Single Shareholder Joint Stock Company (“AS”) and Single Member Partnership with Limited Liability (“Ltd S”)
Single shareholder AS and single member Ltd S may either be incorporated or if shareholders/partners of an AS or a Ltd S incorporated by and among multiple shareholders/partners diminishes to a single partner or shareholder, the firm may legally continue its activities.
The single shareholder or partner may solely use all powers of the GA and may adopt all resolutions; however all resolutions adopted in the name of the GA must be specified as GA resolutions and must be in writing.
Group of companies, which is created for the specific purpose of managing more than one capital stock company according to predetermined and concrete policies within the context of controlling relationships, has been regulated for the first time in Turkish law by this new Code. The concepts of a controlling company, which sustains control, and a dependent company which is under control have been clearly defined and legal status of these companies and their relationships have been specified.
The Commercial Code has regulated the structural changes in the companies, in other words (i) division, (ii) merger and (iii) conversion, under several articles.
Significant changes have been made regarding commercial books and the provisions thereof related to the financial statements of capital stock companies and the Group and to the Board’s annual reports. The provisions related to bookkeeping obligation, inventory, opening balance sheet, financial statements, balance sheet principles, prohibition of capitalization, provisions, prepaid expenses and deferred income, valuation, custody and disclosure has been effectived starting from 1 July 2012. (IFRS rules are only applicable for the companies and institutions which are subject to audit mentioned in article 3.)
Incorporation of an AS
The Commercial Code introduces a simple and original system that allows for public incorporation. The responsibility arising from incorporation has also been regulated by effective provisions. The incorporation will be audited by the operational auditor. The person who audits the certain transactions of the AS such as incorporation, capital increase and decrease, merger, division, conversion and issuance of securities is called an operational auditor.
The Commercial Code has also introduced provisions for single shareholder AS, publicly held AS and fully publicly held AS whose shares are listed on the stock exchange .
The Commercial Code has accepted two capital systems for all ASs regardless of whether or not they are publicly held: basic capital and registered capital. The adoption of the registered capital system, the acceptance in and dismissal from the system are left to the regulations of the Turkish Ministry of Industry and Commerce. The Ministry will issue the regulations required by the dynamism of the subject.
Shares may be in cash or in-kind. The prohibition that shares corresponding to capital inkind may not be transferred for a period of two years does not exist in new Turkish Commercial Code. A share without a nominal value is not recognized. The minimum nominal value is Kurus 1.
The Commercial Code recognizes privileged shares. However, contrary to the current Turkish Commercial Code, the privilege concept has been defined. Privileged voting right has been restricted.
The Turkish Commercial Code, to a great extent, has loosened the prohibition on an AS’s acquisition of its own shares or acceptance thereof as pledge in accordance with the Second Directive of the EC, called the “Capital Directive”, under company law.
The regime that new Turkish Commercial Code accepts is based on broad and functioning opportunities that may bring ease to the business world. The new Turkish Commercial Code specifically has protected companies whose shares are listed on the stock exchange against manipulation.
The possibility for a single member Board has been introduced into Turkish law. The possibility for a legal entity to become a Board member has been brought. The
legal infrastructure that enables the representation of shareholder groups in the Board has been established.
The non-delegable and exclusive authorities of the GA are listed collectively. While indicating these authorities, exceptions such as the capital increase and issuance of securities that are particularly related to publicly held A?s are mentioned. The parties who are authorized to call the GA to a meeting are re-defined. The auditor’s power to call a meeting has been excluded. Furthermore, an obligation is included for the arrangement of an internal regulation by the A? relation to the management of the GA meetings by the meeting chairmanship.
The New Turkish Commercial Code has improved the known methods through innovations in relation to the capital increase in the A? and also has enriched this transaction with new types. The improvements are the legalizations of capital increase in an authorized capital system and capital increase through internal funds besides the known capital increase types as basic capital increase. On the other hand, conditional capital increase is a new concept.
In this type of capital increase, the capital is increased neither upon a Board decision nor through a GA resolution, and the capital increase may not be subscribed by particular people and the basis of the capital increase is a provision of the articles of association.
The New Turkish Commercial Code has regulated the legal and the criminal responsibilities arising from various transactions, decisions, declarations or documents of ASs.
The new Ltd Sti has departed from general partnership, in contrary to the existing Turkish Commercial Code and has almost resembled a small size AS. The minimum capital is 10.000 (ten thousand) TL.
With the new Turkish Commercial Code, a single member Ltd has been allowed and incorporation has been simplified.
It has been set forth that the capital share is paid at once, i.e. installments have been removed. Since the system in which the total value of the capital shares is to be paid at once has been introduced, default and its results have been eliminated.