The Changes In The Turkish Commercial Code

The Changes in the Turkish Commercial Code Introduced by the Law on the Amendment of Certain Laws for the Purposes of Improvement of the Investment Environment

The Law No. 7099 on the Amendment of Certain Laws for the Purposes of Improvement of the Investment Environment (the “Law No. 7099”) adopted on 15 February 2018 has been published in the Official Gazette no. 30356 dated 10 March 2018. By the Law No. 7099, several laws have been amended. The subject of this newsletter covers only the amendments made in the Turkish
Commercial Code (the “TCC”), which are as follows:

By Article 21 of the Law No. 7099, the 2nd paragraph of Article 40 of the TCC titled “Registration” has been amended as specified below. Regarding the implementation of the article, the communique to be issued by the Ministry of Customs and Trade is expected. This amendment has entered into force at the date of its publication.”
Every merchant registers its commercial enterprise and the chosen trade name with the trade registry in the place where the principal office of the enterprise is located and have the same announced within fifteen days of the opening date of the commercial enterprise.
Every merchant submits to the registry office the trade name it shall use and the signatures it shall place under such trade name. If the merchant is a legal entity, the signatures of the persons authorised to sign on behalf of the merchant will also be submitted to the registry office. The signature declaration is submitted by making a written statement in the presence of an authorized officer at any trade registry directorate. The principles and procedures regarding the implementation of this article is determined by means of a communique to be issued by the Ministry of Customs and Trade. (Paragraph amended by Article 21 of the Law No. 7099 dated 15.02.2018)
Branches of commercial enterprises the headquarters of which are based in Turkey will also be registered with the trade registry in the place where these branches are located and published. Provisions of the first and second paragraph relating to the trade name and signature specimen will also be applicable to such enterprises. Unless provided otherwise by law, records of the registry of the place in which the headquarters of the enterprise is based is also registered with the registry to which the branch is affiliated. However, the registry directorate of the place at which the branch is located will be under no obligation to carry out a separate examination in this respect.
Turkish branches of commercial enterprises domiciled outside of Turkey will be registered in the same way as domestic commercial enterprises, provided that the provisions of the laws of their own country relating to trade name are reserved. For such branches, a fully authorised commercial representative resident in Turkey will be appointed. In the event that such commercial enterprise has more than one branch, branches to be opened after the registration of the first branch will be registered in the same manner as the branches of domestic commercial enterprises.”
By Article 22 of the Law No. 7099, the fifth sentence of the third paragraph of Article 64 titled “Bookkeeping and Inventory” has been abolished. Amendments regarding this article have entered into force at the date of its publication. The abolished sentence is as follows:
Every merchant is obliged to keep commercial books and to clearly disclose its commercial transactions and commercial and financial standing, debit-credit relationships and results attained within each accounting period. Books shall be kept so as to provide insight for third party experts during their examinations to be performed within a reasonable period in relation to activities and financial standing of the enterprise. It must be possible to follow up generation and progress of the activities of the enterprise from the books. (Paragraph amended by Article 8 of the Law No. 6335 dated 26.06.2012)
A merchant is obliged to keep in writing, visual or electronic media a photocopy, carbon copy, microfiche, computer record or a similar copy of all documents sent in relation to its enterprise.
Certification of opening of day books, ledgers and inventories kept in hard copy and the books listed in the fourth paragraph will be made by the notary public at the time of incorporation and prior to usage. Certification of opening of such books in the following financial years will be made by the notary public by the end of the month before the first month of the relevant financial year. The share ledger and general assembly and discussion book may be continued to be used in the following financial years without certification of opening provided that they have sufficient number of pages. The certification of closing of the day book will be made by the notary public by the end of the sixth month of the following financial year and certification of closing of the board resolution book is made by the notary public by the end of the first month of the following financial year. Opening of the books of commercial companies may also be certified by the trade registry directorates at the time of registration of commercial companies.In cases where the certification of opening is made by the notary public, the notary public will be obliged to require the certificate of trade registry. However, certification of opening of books is made by the trade registry directorates at the time of registration of joint-stock and limited liability companies with the trade registry. In cases where commercial books are kept electronically, notarisation or approval of the trade registry directorate will not be required in the opening of such books and the closing of the day book and resolution book. The manner in which commercial books will be kept in hard copy or electronically, time of recording in the mentioned books, certification renewal and form and principles relating to opening and closing certifications will be determined in a communiqué jointly issued by the Ministry of Customs and Trade and the Ministry of Finance. (Paragraph amended by Article 22 of the Law No. 7099 dated 15.02.2018)
Books which are not related to the accounts of an enterprise such as share ledger, resolution books and general assembly and discussion books are also commercial books.
Real persons and legal entities subject to this Code shall be obliged to comply with the provisions of Tax Procedure Law dated 4/1/1961 and numbered 213 in relation to book keeping and time of recording and regulations made relying upon the authority under Article 175 of the same Law and the duplicate Article 257. Provisions of this Code on bookkeeping, inventory, drawing up of financial statements, capitalisation, considerations, accounts, valuation, safekeeping and disclosure shall not prevent the implementation of provisions of Law no. 213 and other tax laws providing for the same issues, determination of the tax assessment in compliance with tax laws and drafting of financial statements for this purpose.”
By Article 23 of the Law No. 7099, Article 428 titled “Representative of the Body, Independent Representative and Corporate Representative”, Article 430 titled “Declaration” and Article 431 titled “Notification” of the TCC have been abolished. These amendments have entered into force at the date of its publication.
By Article 24 of the Law No. 7099, Article 575 titled “Articles of Association” of the TCC has been amended as follows:

