Description of Securities

 

The following is a summary of the material terms of our securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”). All references to the “Company,” “we,” “us,” “our” and “ZIM” refer to ZIM Integrated Shipping Services Ltd. Our Ordinary Shares, no par value (the “Ordinary Shares”) are the only type and class of securities of the Company that are registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. We are incorporated as a limited liability company under the laws of the State of Israel.

 

Type and Class of Securities

 

Our Ordinary Shares are listed on the New York Stock Exchange under the symbol “ZIM”. Our authorized share capital consists of 350,000,001 Ordinary Shares, no par value, of which 120,286,627 Ordinary Shares were issued and outstanding as of December 31, 2023 and 120,320,804 as of March 1, 2024. All of our outstanding Ordinary Shares have been validly issued, fully paid and are non-assessable. Our Ordinary Shares are not redeemable and do not have any preemptive rights.

 

Rights of our Ordinary Shares

 

The following description of our share capital and provisions of our articles of association are summaries and are qualified in their entirety by reference to the full text of the articles of association, which was filed as Exhibit 1.1 to our to the Company’s 2022 Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 13, 2023.

 

Dividend and Liquidation Rights 

 

We may declare a dividend to be paid to the holders of our Ordinary Shares in proportion to their respective shareholdings. In accordance with the Israeli Companies Law 5759-1999 (the “Companies Law”) and our articles of association, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company.

 

Pursuant to the Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two years, according to our then last reviewed or audited financial statements, provided that the date of the financial statements is not more than six months prior to the date of the distribution, or we may distribute dividends that do not meet such criteria with court approval. In each case, we are only permitted to distribute a dividend if our Board of Directors and the court, if applicable, determines that there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due. Pursuant to an amendment to the Companies Regulations (Reliefs for Companies whose Securities are Traded Outside of Israel), 2000, we may conduct a distribution by means of a share buyback that does not meet the profit test applicable by law, without requiring the court's approval, if several conditions are met. For information regarding reliefs for companies whose securities are traded outside of Israeli, see “Item 6.C – Board Practices – Amendment to Companies Regulations (Reliefs for Companies whose Securities are Traded Outside of Israel), 2000”.

 

In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our Ordinary Shares in proportion to their shareholdings. This right, as well as the right to receive dividends, may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.

 

Voting Rights

 

Pursuant to our articles of association, holders of our Ordinary Shares have one vote for each Ordinary Share held on all matters submitted to a vote before the shareholders at a general meeting. Our Ordinary Shares do not have cumulative voting rights for the election of directors.

 

Quorum

 

The necessary quorum for a general meeting of shareholders consists of two shareholders who together represent at least thirty-three and a third percent of the voting rights of our Ordinary Shares entitled to vote at the meeting, present in person or by proxy within half an hour from the time determined for the opening of the general meeting. A meeting adjourned for lack of a quorum is generally adjourned to the same day in the following week at the same time and place or to a later time or date if so specified in the notice of the meeting. At the reconvened meeting, any single shareholder present in person or by proxy shall constitute a lawful quorum.

 

Shareholders’ Meeting and Resolutions

 

Our articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by the Companies Law or by our articles of association. Under the Companies Law, certain actions require a special majority, including: (i) the approval of an extraordinary transaction with a controlling shareholder or in which the controlling shareholder has a personal interest, (ii) the terms of employment or other engagement of a controlling shareholder of the company or a controlling shareholder’s relative (even if such terms are not extraordinary), and (iii) approval of certain compensation-related matters.

 

Under Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be held no later than 15 months after the date of the previous annual general meeting. All meetings other than the annual general meeting of shareholders are referred to in our articles of association as extraordinary general meetings. Our Board of Directors may call extraordinary general meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine. In addition, the Companies Law provides that our Board of Directors is required to convene an extraordinary general meeting upon the written request of (i) any two of our directors or one-quarter of the members of our Board of Directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares and 1% of our outstanding voting power or (b) 5% or more of our outstanding voting power. One or more shareholder holding at least 1% of the voting rights in the general meeting is entitled to request the company’s Board of Directors to include a proposal on the agenda of a general meeting, provided that the proposal is appropriate to be discussed at a general meeting. Regulations promulgated under the Companies Law provide that such a request may be provided within three to seven days following the convening of the general meeting depending on the item. Pursuant to an amendment to the Companies Regulations (Reliefs for Companies whose Securities are Traded Outside of Israel), 2000, which applies to us, a shareholder who wishes to add an item to the agenda of a general meeting which entails the proposal of a candidate to serve as a director on the board of directors, may do so if such shareholders holds 5% or more of our voting rights (instead of 1%). For information regarding reliefs relating to general meetings for companies whose securities are traded outside of Israeli, see “Item 6.C – Board Practices – Amendment to Companies Regulations (Reliefs for Companies whose Securities are Traded Outside of Israel), 2000”.

