EU Legal Landscape and EMCA on Mitigating Abuse by Majority Shareholder(s) in Public Companies: Any Inspiration for Minority Protection in Independent and Privately Held Turkish Anonim Ortaklık?
Onur GörmezIn EU legislation, a general provision regulating abuse by the majority does not exist. Two approaches have been adopted in Member States. One requires both damage to the minority and to the company, named in this work as double-threshold approach, is implemented by eg France; the other deems the damage to the minority sufficient to conclude on the existence of abuse by the majority; this single-threshold approach is implemented by eg Germany and the Nordic countries. The latter approach, which is also set out by the European Model Companies Act (EMCA), provides better protection to minority shareholders, especially those that are locked in an independent and private anonim ortaklık (Turkish public company – briefly AO). Under EU legislation, as stated by the European Court of Justice in the Audiolux ruling, there does not exist an immanent principle of equal treatment of shareholders. Like EMCA, TCC art 357 imposes on company organs the duty of equal treatment of shareholders who are in the same position. With this provision, it can be argued that the singlethreshold approach is the prevalent approach in Turkish law to determine whether the majority has abused its powers. As for the effective remedies to protect the minority against abuse by majority in independent and privately held AO, a sell-out provision, a remedy implemented by the Directive (EU) 2017/1132 for cross-border conversions, mergers, and divisions of limited liability companies, should be introduced, and a modification to Article 531 of TCC on dissolution by just cause should be made, allowing minority shareholders to request directly from the court to exit the company via sale of their shares. EMCA provisions on Sections 11.35 and 11.37 regarding, respectively, the right to sell-out and redemption, and buyout may serve as an inspiration for TCC.
AB Hukuk Düzeni ve EMCA’da Anonim Ortaklıklarda Çoğunluğun Kötüye Kullanımının Etkilerinin Azaltılması: İzole ve Halka Kapalı Türk Anonim Ortaklıklarında Azınlığın Korunması İçin Esinlenmek Mümkün Mü?
Onur GörmezAB mevzuatında, çoğunluğun kötüye kullanılması hususunu düzenleyen genel bir hüküm bulunmamaktadır. Üye devletlerde ise konuya dair iki ayrı yaklaşım bulunmaktadır. Bunlardan Fransa’da kabul gören çift eşikli yaklaşım olarak adlandırılabilecek ilki hem azınlığın hem de ortaklığın çıkarının zedelenmesini aramaktadır. Almanya ve İskandinav ülkeleri gibi bazı ülkelerde kabul gören tek aşamalı yaklaşım olarak adlandırılabilecek diğer yaklaşımda yalnızca azınlığın çıkarının zedelenmesi yeterli görülmektedir. AB düzenlemeleri de dikkate alınarak akademisyenler tarafından hazırlanan bir model yasa çalışması olan EMCA’da da kendisine yer bulan ikinci yaklaşım azınlık pay sahipleri için daha iyi bir koruma sunmaktadır; özellikle izole ve halka kapalı anonim ortaklıkların azınlık pay sahipleri yönünden. Adalet Divanı’nın Audiolux kararıyla da ortaya konduğu üzere AB Hukuku’nda pay sahipleri yönünden uygulama alanı bulacak genel geçer bir eşit işlem ilkesi söz konusu değildir. EMCA’da olduğuna benzer şekilde TTK m.357’de ise eşit şartlardaki pay sahiplerinin eşit işleme tabi tutulması gerekliliğini öngören hüküm uyarınca, Türk hukukunda da ortaklıkta çoğunluğun kötüye kullanılmasının tartışma konusu olduğu hallerde, kötüye kullanmayı tespit için tek eşikli yaklaşım yeterli olmalıdır. İzole ve halka açık olmayan anonim ortaklıklarda azınlık pay sahiplerinin etkin bir şekilde korunması için uygulanabilecek yöntemler bakımından ise, sınır aşan tür değiştirme, birleşme ve bölünmeler yönünden 2017/1132 sayılı Yönerge seviyesinde de öngörülen azınlığa ortaklıktan çıkma hakkı tanıyan bir düzenlemenin getirilmesi yerinde olacaktır. Haklı nedenle feshi düzenleyen TTK m.531’in değiştirilmesi suretiyle azınlık pay sahiplerine, paylarını satarak ortaklıktan çıkmayı doğrudan mahkemeden talep edebilecekleri bir düzenleme getirilmesi de düşünülmelidir. EMCA Bölüm 11.35 ve Bölüm 11.37’deki pay sahiplerinin paylarını satarak ortaklıktan çıkması ile payların satın alınmasını talep etme veya paylarını satmaya zorlama hususlarında öngörülen hükümlerden TTK için de esinlenilebilir.
