30 / 473
COMMERCIAL LAW
17
company shall be stated in the affiliation report. Within that scope, (i) the
obligations of the subsidiary and the counter obligations, (ii) the measures
to prevent the losses of the subsidiaries which the parent company adopted
or refrained from providing, together with the reasons of such measures
and the interest and damages that the company may incur due to such
measures and (iii) whether compensation was made where some losses
were incurred and the information with regards to such compensation
shall be included to the affiliation report.
In short, the matters to be mentioned in the affiliation report may be
classified into three groups: the legal transactions with the other companies
of the corporate group, the measures omitted or provided in favor of such
companies, and the compensation made for the losses incurred.
The text of the article regarding measures to be provided and
compensation is quite clear. However, the scope of the legal transactions
to be included in the affiliation report must be carefully and diligently
determined; as the wording of the article may result in differences of
interpretation.
The wording of the article with regard to legal transactions is as
follows:
“… the legal transactions made with the parent company or a
subsidiary of the parent company, or made in favor of the parent company
or one of its subsidiaries upon the direction of the parent company”
. As
can be seen, the interpretation of the phrase
“upon the direction of the
parent company”
is not sufficiently clear; neither does the justification of
the article offer any explanation to that end.
In our opinion, all of the transactions made with the parent company
and the subsidiaries shall be included in the affiliation report without
being subject to any other condition. However, certain transactions that
are not made with the parent company or one of its subsidiaries may
also be included to the report provided that such transactions are made
in favor of the parent company or one of its subsidiaries, and that the
transactions have been made upon the direction of the parent company.
Therefore, three groups of transactions shall be included in the report:
(i) all of the transactions made with the parent company, (ii) all of the
transactions made with the subsidiaries of the parent company and (iii)