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The third circumstance where squeeze-out is possible is regulated
along with the right of shareholders to request dissolution of the company
due to just cause under TCC Art. 531. The minority shareholder may
initiate a lawsuit for the dissolution of the company where there is just
cause (such as constant violation of minority rights, right to information
or similar rights). The judge of the civil court of first instance may decide
on the squeeze-out of the shareholder from the company by paying the
plaintiff shareholder the share price, instead of deciding to dissolve the
company. However, it should be noted that this article does not provide a
squeeze-out right for the company. Pursuant to this article, the shareholder
may only be squeezed out if a lawsuit for the dissolution of a company is
filed and upon a court decision.
Sell-out Right of the Shareholder in Group Companies
The TCC foresees certain consequences of unfair exercise of
dominance under its provisions governing group companies. Certain
provisions grant shareholders of subsidiary companies the right to sell-
out under certain conditions.
Pursuant to the TCC, the controlling company may not exercise
dominance over its subsidiary which results in loss in the subsidiary, unless
such loss is counterbalanced in the given activity year or without specifying
the timeframe within which counterbalance will take place. Pursuant
to TCC Art. 202/1/b, in the event the company fails to counterbalance
the loss, the shareholders of the subsidiary may request the controlling
company to compensate the damages incurred by the subsidiary. In such
an event, the judge may decide on compensation, on the purchase of
the shares of the plaintiff shareholder by the controlling company or on
another convenient measure. However, the abovementioned provision
also grants the shareholder the right to request from the court that the
controlling shareholder purchase his shares. Therefore, the shareholders
are granted a right to request to sell-out.
In the event the subsidiary company engages in transactions such as
merger, spin-off, type conversion, issuance of securities and amendments
to its articles of associations, and if such transaction is made only as a result
of dominance, without an apparent justification from the subsidiaries
point of view, another sell-out right may arise. Pursuant to TCC Art.