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is concluded, the subsidiary company starts to act for the benefit of the
group of companies by changing its management structure.
The subsidiary company, no longer being managed by its own bod-
ies, is operated and controlled by another company and therefore
becomes dependent through a domination agreement, which must be
submitted for the approval of general assembly
4
.
Moreover, as is frequently observed in practice, the dominant com-
pany may be the shareholder of the subsidiary company as well. In
such cases, the shareholder dominant company is required to vote in
the subsidiary company’s general assembly. However, pursuant to
Article 436 TCC, the shareholder of a company cannot vote with
respect to personal acts and transactions between itself and the sub-
sidiary company under its dominance. Therefore, the dominant com-
pany that is the shareholder of the subsidiary company can only vote
on acts and transactions in which it holds no special interest.
Registration of Domination Agreements
As per Article 106/2 of the Regulation, in order to gain validity,
domination agreements must be approved by subsidiary company’s
general assembly; and then registered and announced. This registration
and announcement of the domination agreement enables third parties
to become aware of such agreement.
Domination agreements shall not be considered valid and effective
until registered and announced in the trade registry. However, the inva-
lidity of a domination agreement shall not prevent the liabilities and
responsibilities regulated under the provisions of the TCC and other
Codes. Therefore, as per Article 198/3 TCC, even if the domination
agreement is not registered and announced in the trade registry, the
dominant company and its managing body shall be held liable and
responsible.
Liability Arising from a Domination Agreement
Liability of the Dominant Company
The dominant company must not use its control illegally against
the subsidiary company through the domination agreement. Preventive
COMMERCIAL LAW
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PULAŞLI, Hasan
, Yeni Şirketler Hukuk Genel Esaslar, Ankara 2012, p. 225.