Certain things to do to align with the new Turkish commercial code

The new Turkish Commercial Code No. 6102 (“New TCC”) was entered into force on July 1^st, 2012. The main objectives of the New TCC are ensuring transparency and accountability as well as the introduction of internationally accepted auditing and reporting standards, all important aspects of corporate governance standards.

With this paper, we aim to explain highlights of the main important changes introduced by the New TCC, and things that companies may need to be aware of to make the necessary changes at first sight.

Single Shareholding Option:
One of the most important changes brought by the New TCC is the option of formation of single shareholder companies. Nowadays, foreign investors are busy with turning their Turkish subsidiaries to a single shareholder companies by transfer of shares, as they now have the option to have a sole shareholder.

Amendments to the Articles of Association:
It is stated that joint stock companies and limited liability companies have to amend their articles of associations in accordance with the New TCC within 12 months as of enforcement date of the new law (meaning until July 1^st, 2013). In the event that companies do not make necessary amendments to align with the New TCC, related provisions of the New TCC will apply automatically instead of the provisions of articles of associations of those companies, as of the end of the given deadline.

Capital Requirements:
According to the New TCC, in terms of joint stock companies, ¼ of the committed capital must be paid before the registration of the company and the remaining amount can be paid within 24 months from registration of the company with the relevant trade registry.

In limited liability companies, the minimum capital requirement has been raised to TRL 10.000.- (approx. EUR 4,400) from TRL 5,000.- and a payment process similar to the process in joint-stock companies has been provided for the payment of the capital. ¼ of the committed capital must be paid before the registration of the limited company and the remaining amount can be paid within 24 months.

It is further stated that limited liability companies must increase their capital amounts at least to the minimum required amount within 3 years as of the effective date of the New TCC (i.e. until July 1, 2015). Otherwise, they shall be deemed dissolved at the end of this time period.^[1]  However, a Communiqué^[2] was issued on November 15, 2012 and the deadline for the increase of the capital was amended as February 14, 2014.

Corporate Governance:
Under the New TCC, it is possible for legal entities to be appointed as managers/ board members.

Particularly, in limited liability companies (that are more preferably established by foreign investors), it is required under the New TCC that at least one of the legal person shareholder of the company must be appointed as manager to the company with powers to represent and bind the company in the widest sense. In such a case, the legal entity shareholder which becomes the manager of the company representing the company in the widest sense, must also determine a real person who will perform his duties on its behalf.

In terms of joint stock companies, since the New TCC introduces a change with regard to conditions of being a board member and it is no longer required to be a shareholder in the company to become a member, those real person members who were appointed on behalf legal entity shareholders must resign from their duties (this is to ensure the independence of board members). These people can be re-appointed as independent member under the same resolution.

For further detailed information regarding New TCC requirements and changes, you may contact us.

Begüm Yavuzdoğan
Selin Başaran