GENERAL PRINCIPLES ABOUT JOINT STOCK COMPANIES AND LIMITED LIABILITY COMPANIES AS PER THE NEW TURKISH COMMERCIAL CODE
The new Turkish Commercial Code numbered 6102, published in the Official Gazette dated 14 February 2011 and entered into force on 7 July 2012 (hereinafter referred to as the “Code”) regulates the principles applicable to Joint Stock Companies (hereinafter referred to as “JSC”) and Limited Liability Companies (hereinafter referred to as “LLC”) established as per the Turkish legislation.
- Number of Shareholders
As per the provisions setting forth the principles of incorporation, both LLC and JSC may be incorporated in presence of a unique shareholder. The number of shareholders of the LLC cannot exceed fifty; however, no such upper limit has been determined for JSC as per the Code.
- Share Capital
The incorporation of the LLC requires a minimum share capital in the amount of TRY 10,000.- which may be increased up to TRY 100,000.- through a decision of the Council of Ministers (in Turkish “Bakanlar Kurulu”).
On the other hand; the incorporation of JSC requires a minimum share capital in the amount of TRY 50,000.-.
However, the minimum initial capital of the JSCs having accepted the registered capital system is to be TRY 100,000.-.These amounts may be increased through a decision of the Council of Ministers.
- Share Transfer
As per the relevant provisions of the Code, the shares of LLC shall be transferred upon (i) notarization of a share transfer agreement (in Turkish “hisse devri sözleşmesi”) and (ii) approval of this transfer by the General Assembly of Shareholders (in Turkish “ortaklar genel kurulu”, hereinafter referred to as the “GA”). The share transfer shall be registered in the share book of the company (in Turkish “şirket pay defteri”) and at the trade registry. The process for the share transfer pertaining to JSC shall gain validity upon transfer of possession of the relevant bearer share certificate (in Turkish “hamiline yazılı pay senedi”) or of the relevant endorsed registered share certificate (in Turkish “nama yazılı pay senedi”), unless otherwise foreseen in the legislation or in the Articles of association (in Turkish “esas sözleşme”, hereinafter referred to as the “AoA”) of the company. It shall be noted that the said transfer does not require registration at the trade registry.
- Public Debt Responsibility
If the tax debts cannot be collected in whole or in part, if the other public debts cannot be collected in whole or in part or if it is understood that the collection of the latter will not be possible; LLC shareholders shall directly be responsible for the amount uncollected in proportion to their shares in the company.
JSC shareholders shall not be held responsible for uncollected public debts. Their responsibility is limited to the share capital that they have subscribed.
Pursuant to the Attorney’s Act (in Turkish “Avukatlık Kanunu“) numbered 1136, a contract shall be concluded between an attorney and the JSC, if the share capital of the JSC is equal to or above TRY 250,000.-.
As per the relevant legislation in Turkey, no such obligation has been foreseen with regard to LLCs.
- Foreclosure/Squeeze-out / Withdrawal of Shareholders
With regard to LLC; the Code allows (i) the regulation in the AoA of the reasons to squeeze out a shareholder through a decision of GA, (ii) the regulation in the AoA of the right of withdrawal of the shareholder, (iii) the filing of a lawsuit by the company claiming the squeeze-out of a shareholder for just reasons, (iv) the filing of a lawsuit by the shareholder claiming its squeeze- out for just reasons and (v) the participation by any other shareholder to the withdrawal of or to the lawsuit filed by a shareholder claiming squeeze-out.
The shareholders of JSCs may be (i) foreclosed with regard to their undertaken unpaid shares, (ii) squeezed-out as per the provisions of a merger agreement approved upon the 90% of the votes present in the relevant company, (iii) squeezed-out upon purchase of the minority shares by the mother company for just reasons (this would solely be the case for the multi-corporate enterprises), (iv) court decision following the claim on termination of the company for just reasons by the shareholder. The shareholders of the affiliated company may also claim the purchase of their shares upon the non-performance of the balancing by the holding company within the relevant activity year. The shareholder of the affiliated company may as well file a lawsuit claiming the purchase of its shares by the mother company upon its objection to the decision of the general assembly of shareholders concerning the matters as merger, acquisition, spin-off, issuance of securities, change in the AoA and such; and upon its written objection to the decision of the Board of Directors (in Turkish “Yönetim Kurulu Kararı”) within two years as of the aforesaid decision of the Board of Directors.
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