Business Law Dersi 4. Ünite Sorularla Öğrenelim

Which areas are regulated in the Turkish company law (TCC)?

The rules on company law regulate the requirements for the formation, incorporation,
organs and functioning of each specific type of company and furthermore the liability of the shareholders, and auditing and dissolution of the companies. Company Law as set forth in the TCC is not the only relevant legislation regarding companies but it is also complemented with some other legislation such as Capital Markets Law, Banking Law, Competition Law where appropriate.

Please mention the importance of the Turkish Commercial Code (TCC) in terms of companies.

The TCC which is enacted in 2011 after a long period of consultation with all the interested parties has introduced a new regime for companies. When compared to other chapters of the TCC, there has been significant amendments in the company
law regime. The second chapter of TCC on companies aims to provide a legal  environment as simple and as accessible as possible for firms and to avoid imposing unnecessary burdens on the ways companies get established and operate and on the other hand protect investors. It is aimed to provide a simpler, more efficient and cost effective framework for companies in commercial business life. The new company law regime extended not only to cover some new types/structures of companies; such as the single-shareholder joint stock company but also introduced some new principles.

Please mention the fundamentals of corporate governance under the Turkish Commercial Code (TCC).

Fundamentals of corporate governance under the TCC can be listed as in the following:
1. Corporate governance principles aim to maintain (i) transparency, (ii) fairness, (iii)
accountability, (iv) responsibility.
2. Transparency is required in (i) financial statements, (ii) boards of directors’ annual
reports, (iii) independent audits, (iv) transactional auditors, (v) all audit reports of individual companies and group of companies.
3. Fairness has been ensured by establishing a balance of interests and by objective justice.
4. Accountability is aimed to be provided with the requirements sought for the Board
of Directors reports, flow of information, right to information and oversight.
5. The rights of shareholders to sue, obtain information and perform oversight have
been created along with smooth-running legal mechanisms.
6. The minority rights have been expanded.
7. Privileged shares have been restricted.
8. Representation opportunities for group of shareholders and the minority in the Board
of Directors have been increased.
9. The Capital Markets Board has been provided with exclusive authority to
regulate corporate governance.
10. The publicly held companies are now obliged to publish corporate governance
reports.

Please define the concept of incorporation with regard to Turkish Commercial Code (TCC).

Incorporation is the process by which a new or existing business registers as a company. A company is a legal entity with a separate identity from those who
own or run it. A business cannot operate as a company until it has been incorporated under the TCC. Establishing your business as a company means there are certain legal requirements to be met under the TCC. Companies are separate legal persons who
are incorporated with the aim to make profit and who are independent of their directors and shareholders.

Please write the types of companies that exist in Turkey.

The existing company types in Turkey are:

Limited Company 
Commercial enterprises 
Branches 
Joint Stock Corporations 
Cooperatives 
Collective Companies 
Comandite Companies

Please mention the relationship between the Turkish Commercial Code, the Turkish Code of Obligations and the Turkish Civil Code briefly.

Article 126 TCC provides the link and the applicability of Turkish Civil Code and Turkish
Code of Obligations to commercial companies. In accordance with Article 126 of the Turkish Commercial Code, "Based on the condition that specific rules related to each special type of a company is reserved, the general rules of the Turkish Civil Code applicable to legal persons and in cases where there is not a provision in the TCC, the rules in the Code of Obligations concerning the ordinary partnership will also be applicable to commercial companies to the extent appropriate.

What items can be invested in the companies as capital in accordance with the Turkish Commercial Code?

Unless otherwise regulated in the law, the following can be invested in a company as
capital (Article 127/1 TCC):
a. Money, credit, negotiable instruments, shares of a capital company
b. Intellectual property rights,
c. Movable and all kinds of immovable property
d. Usage and benefiting rights of movable and immovable property
e. Personal labour,
f. Commercial reputation,
g. Commercial enterprises,
h. Lawfully used assets such as transferrable electronic platforms, areas, names and signs,
i. Mining licences and other rights such as that which has an economic value,
j. Any economic asset which is transferrable

What are the common statutory requirements to be complied with by all the companies at the stage of an establishment?

The common statutory requirements to be complied with by all the companies at the stage of an establishment are following:

• Legal personality
• Profit making purpose
• To operate with a trade name
• Registration with the Commercial
  Registry

Please define each common statutory requirement to be complied with by all the companies at the stage of an establishment briefly.

There are some common statutory requirements to be complied with by all the companies at the stage of establishment. These can be listed as follows:

Legal personality: All companies regardless of the number of its partners or the nature
of liability of the shareholders have a legal personality separate from the personality of
the founder partners.
Profit making purpose: Commercial companies are established for profit making
purposes which is a distinctive feature of commercial companies compared to
associations and foundations.
To operate with a trade name: All companies should have and operate under
a trade name to be registered with the commercial registry.
Registration with the Commercial Registry: All companies should get the foundation and the required info with the Commercial Registry.

Please define the concept of the company.

A company is a business association formed by two or more parties who bring together
their capital to achieve common purposes of making and sharing profit.

Please define the concept of Articles of Association (AoA).

