to the public in or outside of Israel are required to appoint at least two external directors.
The Israeli Act provides that a person may not be appointed as an external director if the person, or the person’s relative, partner, employer or any entity under the person’s control has, at the date of appointment, or had during the two years preceding the date of appointment, any affiliation with:
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the company (excluding an affiliation resulting from such person being appointed as a director and as a proposed external director) of the company in contemplation of the company’s initial public offering); or
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any entity controlling the company; or
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any entity controlled by the company or by its controlling entity.
The term affiliation includes:
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any employment relationship;
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a business or professional relationship maintained on a regular basis;
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control; and
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service as an office holder.
No person can serve as an external director if the person’s position or other business creates or may create a conflict of interest with the person’s responsibilities as an external director. Until two years after termination of office, a company may not engage an external director to serve as an office holder or employee and cannot receive professional services from that person for compensation, either directly or indirectly, including through a corporation controlled by that person.
External directors are elected by a majority vote at a shareholders’ meeting, provided that either:
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the majority of shares voted at the meeting, including at least one-third of the shares of non-controlling shareholders voted at the meeting, vote in favor of election; or
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the total number of shares of non-controlling shareholders that voted against the election of the director does not exceed one per cent. of the aggregate voting rights in the company.
The initial term of appointment of an external director is three years and may be extended for one additional term of three years. Each committee of a company’s board of directors that is authorized to exercise specific powers of the board is required to include at least one external director. Pursuant to the provisions of the Israeli Act, the Company intends to recommend to its shareholders that Yael Hershtik and David Rubin be elected as external directors at a general meeting to be held within three months of Admission.
An external director is entitled to compensation as provided in regulations under the Israeli Act and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with services provided as an external director.
