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transactions, type conversions, decisions to dissolve, transfer of all or a
material portion of its assets, establishing of a right
in rem
over or leasing
all or a material portion of its assets, materially or completely amending
the scope of activities, granting privileges and amending the scope of
existing privileges and delisting decisions are considered among the
important decisions of a public company. Exit rights may also emerge
for companies which became
ipso jure
public due to the number of their
shareholders, however, which do not want to be subject to the CML.
Pursuant to CML Art. 33, companies deemed public for having over five
hundred shareholders may opt out from the scope of the CML through a
general assembly resolution to be adopted with the votes of at least two
thirds of the total number of shareholders, and which may not be less than
three fourth of all votes in the company in the event the company does not
want its shares to be traded on a stock exchange.
Shareholders participating in the general assembly resolutions where
the abovementioned transactions are discussed, who cast negative votes and
who record their objection in the meeting minutes may exit the company
by selling their shares to the public company. In the event a shareholder is
unjustly deprived of the right to participate in the general assembly meeting
or if the invitation or announcement of the agenda is not duly made, the
prerequisites of casting a negative vote and recording the objection shall
not be applicable in order to grant the exercise of the exit right.
It is disputed whether the share buy-back limits of companies regulated
under the TCC shall apply in the event of an exit right. The principles and
procedures of the exit right shall be determined by the CMB.
Conclusion
The squeeze-out right of a company is a right introduced with
the TCC, which also is subject to specific provisions under the CML.
Additionally, these recently adopted codes grant the shareholder sell-out
and exit rights which may be used to sever partnership with a company.
These rights serve to fulfill needs that arise in practice.
The procedures and principles regarding the squeeze-out, sell-out and
exit rights regulated under the CML shall be clarified in the secondary
legislation to be issued by the CMB.