As per the Article 371/3 of the Turkish Commercial Code numbered 6102 (“TCC”), only the following restrictions regarding the representation of a company set forth in the circular of signatures (in Turkish, “imza sirküleri”) shall be binding for third persons acting in good faith and therefore can be registered at the Trade Registry:

a)  The restrictions regarding the acts and the operations related to the headquarters of a company or related to a specific branch of the company. For instance, one can empower a person by the circular of signatures to represent the branch or limit his/her powers to the branch. By other means, such person will be restricted to represent the whole company.

b)  The restrictions imposing joint signatures. From now on, the companies shall decide on whether they are represented by single signature or joint signatures. Previously, it was possible to limit such joint signatures or single signature to specific matters and/or amounts of money.

Other restrictions, as restrictions based on monetary limitations, cannot be registered. By other means, one cannot set forth in the circular of signatures that such person is empowered to act on behalf of the company up to a certain amount of money.

Any restriction that cannot be registered at the Trade Registry can be considered as follows:

• They can be handled by the internal directive as defined in the Article 367 of TCC. However as it is clearly defined in the said article that the internal directive is purely “internal” and only relates to the management transfer and not to the representation transfer and therefore has no binding effect on third persons. TCC did not make any distinctions between administrative and representation powers.
• Any of these restrictions are binding to third persons only when they have been specifically informed of the restriction regarding the representation power of the relevant person acting on behalf of the company. The fact that the restriction exists in the company’s Articles of Association or in the resolution of the General Assembly is not enough to render it binding for third persons.

Such limits to the restrictions of representative powers already existed under the former Turkish Commercial Code numbered 6762. However, in practice, the Trade Registry Offices accepted the registrations of such restrictions.

With the entry into force of TCC, the Trade Registry Offices are asked by the Customs and Trade Ministry (“Ministry”) not to register and publish Board’s Resolutions foreseeing such restrictions of representations that are in breach with the Article 371/3.

We have obtained a copy of the letter sent by the Ministry to the Trade Registry Offices on 7 May 2013 regarding this matter.

As of the receipt of this letter; Bursa, Antalya and Eskişehir Trade Registry Offices do not accept the registration applications of the companies regarding the issuance of the new circular of signatures which do not meet the conditions explained here-above.

Istanbul and Ankara Trade Registry Offices do not take into account (for the moment) this letter sent from the Ministry. They consider that it is a matter of concern for the

company and that in any case, whether registered or not, these restrictions are not binding for third persons of good faith. However, we have been informed that the Trade Registry Offices of Istanbul, Ankara and Izmir plan to change their application as instructed by the Ministry as from January 2014.

In any case, this position may change and comply with the law as instructed by the Ministry. We are at your disposal for any further assistance.