57 / 521
dance with subparagraph (d) of Art. 465/1 TCC. Since this situation
would affect the capital participation rate of the current shareholders (it
would decrease their participation rate) the law maker, in order to not
injure the interests of the shareholders, establishes the condition that
the newly issued debt instruments made up of conversion and purchase
rights shall primarily be offered to the shareholders pro rata to their
shares. On the other hand, the “right to be the object of the offer” rec-
ognized for the shareholders may be abolished or restricted in the pres-
ence of just causes
6
. In case the purchase right is recognized for the
employees, it is not required to recognize the right to be the object of
the offer for them. However, in this case, the rights of the shareholders,
whose right of first refusal is restricted, shall be protected within Art.
466/3 TCC.
Protection of Conversion and Purchase Rights Holders
The lawmaker places importance on the protection of persons enti-
tled to conversion and purchase rights in conditional capital increase in
accordance with Art. 467 TCC. In compliance with the first paragraph
of Art. 467 TCC, creditors or employees entitled to acquire registered
shares through conversion or purchase rights may not be prevented
from exercising these rights based on the claim that the transfer of such
shares is restricted, unless such a restriction is explicitly stipulated
under the articles of association or in the offering circular.
Another arrangement protecting rights holders is stipulated in the
second paragraph of the same article. In accordance with said para-
graph it is set forth that conversion or purchase rights recognized for
creditors or the employees may not be subject to any losses due to cap-
ital increase, the granting of new conversion or purchase rights or by
any other means. However, along with said regulation the 2nd para-
graph also stipulates that if the conversion fee is decreased, the rights
holders have been provided with adequate consideration or the share-
holders incur losses in the same manner, an action contrary to the pro-
tection defined in the previous sentence may be carried out.
COMMERCIAL LAW
41
6
KENDİGELEN
, p. 322.