WITHDRAWAL AND DISMISSAL FROM PARTNERSHIP

The situations where a shareholder is dismissed from partnership conditionally in incorporations are specified in Turkish Code of Commerce. Below, the situations where a dismissal from partnership will be allowed are summarized under relevant titles.

I. Dismissal:
The dismissal is governed by the provisions of Article 482 of Turkish Code of Commerce. Dismissal of a shareholder from partnership through dismissal requires failure of that shareholder to pay to the company its debt arising out of its participation in the capital, within the procedures stipulated in the law. In case of the shareholder's default to pay its debt to invest capital, the company management may decide to dismiss that shareholder from the company. The company's board of directors is authorized to take the decision on this matter.

II. Termination for Cause:
Article 531 of Turkish Code of Commerce governs the termination for cause. Under this provision, the shareholders who represent at least one-tenth of the capital, one-twentieth in publicly held companies, may demand from the court to rule for the termination of the company. Thanks to this regulation, the minority will be able to put pressure on the majority, and ensure execution of the minority rights in the most efficient way. Instead of termination, the court may decide dismissal of the plaintiff shareholders from the company by paying them the value of their minority shares.

III. Equalization Claim:
Within a group of companies, the holding company may not exercise its dominance so as to cause loss of a subsidiary company. If the holding company causes such a damage, the loss should be equalized within that year of operation or how and when the loss will be equalized should be defined, giving the subsidiary company a right to make a claim at an equal worth no later than the end of that year (Turkish Code of Commerce, Article 202/I/a).

According to Article 202/I/b of Turkish Code of Commerce, if the equalization claim of the subsidiary who got damages that way is not actually fulfilled within the year of operation or it is not granted a right to make an equal claim within the allowed period, any shareholder of the subsidiary may ask from the holding company and the members of its board who caused the loss, to compensate for the company's loss. If it will be appropriate in terms of the principle of equity in the concrete event, the court may, upon request or ex officio, decide purchasing of the shares of the defendant shareholders by the holding company. Each shareholder in the subsidiary company is entitled to file an equalization suit. The law has not stipulated a share percentage for filing an equalization suit.

IV. Asymmetrical Division:
In the symmetrical division where the ratio is preserved, the partners keep their share percentages in the divided company. In the asymmetrical division where the ratio is not preserved, the partners of the divided company are given shares in the transferee or newly-established companies by changing their current share percentages. The law has extensively regulated the types of divisions that preserve and do not preserve the ratios, granting the involved companies and partners a wide range and possibility of maneuver in shaping the division. This flexibility will provide great convenience in restructuring of companies. Thanks to this flexibility, the partners of divided companies may become shareholders in the new companies by keeping or not keeping their percentages, withdraw from the divided company completely, and participate or not participate in some or all of the transferee or newly-established companies, or increase their shares in the divided company.

In the division, where the ratio is not preserved, the division decision will disarrange the order between partners, and a new order based on inequality will be established. For this reason, the lawmaker has tried to prevent an inequality not consented by the majority by requiring a high quorum. According to Article 173/3 of Turkish Code of Commerce, in the asymmetrical division, the decision of approval required at least ninety percent of the partners entitled to vote in the transferor company. The majority shareholders who achieved this ratio are entitled to dismiss the minority from the company after a division where the ratio is not preserved.

V. Dismissal From Partnership as Specified in the Draft Capital Markets Law:
According to Article 26 of Draft Capital Markets Law, if the shares or voting rights ensuring management control in publicly-held partnerships are acquired, one must make an offer to purchase the shares of other partners. Having more than fifty percent of the voting rights in a partnership, directly or indirectly, by himself or with those acting together, is assumed as taking the management control. Not being able to take the control due to privileged shares is an exception. Obtaining the privileged shares that entitles you to select the majority of the number of members of the board or to nominate candidates for the said number membership positions, is also considered as taking the management control.

According to Article 27 of the draft, if the shares purchased as a result of a takeover bid or otherwise, and the voting rights of the public partnership reach or exceed the ratio determined by the Board, those who placed the takeover bid are entitled to dismiss from partnership. As of the date of announcement of the takeover bidding results to the public, within the period determined by the Board and in return for a fair price, these persons may request cancellation of the shares of minority partners, and that the shares to be issued anew be given to them.