Government Companies Authority Bans Zoom from Board Meetings, Sparking Backlash

The head of the Government Companies Authority, Roi Kahlon, issued a circular several months ago mandating that board meetings of government-owned companies be held in person. The directive explicitly prohibits hybrid meetings where some participants join via Zoom. Directors who join an in-person meeting remotely, rather than from the company's offices, will not be compensated.

The directive has caused a stir among board members, leading the Directors Association to file an appeal, which Kahlon recently rejected. The association is now considering a petition to the High Court of Justice. According to the new rules, remote participation is permitted only under "relevant circumstances," such as states of emergency or war. Chairmen are required to document the specific reasons for any remote meeting in the minutes.

"Going Too Far"

The Directors Association claims the decision was made without proper authority and will create uncertainty regarding quorums and director liability. Board members argue that the policy is out of touch with the modern digital era.

"We are in the age of digitization. This is a step too far and does not fit the era we live in," one director told Globes. "There is no precedent in large corporations where a director's presence is not counted simply because they cannot attend in person." Another director from the defense sector suggested that a more balanced approach, similar to limits used in the banking industry, would be more appropriate than a blanket ban.

Arguments For and Against

Arguments for the directive:

• Improving the quality and professionalism of board discussions.

• Preventing abuse, where directors previously joined meetings while on vacation or occupied with other tasks.

• Ensuring directors maintain physical oversight of company operations.

Arguments against the directive:

• Creating a burden for directors who travel abroad for work or live in remote areas.

• Failing to adapt to the global shift toward hybrid work models.

• Disproportionate time and travel costs compared to the meeting fees received.

Currently, approximately 300 directors serve across 68 government companies, managing assets estimated at 300 billion shekels. While remote meetings were rare before 2020, the COVID-19 pandemic and the security situation following October 7 normalized the practice. Currently, remote participants receive 60% of the standard meeting fee, which ranges from 870 to 1,715 shekels depending on the company's classification.

Official Stance and Expert Support

Kahlon maintains that physical presence is vital for effective governance. "Hybrid meetings are the worst format. If a meeting must be held via communication means, everyone should join that way," he explained. "I have not limited the board's discretion, but the chairman must justify why a meeting is being held remotely."

Support for the move has come from the Ohayon Center for Excellence in the Board of Directors, which cited studies indicating that hybrid meetings are the least effective format. Experts argue that physical presence is essential for influence, committee appointments, and leadership roles within the board.