The parties (shareholders/partners) establishing the company enter into a contract titled “Articles of Association (AoA)”. Every company is required to have an AoA
which is legally binding on the company and all of its shareholders and which can be
regarded as its internal rules, prepared by the shareholders. The AoA cannot contain rules that are against the law. AoA of a company must be in a written form and should bear the signatures of all the shareholders, authenticated by the notary public.

Which fundamental items should be comprised by an Articles of Association (AoA)?

Unless some further requirements are also required in the law, the AoA should comprise of the following points:
• Headquarters (registered office) and corporate title of the company
• The objectives of the company
• Capital, nominal value of shares, number of shares and the terms of payment
• In case of capital commitment in kind (rather than or together with cash), the
value should be appraised appraised for the in kind capital
• Special privileges, if any, for the shareholders, directors or other persons
• Provisions concerning the election of the members of Board of Directors and
statutory auditors; their rights and duties and the persons authorized to represent the
company
• Rules of general assembly meetings (quorum etc.)

• The duration of the company
• The form of announcements of the company
• Portion of the capital each shareholder has undertaken

What are the legal consequences of being incorporated under a separate legal personality and the liabilities of shareholders at the establishment stage?

The legal consequences of being incorporated under a separate legal personality and the liabilities of shareholders at the establishment stage can be listed as follows:

• A company’s property belongs not to its directors, management or shareholders
  but to the legal personality created by the establishment of the company.
• A company is responsible for its own debts and liabilities. The shareholders and, as a general rule, directors are not liable from the total amount of debts of the company. However, the directors have several liabilities arising from company law.
• The immovable property, the date registered in the land title and the intellectual property rights and other assets from the date they are registered in the relevant registries and the movable property when it is transferred to a trustful person will be considered as a property capital invested in the company. Registration in the statutory registries removes the good faith. (prevails the good faith arguments)
• The agreements made on the subscription of an immovable property or some similar
  rights like ownership rights on the property are valid without a requirement of  statutory form.
• For economic assets or movables subscribed, the company as the owner may  conclude transactions on the assets defined.
• Where the ownership on immovable property or other similar rights are subscribed as capital, than there has to be a registration in the Land Title in order for the company to carry out transactions on such property.
• In cases of registration in the Land Title and in other registries, the registrations shall be made promptly. The company has the right to unilaterally request for that.
• The Company may request from each shareholder to comply with their undertakings and and it is entitled to take a legal action before the courts and where delays cause losses, then can claim compensation. For claims, there should be a formal in advance warning. In companies in person, the partners can also take such legal actions.
• For the protection of the rights undertaken, the founders can request an injunction from the court against the partners.

What kind of measures need to be taken in terms of the transparency and supervision of all the transactions?

In terms of the transparency and supervision of all the transactions to be concluded, the following measures need to be taken:
a. The contents of contracts, plans, and reports are defined in the Law.
b. Audits will be conducted by expert, independent auditors.
c. All spin-off-related documents will

What is collective company?

According to Article 211 of the Turkish Commercial Code, a collective company is a type of company which can be established only by persons (individuals) for the
purposes of operating a commercial enterprise under a commercial title. Shareholders’ liability is joint and unlimited with all their property and this principle is an obligatory rule which the parties cannot agree otherwise. The shareholders’ unlimited liability for the debts of the Company is not a direct liability which means that a creditor should first refer to the Company for the debts and only if the Company is unable to pay, then refer to the shareholders. In such a case the shareholders are jointly and severally liable for the debts.

What are the essential requirements for a collective company?

In the light of the above, the essential requirements for a collective company can be listed as follows:

• establishment with a separate legal personality,
• by at least two individuals as partners,
• whose liability is not limited towards the creditors of the Company,
• to operate a commercial enterprise,
• with a trade name,
• under a written Articles of Association

What is commandite company?

Pursuant to Article 304 TCC, a comandite company is a company which is established
to operate a commercial enterprise under a trade name, where the liability of one or more shareholders are not limited against the creditors and where the liability of others is limited with the capital subscribed. Those partners whose liability is unlimited can only be individuals not legal entities.

What are the essential requirements for a comandite company?

In the light of the above, the essential requirements for a comandite company can be
listed as follows:

• establishment with a separate legal personality,
• to operate a commercial enterprise,
• with a trade name,
• under a written Articles of Association,
• by at least one individual partner with unlimited liability (comandite partner)
• whose liability is not limited towards the creditors of the Company and
• at least one partner whose liability is limited with certain amount of capital

What is Joint Stock Corporation?

Joint Stock Corporation is a capital company which is established for operating a commercial enterprise in any subject which is not prohibited by law and where the liability of the shareholders is limited with the amount of capital undertaken. The consent of Ministry of Trade is required at the establishment stage who then have the authority to supervise the activities of the company (Article 333 TCC). The shares of a joint stock company are transferable, so for a public joint stock company, the shares may be traded on a registered exchange, but for a private joint stock company, they are transferable between private parties.

What are the certain principles applicable to the joint stock corporations?

Principle on Majority Management

Principle on Limited Liability of the Shareholders

The Principle on the Protection of Capital

The Principle of State Supervision

The Principle of Informing the Public

The Principle of Equal Treatment