Related party transactions in joint stock companies law

The subject of this study is the related party transactions in the joint-stock companies law. The related party may be a natural or legal person. The fact he/she has managerial power over the partnership is required and enough. The risk in related party transactions is that the owner of the managerial power abuses his/her position and thereby damages the partnership. The first of the regulations based on the related party transactions are obligations to notify. The second type of regulation is special decision-making processes. In these regulations, the execution of the related party transaction is given to the independent directors and sometimes to the minority shareholders. Another regulation type is prohibition. This type of provision accepts that the transactions they include are harmful. There are examples of special decision-making processes in the positive law. The reflection of the harmful related party transactions in publicly-held joint-stock companies is the prohibition of hidden gain distribution. Provisions that contain clear prohibition are not limited to the CML regulation. TCC prohibits or limits the borrowing of shareholders, managers and some of their relatives to the company. Finally, if there is an evident disproportion in the actions arising from the transaction between the related party and the partnership, the mitigating effect on the partnership's assets must be eliminated. This issue is regulated in Article 678/II of the Swiss Code of Obligations. However, there is no similar provision in TCC. Yet, general provisions and basic principles of Turkish law are enough to draw the same conclusions.