72 / 391
NEWS LETTER 2 0 1 0
58
Equalization payments may be explained as follows: as mergers will
be based on a transfer rate, there will be remainders in the shares. For
example, TRY 1.1, TRY 1.2. It is not easy to calculate and account for
these remainders as shares. Therefore, certain payments are made instead
of these remainders. This is called an equalization payment. This payment
is not unlimited; it may not exceed 10% or 1/10.
Exit – Squeeze out.
According to the TCC, shareholders have one vote
against the merger while the companies decide on the merger. However,
if the company decides on the merger, the shareholder is bound by this
decision. This, in practice, usually results in the frustration of the merger
due to various lawsuits initiated by the shareholders. The Draft Code, on
the one hand, entitles the shareholder who is unhappy with the merger to
exit, and, on the other hand, gives companies the opportunity to dismiss
certain shareholders who continuously cause problems, frustrate the works
of the company, and act contrary to the interests of the company. Thus,
the Draft Code accepts the exit and squeeze out of a shareholder, which is
completely foreign to the joint stock companies’ nature.
The rights to exit and squeeze out are to be provided for in the merger
agreement. The right to exit will be given to shareholders by the merger
agreement, and squeeze outs are to be provided for in the merger agreement.
A compensation payment will be effectuated consisting of a certain
amount of cash or other consideration. The reason for such payments may
be explained as follows. If the shareholders participated in a merger, they
would have certain shares and rights in the new company equal to those
they had in the previous company. Thus, they need to be compensated for
the shares and rights they are deprived of as a result of their squeeze out.
The compensation payment does not have to be made in cash; it may be
some other consideration. For example, it may be the shares of another
company. It must be noted that if compensation payments are provided for,
the voting majority needed for mergers will be increased; the affirmative
votes of more shareholders will be necessary.
Merger Documents.
There are two basic documents for merger. The
first is the merger agreement, and second is the merger report. The merger
agreement is addressed in the Draft Code in detail; the required provisions
and the minimummandatory features are stipulated. The merger agreement
must be in written. It is signed by the management and approved by the