Protection of the majority shareholders against the abuse of the rights afforded to qualified minority shareholders in joint-stock companies

The concept of "qualified minority" is utilized regarding the individual(s), who are among the shareholders which do not constitute the majority of stock and who represent the stock percentages determined by the law. The shareholders who own the fixed stock percentages prescribed by the law and the articles of association are those who constitute one tenth of the stock in closely held corporations and those who constitute one twentieth of the stock in publicly held corporations. In joint-stock companies directed in accordance with the majority principle, a group identified as the qualified majority is afforded certain rights separate from and in addition to the group members' rights stemming from their individual shareholder status, in order to strengthen their position against the majority which holds sway over the management of the company. Regulations set forth with a view to protecting the qualified minority may not be interpreted as bestowing the freedom to act against the interests of the company and the majority shareholders. Thus, it may be stated that the rights of the qualified minority shareholders are subject to prohibitions against abuse of rights. Due to the lack of a system of sanctions prescribed by the legislative authority to be employed in the event of abuse of the qualified minority shareholders' rights, this thesis endeavors to put forth a system applicable in such events. In the thesis, the rights afforded to qualified minority shareholders in Turkish Commercial Code (TCC) are presented and the idiosyncratic aspects of the applicable sanction systems with regard to abuse of the rights in question are reviewed, reaching to the conclusion that the most effective sanction system within the frame of the legislation in force may be built upon compensation arising from wrongful (tortious) act liability. Subsequently, a comprehensive analysis of the wrongful act liability in case of abuse of the rights afforded to qualified minority shareholders is presented, delving into both material and procedural law.