Publication -  פרסומים

No Extension to Minimum Capital Requirements for Publicly Traded Companies

July 30, 2005

In Art-In Internet Technologies v. Tel Aviv Stock Exchange (“TASE”) the Tel Aviv District Court affirmed TASE’s decision to remove Art-In’s shares from public trading.


Honorable Judge Sirota, presiding over Art-In’s liquidator’s motion to postpone TASE’s decision, ruled that only in extraordinary circumstances courts have the authority to extend time limits set by TASE’s bylaws. However, the specific circumstances in Art-In did not amount, in Judge Sirota’s opinion, to such extraordinary circumstances.


Art-In was a publicly traded company undergoing bankruptcy proceeding. During August of 2002 TASE suspended Art-In’s shares from trading, because Art-In did not meet the minimum self-capital criteria. Pursuant to TASE’s bylaws, the maximum suspension time is 36 months, after which the shares are removed from trading.


Art-In’s liquidator claimed that the public registration of the shares (i.e. the value of Art-In as a shell company) was a material asset that could be leveraged as a potential source for partial repayment to the creditors.


Judge Sirota reasoned that the orderly trading in public markets requires strict and well defined time limits. Postponing the removal of Arti-In’s shares from public trading might therefore hinder TASE’s ability to ensure fair and transparent trading. Art-In had 36 months to restructure its business in order to meet the self-capital trading, and relaxing the criteria in one case will lead to relaxing them in other cases. Therefor Judge Sirota affirmed TASE’s decision.

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