46 / 521
measures are foreseen against the dominant company’s illegal use of
domination with Article 202 TCC.
In cases where the dominant company causes its subsidiary to
incur losses, the dominant company shall be obliged to compensate
such losses. In the event that the determined compensation is not paid,
each shareholder of the subsidiary company may claim compensation
from the dominant company and from members of its board of direc-
tors. If the subsidiary company is not compensated, the shareholders
and creditors of the subsidiary company may file suit for the damages
incurred.
The illegality herein results from a transaction by the dominant
company, which damages the subsidiary company, its shareholders and
creditors.
The members of the subsidiary’s board of directors are obliged to
execute transactions as instructed by the dominant company even if
they would prefer not to do so. In such circumstances, members of the
subsidiary’s board of directors may conclude an agreement with the
dominant company in order to make the dominant company liable to
shareholders and creditors for any legal results.
Liability of the Subsidiary Company
In accordance with the domination agreement, the subsidiary’s
board of directors shall be responsible for complying with the domi-
nant company’s instructions; otherwise they may be held liable.
However, where the dominant company gives illegal instructions, the
managing body of the subsidiary company shall neither be held
responsible for nor obliged to exercise such instructions.
However, pursuant to Article 203 TCC, when the dominant com-
pany establishes full domination over the subsidiary company, which
means, when the dominant company directly or indirectly holds one
hundred percent of the shares and voting rights in the subsidiary com-
pany, the members of the dominant company’s board of directors may
give instructions to the subsidiary company with respect to its opera-
tions and management, even if such instructions cause the subsidiary
company to incur losses; under the condition that such instructions
stem from specific and concrete policies of the group of companies.
30
NEWSLETTER 2014