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COMMERCIAL LAW
15
Affiliation Reports in a Corporate Group
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Prof. Dr. H. Ercument Erdem
Introduction
The Turkish Commercial Code No. 6102 (“TCC”) introduces
provisions on group companies on the basis of the concept of dominance
between companies. Pursuant to these provisions, where a company
directly or indirectly (a) holds the majority of voting rights in another
company, (b) has a right in another company to appoint the number
of members of its managing organ having the majority to adopt board
resolutions, (c) owns the majority of voting rights in another company
solely or together with other shareholders based on an agreement; or where
a company controls another company through a dominance agreement or
through other means, the first company is in a dominant position. The
parent company and the subsidiaries under its control, which are party to
a dominance relationship, constitute a group of companies (a corporate
group). The Trade Registry Regulation
1
Art. 105/1 on the other hand
stipulates that for a corporate group to exist pursuant to TCC Art. 195/4,
there must be one parent company and at least two subsidiaries.
In order to prevent negative influences of the parent company over
the subsidiaries as a result of the dominance, the TCC stipulates some
obligations for both the parent company and the subsidiaries. The main
obligation of the parent company is to not exercise control illegally. In the
event the parent company exercises its control illegally over its subsidiary,
resulting in the subsidiary facing losses, the parent company shall
compensate the losses of the subsidiary. The purpose of such obligation
is to prevent the shareholders and the creditors of the subsidiaries from
incurring losses. In the event the parent company does not compensate the
losses, the shareholders of the subsidiary may request compensation of
damages and the creditors of the subsidiaries may request compensation
of the losses to be paid to the company.
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Article of February 2013
1
Official Gazette, 27.01.2013, No. 28541.