Important Amendments Introduced to the Turkish Commercial Code by Law No.7511 29 May 2024

The Law implies many important amendments under the Turkish Commercial Code ("TCC") as follows;

1) Election of the Chairman and Deputy Chairman of the Board of Directors in Joint Stock Companies

Before the Amendment:

Article 366 of the TCC, titled "Distribution of duties", stipulated that the board of directors was obliged to elect a chairman and at least one deputy chairman from among its members every year to deputize for the chairman in his/her absence.

After the Amendment:

With the amendment made to the first paragraph of the aforementioned Article 366 of the TCC, the obligation of the board of directors to elect a chairman and deputy chairman every year has been abolished. In this way, the article, which was essentially dormant in practice, has been amended so that the chairman and deputy chairman of the board of directors can be elected in accordance with the term of office of the board of directors.

2) Non-Transferable Duties and Powers of The Board Of Directors in Joint Stock Companies
 

Before the Amendment:

Pursuant to subparagraph (d) of paragraph 1 of Article 375 of the TCC regulating the non transferable duties and powers of the board of directors in joint stock companies, the appointment and dismissal of the directors and persons with the same function and signatory authority were among the non-transferable and inalienable duties and powers of the board of directors.

After the Amendment:

With the amendment introduced by the Law, the authority to appoint and dismiss branch managers and persons with signatory authority has been removed from the non-transferable powers of the board of directors. With this amendment, the board of directors will be able to delegate its authority to appoint and dismiss branch managers and other authorized signatories.

3) The Right Of The Board Of Directors in Joint Stock Companies to Obtain İnformation and Examination

Before the Amendment:

Paragraph 7 of Article 392 of the TCC, which regulates the right of the members of the board of directors of joint stock companies to obtain and review information, stipulates that each member of the board of directors may request the chairman of the board of directors in writing to call the board of directors for a meeting.

After the Amendment:

While Article 392 of the TCC is retained; the obligation for the chairman of the board of directors to call the board of directors upon the written request of the majority of the members of the board of directors within thirty (30) days from the date of receipt of the written request is implied. In the event that the board of directors is not called for a meeting within this period or the chairman of the board of directors or his deputy cannot be reached, it is regulated that the call for the meeting may be made directly by the requestors. In addition, with the new regulation, it is possible to decide on a different procedure for calling the board of directors for a meeting in the articles of association of the company. With this regulation, it is aimed to eliminate the situation that creates hesitation in practice and delays the process.

4) No Attorney Fee and Trial Expenses Against the Trade Registry Directorate in Re-Registration Cases

Before the Amendment:

Provisional Article 7 of the TCC stipulates that the liquidation and deregistration of joint stock and limited liability companies and cooperatives from the trade registry shall be carried out in accordance with this article, without complying with the liquidation procedure in the relevant laws. However, the aforementioned article did not clearly stipulate which party would be responsible for the attorney fees and judicial expenses in the aforementioned re-registration proceedings.

After the Amendment:

With the sentence added to Paragraph 15 of the Provisional Article 7 of the TCC, it has been clearly regulated that no judicial expenses and attorney fees may be awarded against the trade registry of commerce as a result of the re-registration actions filed by naming the trade registry of commerce as a party in order for the companies whose trade registry records have been canceled to regain legal personality due to their debts. In this context, it will not be possible to award judicial expenses and attorney fees against the trade registry of commerce that carry out ex officio cancellation procedures in accordance with Provisional Article 7. By this amendment, the practice adopted by the precedent decisions of the Supreme Court has been included in the legislation. The matter to be considered here is that the procedural compliance of the deregistration made by the Trade Registries of Commerce will be evaluated in the re-registration case.

5) Ensuring Adjustment to Minimum Capital Amounts in Joint Stock and Limited Liability Companies

Before the Amendment:

With the previous amendment to the TCC, the minimum initial capital for joint stock companies was increased to 250,000 Turkish Liras, the minimum initial capital for non-public joint stock companies that have accepted the registered capital system was increased to 500,000 Turkish Liras, and the minimum initial capital for limited liability companies was increased to 50,000 Turkish Liras. However, this amendment did not cover companies established before 01.01.2024.

After the Amendment:

With Provisional Article 15 added to the TCC with the Law, it has become mandatory for joint stock and limited liability companies established before 01.01.2024 to adjust to the increased minimum capital amounts until 31.12.2026. In this direction, it is regulated that companies that do not meet the minimum capital amounts specified in the provision will be deemed to have dissolved. In order to prevent possible loss of rights, the amendment stipulates that non-public joint stock companies that have adopted the authorized capital system and whose initial capital does not exceed TRY 500,000 will not be deemed to have dissolved as long as their issued capital is TRY 250,000 or more, but will instead be deemed to have exited the authorized capital system.
 

In accordance with the Provisional Article 15 added to the TCC, no quorum will be required for the general assembly meetings to be held for the increase of the share capital to the amounts stipulated in the provisions of the law, resolutions will be adopted by a majority of the votes present at the meeting and privileges will not be exercised against such resolutions.

Pursuant to Article 23 of the Law, all of the amendments envisaged under the TCC entered into force as of 29.05.2024 which is the date of publication of the Official Gazette.

You can access the relevant Official Gazette announcement from the link below:

https://www.resmigazete.gov.tr/ eskiler/ 2024/ 05/ 20240529-1.htm