Individual Application 76/18
Press Release Concerning the Judgment Finding No Violation of the Right to Property due to Imposition of an Administrative Fine Contrary to the Capital Market Rules
On 10 October 2018, the Second Section of the Constitutional Court found no violation of the right to property safeguarded by Article 35 of the Constitution in the individual application lodged by Mars Sinema Turizm ve Sportif Tesisler İşletmeciliği A.Ş. (no. 2017/23849).
The applicant, a company operating cinema and sports facilities, purchased the majority shares of a company. The holding company exercising control over this company took over the 50 percent shares of the company that exercised control over the applicant. The take-over process was approved by the Competition Authority.
In this scope, three cinemas located in İstanbul, Antalya and İzmir were transferred to another company that undertook to pay a certain amount.
Within the scope of a case filed against the decision of the Competition Authority, the Council of State stayed the execution of the decision in question. The appeal against the decision of the Council of State was accepted by the Plenary Session of the Chambers for Administrative Cases of the Council of State. As the plaintiff withdrew its case, the Council of State dismissed the relevant case.
Relying on the case, the company taking over the three cinemas brought an action before the commercial court requesting the annulment of the contract due to cheating and the determination of the fact that it was not in debt.
The Capital Markets Board (“the CMB”) imposed an administrative fine of 269,500 Turkish liras (TRY) on the company transferring the cinemas, on the ground that it was not announced to the public that a case was filed against the decision of the Competition Authority concerning the capital structure of the company, that stay of execution was decided in the relevant case and that the plaintiff withdrew its case, as well as on the ground that no special circumstance was disclosed concerning the case filed against them. The company that received a fine was merged with the applicant company by the decision of the ordinary general assembly.
The applicant company brought an annulment action before the administrative court against the CMP due to the administrative fine in question. The court dismissed the case. The decision appealed by the applicant was upheld by the Council of State. The applicant’s subsequent request for rectification of the decision was also dismissed.
The Applicant’s Allegations
The applicant maintained that the administrative fine imposed on it was unlawful and hence in breach of its right to property.
The Constitutional Court’s Assessment
In order for an interference with the right to property to be in conformity with the Constitution, it must be prescribed by law, serve the public interest and be proportionate.
In the present case, the applicant was imposed an administrative fine on the ground that it failed to fulfil the obligation set forth in Law no. 6362. It is seen that the obligation to be fulfilled and the administrative sanction to be imposed as a result of failure to fulfil this obligation are clearly regulated by the relevant legal provisions that are accessible, precise and foreseeable.
It is specified in the law that all information, events and developments that may affect the value of the capital market instruments, their market prices and the investment decisions of the investors shall be disclosed to the public by the parties concerned. Accordingly, it is clear that there was a public interest in imposing a sanction due to failure to fulfil the obligations in question regarding public disclosure within the scope of the regulation of the capital market.
In addition, it must be borne in mind that the State has a wide margin of appreciation in terms of the regulation and imposition of administrative fines. Moreover, in the present case, no judicial or administrative sanction was imposed on the applicant, except for the administrative fine. Nor was any measure taken such as confiscation, expropriation or prevention or restriction of the company’s activities temporarily or permanently.
Furthermore, it appeared that the act resulting in an administrative fine against the applicant had been caused by the applicant’s fault and that the public authorities cannot be said to have failed to act with due diligence.
Therefore, when the interference with the applicant’s right to property was compared with the public interest it had served and when it was observed that the applicant had caused unlawfulness due to its own fault, it was considered that the alleged interference did not impose an excessive burden on the applicant.
Accordingly, it was concluded that the fair balance to be struck between the applicant’s right to property and the public interest had not been impaired and the alleged interference had been proportionate.
Consequently, the Constitutional Court found no violation of the applicant’s right to property safeguarded by Article 35 of the Constitution.
This press release prepared by the General Secretariat intends to inform the public and has no binding effect.