Responsibility
in the case of unlawful exercise of control
a)
Parent company causing the
subsidiary to incur a loss
(i) A parent company cannot exercise its control in a way that would cause the subsidiary to incur a loss. The parent company cannot direct the subsidiary to:
- Carry out legal transactions such as the transfer of business, asset, fund, staff, receivable and debt,
- Decrease or transfer its profit,
- Restrict its assets with real or personal rights,
- Undertake liabilities such as providing security and guarantee,
- Make payments,
- Adopt decisions or take measures which negatively affect its efficiency and activity such as not renovating its facilities, limiting, stopping its investments without any reasonable grounds and to refrain from taking measures that will ensure its development.
If a loss is incurred as a result of any activities including the aforementioned actions, the loss must be compensated by the parent company in the related financial year. Alternatively, a right to claim of equivalent value may be granted to the subsidiary no later than the end of the related financial year by specifying how and when this loss will be compensated.
(ii) If
compensation is not made within the financial year in which the loss has
incurred, each shareholder of the subsidiary may claim that the loss incurred
by the parent company and its board members who caused the loss be compensated.
The compensation may not be claimed in cases where it is proven that the board members of the parent company acted as responsible managers and even in this situation a loss occurred due to the actions of these managers.
If the headquarters of the parent company is located abroad, the action for compensation must be taken in the commercial court of the first instance at the location of the headquarters of the subsidiary.
b)
Transactions initiated by the
parent company that has no reasonable ground for the subsidiary
Shareholders who counter voted the general assembly resolution and had them recorded in the minutes of this resolution in connection with transactions such as merger, division, conversion, termination, issuing securities and important amendment to articles of association which are initiated by the parent company and without any clear reasonable grounds for the subsidiary, or who have objected in writing to the board resolution on the same and similar subjects, may request from the court that their damages be compensated by the parent company or their shares be purchased at stock exchange value.
Responsibility in the case of full control
a)
Instruction given by parent
company to subsidiary
If a parent company directly or indirectly holds one hundred percent of the shares and voting rights in a capital stock company, the board of directors of the parent company may give instruction regarding the direction and management of the subsidiary even if it has a nature which may cause a loss provided that it is a requirement of the group of companies' policies.
In such a situation the subsidiary's board members, its managers and other responsible persons cannot be held liable to the company and to its shareholders because of compliance with the instructions given by the parent company.
b)
Exception
The parent company cannot give an instruction which may endanger the existence of the dependent company or exceed the dependent company's solvency.
c)
Right of action of the
company's creditors
If the loss incurred by the subsidiary due to instructions given by the parent company (in the case of full control) is not compensated in accordance with the law, the creditors who have incurred damage may take an action for compensation against the parent company and its board members responsible for the loss.
