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NEWSLETTER 2013
26
Where the controlling company fulfills its compensation obligation, the
contravention of the law will be eliminated and the controlling company
will be relieved of its liability. Pursuant to Art. 202/1, the compensation
obligation may be fulfilled by compensating the loss within that activity
year or a right to claim of equivalent value is granted to the dependent
company at the latest by the end of that activity year by specifying how
and when the loss will be compensated.
In the event that the compensation foreseen under Art. 202/1 TCC
has not been paid/ performed, a contravention of the law will be deemed
to exist and the shareholders of the dependent company may file suit for
the damages incurred by the dependent company. The provisions of the
lawsuit will be briefly examined below.
Cause of Action
In order to file a suit as regulated under Art. 202/1(b), certain
factual elements must be met. The first element is the existence of
a group. Moreover in order to file a suit for damages there must be a
dependent company and a controlling company in compliance with Art.
195 TCC. This type of action seeks to compensate the damage caused
to the dependent company for losses incurred due to abuse of control.
Consequently, the presence of a controlling company and dependent
company is essential. Furthermore, there must be a contravention of the
law pursuant to Art. 202/1(a). A contravention of the law will arise where
the dependent company incurs a loss due to use of control and such loss
has not been compensated within the period prescribed by the law. In the
presence of these factual elements, a suit for the dependent company’s
damages may be filed by the shareholders of the dependent company.
Parties
Pursuant to Art. 202/1 of the TCC, if compensation has not been
paid/performed within the activity year in which the damage occurred
or if a right of equivalent claim has not been granted within the due
period, each shareholder of the dependent company may demand that the
loss incurred be compensated by the controlling company and its board
members who caused the loss. The plaintiff is set forth as the shareholder