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shareholding rights including the voting rights attached to those shares
subject to cross-shareholding and all other shareholding rights cease.
Accordingly, those shares are not taken into account while calculating the
meeting and decision quorums. However, this restriction is not applicable
in case of subsidiary company’s acquisition of parent company shares or
both companies’ dominance to each other.
Full Dominance
Full dominance is defined as the direct or indirect hundred percent
ownership of shares and voting rights of a company (only capital
companies) by another company (including partnership companies).
As per art. 203 of NCC, in the case of full dominance, the board of
directors of the dominant company may instruct the subsidiary company
if it is a requirement of the determined and materialized policies of the
group, even if these instructions have the characteristic that can cause
financial losses. The organs of the subsidiary company should obey and
follow such instruction. However, even in such case, art. 204 of NCC
sets forth that the instructions which are clearly beyond the subsidiary
company’s payment ability or which may jeopardize the existence of the
subsidiary company or which may lead the subsidiary company to lose
material assets cannot be given.
Given that the board members of the subsidiary company cannot be
held responsible to the company or to the shareholders because of their
compliance to the instructions given in this context.
As per art. 206 of the NCC, in the case of a financial loss sustained
in the subsidiary company’s ledger as a result of the fulfillment of
instructions given by the dominant company and its executives as per
art. 203, unless the loss occurred is compensated within the fiscal year
or a right of claim equal to such loss is given to the subsidiary company
by stating its time and method, the creditors suffering losses can file an
indemnification lawsuit against the dominant company and the members
of its board who are responsible for the losses. However, as per this article,
the creditor who enters into credit relation by knowing that the loss is not
compensated does not have a right of claim.