Newsletter-21

29 COMMERCIAL LAW shareholding situation, e.g. until the shareholding of one of the com- panies in the other company falls below one-fourth. Unused rights do not disappear, they freeze, and by the transfer of these shares, the new acquirer is entitled to use the frozen rights 4 . There is no explicit provi- sion in the TCC regarding whether or not any claims may be asserted for the rights arising from the frozen rights after the freezing is lifted. However, it is argued by several scholars that frozen rights cannot be claimed, products belonging to the frozen rights should be distributed to the non-frozen rights on a pro rata basis in the general assembly meetings convened regardless of the frozen rights, and provisions to the contrary cannot be adapted by the articles of association or general assembly resolution 5 . It is stated under the preamble of the TCC that although Article 201, regulating the consequences of cross shareholding, was inspired by Article 328 of the German AktG, it is a genuine provision com- pletely different therefrom, and the purpose of the two regulations are the same, but the consequences are different 6 . Indeed, if we adapt the explanation in the preamble to the above example, while calculating the ratio of company Y’s frozen shares as per the German AktG, the total shares of company X shall be taken into consideration instead of the total shares owned by company Y, and company Y shall be entitled to vote up to 25% of the total votes of company X. For example, if there are 100 shares in company X, and company Y holds 40% of the shares of company X, i.e. 40 votes, company Y can use 25 shares from among these. This is because the limit is 25% of the total votes of company X. On the other hand, in the same example, as per the TCC, company Y shall be entitled to use only 10 votes, i.e. 25% of the votes it owns. Qualified Cross Shareholding If one of the companies in a cross shareholding situation is dominant over the other, the second one is deemed at the same time 4 Preamble of Article 201/1 of the TCC. 5 Ünal Tekinalp , New Law of Stock Corporations, 3rd Edition, İstanbul 2013, p. 562. 6 Preamble of Article 201/1 of the TCC.