Newsletter-21

21 COMMERCIAL LAW restrict its assets with in kind and personal rights; to assume liabilities such as provide security, guarantee and aval; to make payments; to make decisions or take precautions that negatively affect its productiv- ity or business, such as not to renew its facilities without just reasons, to restrict or stop its investments, or to avoid taking precautions that would provide its development are listed among such situations. Under the preamble of Article 202 of the TCC 2 , it stated that such transactions, e.g. provision of security or guarantee or transfer of re- ceivables and debts are not unlawful themselves, but the unlawfulness arises in terms of exercise and enforcement of dominance. Unlawful- ness derives from the fact that the transaction, or the decision or pre- caution that has been taken or avoided, causes losses to the dependent company and damages the company, shareholders and the creditors of the company, and there is no just cause thereof for the company. Losses and Equalization For unlawful exercise, the transactions specified, above, must be in a nature so as to cause losses to the dependent company. Accord- ing to the preamble of the article, “ the expression ‘losses’ is different from ‘damages’ in legal terms and is so broad to cover ‘damages’ as well. Losses may occur as a decrease in the assets or prevention of an increase in the assets, as well as loss of an opportunity to conclude a transaction with success such as in the transfer of business, funds or personnel. ” Moreover, for the occurrence of unlawfulness, it is not mandatory that losses have been incurred, and it is sufficient that it is clear from convincing findings and reasoning that such transaction that the dependent company was made to conclude may cause losses. What is important is the preparation for the conditions of loss by the dependent company upon instruction by the dominant company. An exemption to the unlawfulness is the actual equalization of the incurred losses within the activity period in which the transaction was concluded, or entitlement of the dependent company to a right to claim in equal value until the end of such activity period at the latest, by indication as to how and when the losses will be equalized. However, in the second option, the exercise of such right to claim 2 Preamble of Article 202 of the TCC.