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NEWSLETTER 2013
16
Affiliation Report
Article 199 of the TCC stipulates that the subsidiaries will annually
prepare an “affiliation report” in order to both render the above explained
mechanism effective and to ensure that the shareholders and creditors of
the subsidiaries are informed of the relationship between the subsidiary
and other group companies. This report shall assess the relationship
between the subsidiary and other subsidiaries and the parent company of
the corporate group, and the consequences arising therefrom.
Due to the nature of the information included therein, the affiliation
report shall also constitute a basis for the exercise of certain rights
granted to shareholders and creditors under the TCC. For instance, the
issues determined in the affiliation report are of great importance with
regards to the rights of the shareholders to information and to conduct
examinations. Additionally, this information may also form the basis for
compensation lawsuits to be filed in case the parent company does not
make the necessary compensations where compensation shall be made
under the law. For these reasons, TCC Art. 199/2 stipulates that the
affiliation report shall be prepared in accordance with the true and fair
view principle.
The Companies Obliged to Prepare an Affiliation Report
As mentioned above, all of the subsidiaries that are under control of a
parent company are obliged to prepare affiliation reports. The fact that the
subsidiary is a parent company of other affiliates or subsidiaries does not
eliminate its obligation to prepare the affiliation report. The determining
factor is whether the company is under the control of another company
through any means. It is not necessary that the subsidiary be a joint stock
company in order to prepare an affiliation report.
The Content of the Affiliation Report
Article 199 of the TCC which governs the preparation of the
affiliation report also determines the information which shall be included
therein. Pursuant to this article, in general, the relationship between the
company and the parent company and other subsidiaries of that parent