The majority rule is one of the fundamental principles governing the limited companies. This means that the decisions taken, and the management followed by the majority affect other stakeholders who may have different interests other than those of the majority shareholder. As any power, the powers vested in the majority shareholder of a public company (in Turkish case, anonim ortaklık – briefly AO) thanks to majority rule may be abused by such shareholder.
Against an abusive majority, the position of shareholders of a privately held AO is rather challenging and their options limited, due to lack of a viable access to liquid markets for their shares. This paper focuses on abuse by majority and how to mitigate this issue in an independent and privately held public company with an examination of the Turkish public company law on the matter regulated under Turkish Commercial Code numbered 6102 (briefly TCC).
TCC art 202 governs unlawful use of the control for group of companies (conglomerate/ konzern). However, general provisions of limited companies lack any articles that directly regulate the issue of potentially or materially abusive behaviours by a majority (in broader terms, controlling) shareholder. Furthermore, TCC art 202 cannot be directly applied to the independent companies. Yet, an independent AO, either publicly or privately held, may well be the arena for an abuse by majority similar to the cases governed by TCC art 202. Current protections provided by TCC seems to fail to prevent chronic/systematic cases of abuse by majority in an independent and privately held AO; in return judicial and/or legislative intervention may be required. But how?
This article examines the EU legal landscape with Member States’ approaches and European Model Companies Act while comparing them to Turkish perspective for finding effective ways to mitigate abusive majority behaviour in an independent and privately held AO.
In order to provide such a perspective and to understand where the Turkish law stands, the following topics are discussed: differing legal approaches concerning abuse by the majority, equal treatment of shareholders, and exit rights as an effective remedy to mitigate the abuse by the majority.
The EU legislation does not contain a general provision on how to prevent abuse by majority. In Member States, two approaches prevailed without a harmonising EU legislation. One approach seeks both a damage to company and to minority (eg France), the other finds it sufficient just damage to the minority in order to classify the action as an abuse by majority. For the minority, proving that company’s interest is also violated is a rather difficult task and as a result hinders the sought minority protection in most of the cases. Therefore, a single-threshold approach which requires minorities to prove only the damage to their interests should be the approach upheld. In independent and privately held AO, the options for a locked in minority are limited and a further minority protection is required. Single-threshold approach helps providing the sorely needed protection in a more efficient and global way.
According to ECJ’s Audiolux ruling, no immanent principle of equal treatment of shareholders exists under EU law and the EU legislation does not force Member States the implementation of a blanket equal treatment principle of shareholders. Certain Member States tend to provide one. EMCA also regulates the issue directly. This is also the case in Turkish law via TCC art 357. With a provision explicitly imposing the company organs to uphold the principle of equal treatment of shareholders in the same position, single-threshold approach seems to be the prevailing approach in Turkish public company law, and thus Turkish law is positioned to provide an effective protection for minorities in an independent and privately held AO.
With the Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 Amending Directive (EU) 2017/1132, for cross-border conversions, mergers, and divisions of limited liability companies, Member States are under the obligation to provide a right to dispose of their shares for an adequate cash compensation, ie an exit right, to the company’s members who voted against the resolutions concerning the related transactions in the general assembly. These provisions may be used by the minority to protect itself from abuses, potential ones included in the aforementioned transactions.
EMCA provides a more comprehensive protection by regulating the liquidation due to fraud on the minority in Section 11.33, the right to sell out provided to minority stipulated in Section 11.35. Furthermore, according to Section 11.37, shareholders who incurred a loss have a right to be redeemed if the company, individual shareholders, the company’s creditors or other third parties incur a loss due to a shareholder’s intentional or grossly negligent action, and there exists a risk of continued abuse.
Concerning the remedies to save the minority from the abuses committed by majority in independent and privately held AOs, a sell-out provision forcing the majority to buy the minority’s shares should also be introduced to TCC. In order to provide the minority with better options, and legal clarity and to protect it from judicial surprises, TCC art 531 on dissolution by just cause should also be modified in a way that it provides minority to directly request from the court to exit the company, if possible, at the majority’s expense. This type of mechanism would significantly ameliorate the minority’s position in companies, since the risk of paying the relevant cost would create a better incentive for majority to refrain from abusing its power. Furthermore, for the minorities, especially in an independent and privately held AO where they are deprived of an access to liquid markets, it would create the opportunity to be fairly compensated for their shares.
