The Constitution Committee today approved the Companies Regulations, according to which public companies and bond companies, during the Corona period, will be able to pay the external directors a full participation fee for a meeting held online. It was also approved that public benefit companies will also be able to pay full remuneration to the directors, members of the audit committee and the chairman of the board, for a meeting held by online means.
The Companies Regulations currently stipulate that an external director will be entitled to 60% of the participation fee for a meeting held online. In addition, directors, chairman of the board and members of the Audit Committee of the Public Benefit Company are entitled to 50% of the participation fee for an online meeting.
The committee approved the wording of regulations that authorize the company’s board of directors to formulate criteria according to which the participation of those officials in an online meeting can be classified as participation in a regular meeting regarding the payment of remuneration. That is, a sitting that would have been physically held had it not been for the corona restrictions. The committee further approved that the regulations will be under a temporary provision, and will apply retroactively, starting with the outbreak of the corona plague in March 2020.
The committee’s chairman, MK Gilad Karib He noted that the issue needs to be addressed, but remarked that there is a difficulty in approving regulations with retroactive applicability of almost two years: “The issue of retroactive applicability is not trivial in the Knesset and exceptional regulations in this regard. He added that there are shareholders who will argue on the other hand that the regulations are not beneficial. ”
A spokeswoman for the Ministry of Justice, Adv. Idit Mualem, explained that the regulations are temporary and timely, depending on a special health condition or emergency. , For hard work and “recalculation of the route” – the directors received a reduced remuneration. In this regard, she explained, the regulations stipulate that the board of directors may set criteria for classifying those meetings that by their nature should have taken place in physical presence, such as meetings on complex issues – financial statements, balance sheet reports and the like. In addition, regulations give the company discretion, so that it can choose not to set the criteria, and thus not add to the remuneration in practice.
Chairman MK Karib summed up the discussion noting that the Corona has changed the corporate culture and that we are in a different era. “Even when the corona is over a large part of the meetings will continue to take place online,” he said. He added that compensation may have to be given in such a way that the basic amount is given for the very existence of the meeting, and if the meeting is physically held – it will be possible to increase the compensation. Finally, the committee chairman noted that the validity of the regulations depends on the validity of the Corona Virus Special Authorities Act, which is due to expire at the end of 2022.
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