241 / 522
quotation of high prices, or the transfer of certain businesses to certain
persons
4
.
The second paragraph of CML Article 21 states that the hidden
income shifting prohibition can also be passively violated. The second
paragraph of CML Article 21 sets forth that “ In the cases where pub-
lic companies and collective investment schemes, along with their sub-
sidiaries and affiliates, do not perform the activities expected from
them as prudent and honest merchants in accordance with their articles
of association or their internal rules, or if they do not perform activi-
ties in order to conserve or increase their profits or assets in accordance
with market practices, providing the increase of the profits or assets of
real persons and legal entities with whom they are related shall also be
deemed as hidden income shifting transactions.”
The second paragraph of CML Article 21 prohibits the reduction
of assets, along with the reduction of the profits of the company
through transactions concluded by the company through a certain
method and, accordingly, foresees a broader approach than Article 15
of the abrogated law.
When the first two paragraphs of the Article are jointly evaluated,
it is clear that the active operations stipulated in the first paragraph as
(i) the reduction of profits (ii) the reduction of assets and (iii) the pre-
vention of the increase of profits or (iv) the prevention of the increase
of assets, are prohibited, along with the passive operations as stipulat-
ed in the second paragraph of the Article, as (i) the non-performance of
the activities that are expected to be performed in order to protect or
increase the profit, and (ii) the non-performance of the activities that
are expected to be performed in order to protect or increase the assets.
In this context, the new regulation not only aims to prohibit the
reduction or prevention of increase the profits or assets through active
behavior. Additionally, damaging the company through passive behav-
iors shall also be assessed within the scope of the hidden income shift-
ing prohibition.
In accordance with CML Article 21, it is not necessary for the
source shifting to be performed by the public company in person,
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225
4
Ünal Tekinalp
, Sermaye Piyasası Hukukunun Esasları, İstanbul 1982, p. 77.