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NEWSLETTER 2013
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through shareholding and does not set an example regarding dominance
through other ways.
Art. 106 of the TRR defines the dominance agreement. Pursuant to
this article, the dominance agreement is “
an agreement where a party is
granted the unconditional authority to give instruction to the management
body of the other party; in which the parties are not in a direct or indirect
affiliate relationship, or in the event of a relationship as such, in a manner
independent and isolated from the affiliate relationship.”
This definition
considerably restricts the types of agreements that may be accepted
as dominance agreements. As per this definition, the authority to give
instruction contained in the agreement must be completely independent
and isolated from the affiliate relationship and must be unconditional.
As stated above, the TCC aims to define the dominance relationship
and group companies in very broad terms. Likewise, the TCC encapsulates
all means of dominance within its scope bymaking reference to dominance
through all other means. Notwithstanding, the TRR’s restrictive definition
of the dominance agreement, which is a means of dominance, may result
in the exclusion of certain agreements executed for this purpose and
the non-interpretation of such agreements as dominance agreements.
For instance, in practice, in most situations where the dominance is
established through agreements, the authority to give instructions may
be conditioned upon the consent of the parties. In this situation, as per
the TRR’s definition, agreements comprising such conditions will not be
assessed as dominance agreements.
The TRR contains an explicit provision stipulating that credit
agreements containing an obligation “
to get the approval of the credit
institution before a transaction can be conducted
” shall not be included in
the definition of a dominance agreement. Furthermore, it explicitly holds
that agreements such as shareholders agreements to which the company
is not a party do not qualify as dominance agreements.
In accordance with TCC Article 198/3, the TRR requires approval
by the general assembly of the subsidiary company and registration
with the registry in order for the dominance agreement to be deemed
valid. Accordingly, the dominance agreement must be registered with
the registry of the dominant company or in the event that the dominant