Summary: Novation, particularly those related to notarization introduced in the Turkish Commercial Code are explained in this article.
By the Law No. 6728 entitled the “Law Regarding the Amendment of Certain Laws Aiming the Improvement of the Investment Environment” (Omnibus Bill), published in the Official Gazette dated August 9, 2016 to procure Project-Based Support for Investments and by amendments to certain Laws and Statutory Decrees, a number of laws were amended. This law has also made certain changes in the Turkish Commercial Code (“TCC”) No.6102.
- Alternative Procedures to Notary Certification has been Introduced
1.1 The Absolute Notarization Requirement of the Articles of Association during the Incorporation of Companies has been eased off
With the amendments made to the relevant articles of association of the of joint-stock companies (articles 335 and 339) and limited liability companies (articles 575 and 585), and those articles regulating their incorporation procedure, as an alternative to the requirement for the notarization of the articles of association, the signing of these documents before the head or deputy head of trade registry offices thus procuring their official certification has been made possible. By this amendment, besides the certification of the signatories of the articles of association by the notary public, signing of the documents at the trade registry office is also accepted as the incorporation moment of the relevant company. The amended texts of the relevant articles are as shown herebelow:
I- Incorporation Procedure
ARTICLE 335- (1) A company is incorporated upon the declaration of the founders of their intention to incorporate a joint stock company in the articles of association drafted in compliance with law, by which they have unconditionally undertaken to pay the capital in full, where their signatures are notarized or which they sign before the head or deputy head of trade registry offices.
IV- Articles of Association
ARTICLE 339- (1) Articles of association should be issued in writing and the signatures of all founders should be notarised or the articles of association should be signed before the head or deputy head of trade registry offices. (…)
C – Memorandum of Company
ARTICLE 575- (1) Memorandum of company should be issued in writing and signatures of all founders should be notarised or the memorandum of company should be signed sign before the head or deputy head of trade registry offices.
- G) Incorporation
I- Time of incorporation
Article 585- (Amended: 26/6/2012-6335/art. 31) (1) A company is incorporated upon the declaration of the founders of their intention to incorporate a limited liability company in the memorandum of company drafted in compliance with law, by which they have unconditionally undertaken to pay the capital in full, and where their signatures are notarized or which they sign before the head or deputy head of trade registry offices (…)”
A similar regulation has been made for general partnerships (Articles 212 and 215) and limited partnerships divided by shares (Article 566).
1.2 The Absolute Notarization Requirement of the Statements of Signature of Those Signing on behalf of Traders has been eased off
Article 40 entitled “Registration” of TCC has also been amended and, as per this amendment, a real person trader and persons authorized to sign on behalf of a legal entity trader may put the trade name and their signature thereunder by making a written statement before the head or deputy head of the trade registry office without the requirement for notarization. The amended 2nd paragraph of the mentioned Article is as follows:
“(2) Every trader will have the trade name to be used and the signatures to be placed under the trade name notarised, and submit the same to the registry office. If the trader is a legal entity, signatures of the persons authorised to sign on behalf of the trader will also be notarised and submitted to the registry office. (Additional sentence: 15/7/2016-6728/Article 66). The real person trader and the person authorized to sign on behalf of the legal entity trader may put the trade name and his/her signature thereunder by making a written statement before the head or deputy head of the trade registry office without the requirement for notarization.”
- 2. Exemption from charge for valuable papers has been regulated under Articles 212, 335, 566 and 575 of the TCC.
Another amendment is that the charge for valuable paper collected for articles of association and memorandums of company of joint-stock companies, limited liability companies, general partnerships and partnerships limited by shares has been abolished. As per the amendments made to Articles 212, 335, 566 and 575 of the TCC, charge for valuable papers shall not be collected for articles of association or memorandums of company of the above-mentioned companies.
- Articles 349 and 586 of the Turkish Commercial Code have been revoked and the requirement for the declaration of founders has been abolished
“Declaration of Founders” signed by the company’s founders, which is one of the company incorporation documents of joint-stock companies and limited liability companies submitted to the trade registry office, is no longer required as an incorporation document. Accordingly, the administrative fine stipulated in Article 562 for those making declarations in breach of Article 349 in the declaration of founders has been abolished. Declaration of founders was a document which should be signed by founders in person and could not be signed by a representative, and the purpose of this document was to apply the principle of honesty in the incorporation procedures.
- Article 184 Regarding Incorporation and Interim Balance Sheet and Article 189 Regarding the Decision to Convert the Type of the Company and Registration have been amended.
In case of conversion of the type of the company, provisions regarding incorporation of the new type apply, however, for capital companies, provisions concerning the minimum number of shareholders, contribution of capital in kind and founders’ signing a memorandum of company shall not apply. Furthermore, pursuant to Article 189, the management body used to submit the plan for conversion of the type for approval of the general assembly. Pursuant to the amendment, the management body shall be responsible to submit the plan for conversion of the type of the company and the articles of association of the new type for approval of the general assembly.
- The period for distribution of properties to creditors in the liquidation procedure has been reduced to 6 months
By an amendment to Article 543 of the TCC, the period for distribution to creditors of properties of joint-stock companies and limited liability companies in liquidation has been reduced from one year to six months. Furthermore, if it possesses no threat for creditors according to a concrete case, the court may also decide the distribution of properties before such period of six months expire.
- Provisions related to ceasing trade stipulated into Enforcement and Bankruptcy Law is not applicable for the liquidated companies
By the Law No. 6728, a 2nd paragraph has been added to Article 545 of the TCC. Accordingly “(2) Provisions of Articles 44 (those ceasing trade) and 337/a (penalty imposed on those ceasing to trade) of the Enforcement and Bankruptcy Law No. 2004 do not apply to companies liquidated pursuant to provisions of the TCC. In this context, companies liquidated pursuant to provisions of the TCC shall not be subject to the provisions for ceasing trade in the Enforcement and Bankruptcy Law and consequences thereof.
- Elements of cheques have been amended
As per the amendments made to Article 780 of the TCC, serial number and qr code given by the bank have become obligatory elements of cheques. Sheets of cheques to be issued as of 31.12.2016 must include those items. However, it is also stipulated that the absence of these items on cheques issued by a foreign bank shall not preclude the validity of those cheques. Definition and content of MERSIS (Central Registration System) number and qr code and principles and procedures regarding the application of this article will be established by a communiqué to be jointly issued by the Ministry of Customs and Trade and the Undersecretariat of Treasury. By the new regulation, cheque creditors will be able to access to the data concerning the holder of the cheque account and the issuer of the cheque by means of the qr code. Besides the foregoing, the Omnibus Bill brought significant changes into various provisions of the Law on Cheques, including introduction of penal sanctions.
The information given in this note are aimed only at providing information, and does not serve as a legal opinion under any circumstances.