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shall be taken into consideration with regard to the liability of the board
of directors necessitates determination to be made by academics and
jurisprudence
”. Therefore, the board of directors may be held liable for
assessments it will make in preparation of the affiliation report regarding
the circumstances and conditions it should have known in addition to
those of which it had knowledge. Taking into consideration the practice
of the Turkish Commercial Code No. 6762, it is highly probable that
the phrase “known” shall be interpreted as “should have been known”
by academics and the courts. Therefore, it will be prudent to make the
evaluation in accordance with the circumstances and conditions that the
board of directors should have known.
Conclusion
In conclusion, subsidiaries are obliged to prepare an affiliation report
pursuant to Art. 199 of the TCC. In this report, the subsidiary shall cite all
of the transactions made with the parent company and the subsidiaries of
the same parent company, the transactions made with third parties upon
the direction of the parent company in favor of the parent company or its
subsidiaries, the measures taken and not taken in favor of those companies
and the losses incurred resulting from the corporate group relationship
and it compensation of those losses.
The conclusion section of the affiliation report shall be disclosed to
the shareholders through citation in the activity report.
Parent companies shall prepare a control report pursuant to Art. 199/4
upon request with regard to their relationship with their subsidiaries.