Newsletter-21

24 NEWSLETTER 2016 Liability Agreement In practice, members of the board of directors of the dependent company may be obliged to fulfill the instructions from the dominant company, although they believe that such instructions may lead to their liability. In such a case, since such member will not be able to eliminate his liability arising from the law, the last paragraph of Article 202 of the TCC entitles the members of the board of directors of the dependent company to ask the dominant company to execute an agreement for the assumption by the dominant company of the legal consequences of their liabilities that may be due against the shareholders. Full Dominance Situations Articles 203 to 206 of the TCC regulate the abuse of dominant position in the case of full dominance. In the event that a commercial company directly or indirectly holds one-hundred percent of the shares and voting rights of a capital company, there is full dominance. Different from other dominance situations, in the event of full dominance, the dominant company may give instructions for the di- rection and management of the dependent company even if they are of a nature to cause losses to the dependent company, provided that such instructions are due to determined and solid policies of the group of companies. Bodies of the dependent company shall be obliged to com- ply with the instructions of the dominant company and cannot be held liable against the company and shareholders due to such compliance. According to the preamble of Article 203 of the TCC 3 , the reasoning of such non-liability is that in practice, the members of a fully depend- ent board of directors are persons who must comply with the policies of the dominant company and group of companies, or will otherwise lose their jobs. It is unrealistic to accept that a board of directors in such a situation would have to value the interests of the dependent company above those of the dominant company. An exemption to the obligation to comply with the instructions is that such instructions explicitly exceed the payment ability of the dependent company or endanger its existence, or may lead to its loss of its important assets. If the members of the board of directors of 3 Preamble of Article 203 of the TCC.