Mergers and Implications on Minority Shareholders

One of the principal justifications for mergers is that they will produce greater efficiencies and streamline costs. But the rationale behind merger of two holdings will be far from this principal.

Alarko Holding A.Ş.(ticker:ALARK) disclosed Istanbul Stock Exchange that has decided to merge with its parent entity, Anmak Holding, which holds 69.4% of Alarko’s capital. Anmak Holding is not listed and equally ownd by Garih and Alaton families.

The impact of merger on the minority shareholders will depend on the financial condition of Anmak Holding. The equity researchers are concerned that Anmak Holding’s only asset is Alarko Holding and some small companies.

So far, there is no clear public announcement from Alarko Holding about the merger.

The table below is a short analysis of Alarko Holding’s Corporate Governance Compliance Report-2005 prepared by the company regarding Capital Markets Board of Turkey’s Corporate Governance Principles.

1. SHAREHOLDERS (1.1) There is an Investor Relations Department set up, but there has been no activity disclosed for meetings/presentations in the year of 2005. (1.2) The request for appointing a special auditor as an individual right is not stipulated. (1.3) There is no addition to provision to the articles of association to authorize the General Assembly in matters concerning important decisions. (1.4)There is no privilege granted to controlling shareholders regarding one share-one vote principal, (1.5)The accumulated voting method is not applied for minority shareholders and there is no board member appointed to represent minority shareholders. (1.6)There is no policy set for dividend distribution. (1.7)There is no provision restricting the transfer of shares.	2. TRANSPERANCY and PUBLIC DISCLOSURE (2.1) There is no “disclosure policy” published by the company. - Investor announcements are made on time and published in their web site. - Internet web page of the company contains comprehensive information but only in Turkish. (2.2) The ultimate controlling beneficial shareholder is not disclosed. (2.3) Financial statements and annual reports are prepared and disclosed. (2.4) The company did not disclose any information about independent audit and consultancy services. (2.5) The list of those who have access to insider information is disclosed.
	4. BOARD STRUCTURE (4.1) There are 3 independent members appointed at the Board of Directors. The resume of these independent members are not disclosed that it is not available to measure the independency. (4.2) There are no provisions included in the Article’s of Association concerning the qualifications of the Board Members. (4.3) The company’s mission and vision is published in the web site. (4.4) The risk management and internal control mechanisms of the company are not disclosed although the company stated that a Committee is founded. (4.5) Duties and responsibilities of the company’s Board Members are included in the Articles of Association. (4.6) There is no operating principles of the Board of Directors designated. (4.7) Prohibiton of transactions with company and prohibition of competition are not granted. (4.8) The company has published a code of ethics. (4.9) An Audit Committee have been formed but the members of the committee are not independent. (4.10) Although company disclosed that no compensation/salary is paid to board of members but on the otherhand company did not disclose the remuneration policy of the company regarding Board of Directors and executives.
3. STAKEHOLDERS (3.1) There is no program/policy disclosed by the company for informing stakeholders. But it is a routine of the company to have annual meetings with company’s personnel. (3.2) There is no system for stakeholders to attend the company’s management. (3.3) There is no policy disclosed by the company regarding protection of company assets. (3.4) There is no human resources policy dislosed, although the company stated that this policy is announced internally. (3.5) There is no policy disclosed regarding relations eith customers and clients. (3.6) The company has an education and culture foundation to contribute to the social and cultural activities.