Law of Group Companies “History and Terminology”

Abstract

The most common way of economic concentration in practice, in the sense of grouping, is manifested in the form of konzern / group companies and corporate mergers. In mergers, companies that merge and become a single company lose both their legal and economic independence. In the konzern economic concentration model, while the affiliated companies maintain their legal independence, they lose their economic independence. This situation is incompatible with a legal system (traditional company law) based on the independence of companies in legal and economic terms. Seeing this incompatibility, the legal systems took action and regulated the company law accordingly. Regulations have been made in Swiss and Turkish Law, especially in Germany. The Turkish legislator put into effect the provisions in accordance with this new order for the first time between the Articles 195 - 209 of the TCC, addressed the issue decisively and thoroughly. While ‘konzern’ is the main legal term used in German law, instead of ‘konzern’, ‘group of companies and ‘group‘ has become a legal term used in Turkish law. While German konzern law considers single handed management as the determining element of konzern within the framework of paragraph AktG § 18, Turkish law of group companies, unlike German konzern law, has not accepted and regulated single handed management systems and as well peer-level konzerns. The Turkish group of companies is mainly explained according to the control principle. If it meets the conditions specified in TCC art. 195, pure holdings (as well as mixed holdings) whose main purpose is to participate in other businesses, will form a group of companies together with the company or companies under its control. ‘Law Of Group Companies” is as a top concept explained and put forward by the TCC articles 195 et seq provisions.