Legal Results of Unprepared Affiliate Company Report

In case of not preparing an affiliate company report, board members of the affiliate company may be subject to the fines described in Turkish Commercial Law from 4.000 TL up to 73.000 TL.

Legal risks of not preparing this report can be summarised as below.

·         Since the responsibility to prepare the report belongs to board in corporations and managers in limited companies, members of board and managers are held responsible when the report was not prepared.

 

·         Due to the lack of the report; company shareholders may claim that any decision taken by the general assembly is invalid.

·         If a related company is subject to an independent audit, since the annual report, which is the conclusion part of the affiliate company report is mentioned in, is audited by an independent auditor, when the affiliate company report has not been prepared, the independent auditor may avoid giving opinion or can prefer to give a qualified opinion. At this point, independent auditor will just check whether the conclusion part of the affiliated company report is stated in the annual report. The affiliate company report will not be audited separately by the independent auditor.