Newsletter-21

16 NEWSLETTER 2016 per such Article, the principle of the continuation of company shares is dealt with. The current shareholding rights of the spun-off company shall also be met in the company structure that emerges following the spin-off operation. Within this context, the asset values of the spun-off companies, and the distribution of their voting rights shall be dealt with. Capital decrease during the spin-off operations is regulated under Art. 162 of the TCC. Since a certain amount of company assets are being separated from the body of the spun-off company, a decrease in the capital of such company may actualize. Capital decrease may be required in order to prevent the capital loss of the transferor company in the partial spin-off operation, and to adjust the capital to the new company structure. There are no explicit provisions in the law govern- ing the conditions of the capital decrease and the ratios thereof. The decision as to whether a capital decrease is necessary shall be deter- mined by the managerial body. The paragraph in Art. 162 of the TCC expressing that “Art. 473 and 474 of the law shall not be applied,” regarding the capital decrease, rendered spin-off operations more fea- sible by allowing capital increase operations to be conducted without a board of directors’ report and convocation of the creditors. Due to the fact that the elements of the company assets of the spun-off company that are being separated from the body of such com- pany and are being transferred to the acquiring company, the assets of the acquiring company shall be increased. The capital increase to be conducted as such is governed by Art. 163 of the TCC. Pursuant to such Article, the acquiring company shall increase its capital by preserving the rights of the shareholders of the spun-off company. The decision regarding the capital increase shall be taken in accordance with the procedure on the amendments to the articles of association. The important thing to consider in this step is the term, “The provi- sions regarding the capital in kind shall not be applied in the spin- offs,” which is stipulated under Art. 162/3 of the TCC. Thus, another convenience is envisaged for companies that aim to conduct restruc- turing via a spin-off. As mentioned above, a spin-off operation is followed by a merger operation, in which a portion of the assets of the spun-off company are