 

Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the Board of Directors, which may be between four and 40 days prior to the date of the meeting, (and, with respect to companies whose securities are traded on a stock exchange outside of Israel, such as ourselves, 60 days prior to the date of the meeting, pursuant to an amendment to the Companies Regulations (Reliefs for Companies whose Securities are Traded Outside of Israel), 2000, which was approved in March 2024). For information regarding reliefs relating to general meetings for companies whose securities are traded outside of Israeli, see “Item 6.C – Board Practices – Amendment to Companies Regulations (Reliefs for Companies whose Securities are Traded Outside of Israel), 2000”.

 

Furthermore, the Companies Law requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders:

 

 

The Companies Law requires that notice of any annual general meeting or extraordinary general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting includes (among other things) the appointment or removal of directors, the approval of transactions with directors or officers or interested or related parties, or an approval of a merger, notice must be provided at least 35 days prior to the meeting.

 

Under the Companies Law, shareholders are not permitted to take action via written consent in lieu of a meeting.

 

Modification of Shareholders’ Rights

 

Under our articles of association, the alteration of the rights, privileges, preferences or obligations of any class of our shares (to the extent there are classes other than Ordinary Shares) requires a simple majority of the class so affected (or such other percentage of the relevant class that may be set forth in the governing documents relevant to such class), in addition to the ordinary majority vote of all classes of shares voting together as a single class at a shareholder meeting.

 

Transfer of Ordinary Shares 

 

Our fully paid Ordinary Shares are issued in registered form and, subject to the limitations imposed by the Special State Share as detailed below, may be freely transferred under our articles of association, unless the transfer is restricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The ownership or voting of our Ordinary Shares by non-residents of Israel is not restricted in any way by our articles of association or the laws of the State of Israel, except for ownership by nationals of some countries that are, or have been, in a state of war with Israel.

 

The Special State Share 

 

When the State of Israel sold 100% of its interest in us in 2004 to Israel Corporation Ltd., we ceased to be a “mixed company” (as defined in the Israeli Government Companies Law, 5735-1975) and issued a Special State Share to the State of Israel whose terms were amended as part of the Company’s 2014 debt restructuring. The objectives underlying the Special State Share are to (i) safeguard our existence as an Israeli company, (ii) ensure our operating ability and transport capacity so as to enable the State of Israel to effectively access a minimal fleet in a time of emergency or for national security purposes and (iii) prevent parties hostile to the State of Israel or parties liable to harm the State of Israel’s vital interest in the Company or its foreign or security interests or its shipping relations with foreign countries, from having influence on our management. The key terms and conditions of the Special State Share include the following requirements:

 

 

Other than the rights enumerated above, the Special State Share does not grant the State any voting or equity rights. The full provisions governing the rights of the Special State Share appear in our articles of association. We report to the State of Israel on an ongoing basis in accordance with the provisions of our articles of association. Certain asset transfer or sale transactions that in our opinion require approval, have received the approval of the State (either explicitly or implicitly by not objecting to our request).

 

Any change, including an amendment or a cancellation, of the provisions of our articles of association pertaining to the rights granted and/or attached to the Special State Share and to its holder, will not bind us, our shareholders or any third party without the prior written consent of the holder of the Special State Share.

 

Access to Corporate Records

 

Under the Companies Law, shareholders are provided access to: minutes of our general meetings; our shareholders register and principal shareholders register, articles of association and financial statements; and any document that we are required by law to file publicly with the Israeli Companies Registrar. In addition, shareholders may request to be provided with any document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the Companies Law. We may deny this request if we believe it has not been made in good faith or if such denial is necessary to protect our interest or protect a trade secret or patent.

 

Changes in Capital

 

Our articles of association enable us to increase or reduce our share capital (subject to the provisions of our Special State Share). Any such changes are subject to the provisions of the Companies Law and must be approved by a resolution duly passed by our shareholders at a general meeting by voting on such change in the capital. In addition, certain transactions that have the effect of reducing capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings or profits, require the approval of both our board of directors and an Israeli court.