“(1) The articles of association should be issued in writing and the signatures of the founders should be notarized, or the articles of association should be signed by the founders in the presence of an authorized officer at the head or deputy head of the trade registry directorate. At the time of incorporation, valuable paper fee is not collected for papers containing the articles of association.” (This amendment shall enter into force on 15.03.2018).

By Article 25 of the Law No. 7099, the expression “the signatures on which have been notarised or which has been signed in the presence of an authorized officer at the head or deputy head of the trade registry directorate” in the first paragraph of Article 585 titled “Incorporation” of the TCC has been amended as “in the presence of an authorized officer at the trade registry directorate”. In the same article, the sentence “However, the requirement for the payment of at least 25% of the nominal values of shares subscribed in cash before the registration does not apply to limited liability companies.”has been inserted after the second sentence. This amendment has revoked the liability of investing capital at the time of incorporation for limited liability companies. Upon the amendment, the final version of the article is as follows:

“(1) Company shall be established upon the founders’ declaration of their intention to incorporate a limited company in the company’s articles of incorporation, which has been issued in accordance with the law and in which the founders have unconditionally undertaken to fully pay the capital amount, and the signatures on which have been notarised or which has been signed in the presence of an authorized officer at the head or deputy head of the trade registry directorate. Provisions of this Code in relation to joint stock companies shall apply mutatis mutandis to payment of the principle capital share amounts; place of payment; discharge obligation, consequences of failure to discharge and transfer of shares which have not been fully paid up. However, the requirement for the payment of at least 25% of the nominal values of shares subscribed in cash before the registration does not apply to limited companies. Provisions of the first paragraph of Article 588 are reserved.” (Paragraph amended by Article 25 of the Law No. 7099 dated 15.02.2018)

Amendments in this article shall enter into force as of 15.03.2018. Even though the above-stated amendment provides the investors who intend to incorporate a limited liability company with the opportunity to incorporate such company without paying twenty five percent of the capital before the registration, the persons or companies who intend to do business with the limited liability companies in Turkey are recommended to check those companies’ incorporation dates, capital amounts and whether their share capitals have been paid or not.

By Article 26 of the Law No. 7099, the expression “the notarisation of the signatures of the founders or the signing of the articles of incorporation in the presence of an authorized officer at
the head or deputy head of the trade registry directorate” in the first paragraph of Article 587 titled “Registration and Announcement” of the TCC has been amended as “in the presence
of an authorized officer at the trade registry directorate”. Upon the amendment, the final version of the article is as follows:

“(1) The company’s articles of incorporation shall be fully registered with the Trade Registry at the place in which the principal office of the company is located within thirty days following the notarisation of the signatures of the founders or the signing of the articles of incorporation in the presence of an authorized officer at the head or deputy head of the trade registry directorate, and shall be published in the Turkish Trade Registry Gazette. Provision of the first paragraph of Article 36 shall not apply to the registered and published articles of association, except the following:

(Paragraph amended by Article 25 of the Law No. 7099 dated 15.02.2018)

a) Date of the company’s articles of association.
b) Trade name and principal office of the company.
c) Scope of business of the company with material points set out and defined; term of the company in the event that there is a provision in the company’s articles of incorporation on this matter.
d) Nominal value of the principal capital.
e) Name and surname, place of residence of the real person shareholder, trade name, principal office of the legal entity shareholder and principal capital shares subscribed by each shareholder.
f) Subject of capital in kind and principal capital shares to be given in consideration of such capital; in the event that a value in kind has been acquired, the subject of the relevant agreement, the opponent party in the agreement, counter performance which the company is indebted; content and value of personal interests.
g) Number of redeemed share certificates, if provided for, and the scope of the rights granted thereto.
h) Names, surnames or titles and places of residence of directors and other persons authorised to represent the company.

ı) Manner in which the authority to represent is to be used.

i) Place of residence, principal office of the auditor, and branches registered with the Trade Registry, if any.
j) Privileges, additional obligations or ancillary performance obligations, being subject to nomination in relation to principal capital shares, pre-emption rights, repurchase and purchase rights provided for under the company’s articles of incorporation.
k) Form, type of announcements to be made by the company and, in the event that the company’s articles of incorporation include a provision in this respect, the manner in which the directors shall notify the shareholders.”

This amendment enters into force as of 15.03.2018.

The information given in this note are aimed only at providing information, and does not serve as a legal opinion under any circumstances.