With the Law No. 7511 on Amendments to the Turkish Commercial Code and Certain Laws (“Law No. 7511”) published in the Official Gazette dated 29 May 2024 and numbered 32560, some articles of the Turkish Commercial Code No. 6102 (“Commercial Code”) have been amended and entered into force as of the date of publication.
The aforementioned amendments are summarised as follows;
• Removal of the obligation to take the decision on the distribution of duties by electing a chairman and deputy chairman among the members of the board of directors every year,
• Removal of the authority to appoint and dismiss branch managers and persons with signatory authority from the scope of the non-transferable and inalienable powers of the board of directors,
• Introducing innovations to the call procedure to be applied in cases where the members of the board of directors request a board meeting,
• In the reinstatement lawsuits filed due to the debts of the companies whose trade registry records have been cancelled within the scope of Provisional Article 7 of the Commercial Code, the relevant trade registry directorates shall not be awarded judicial expenses and attorney fees against the relevant trade registry directorates; and
• Imposing a capital increase obligation on joint stock and limited liability companies whose capital is below the minimum capital amounts determined by the Presidential Decree No. 7887 dated 24 November 2023 on Increasing the Minimum Capital Amount for Joint
Stock and Limited Liability Companies
1- The obligation to take the decision on the distribution of duties taken by the
board of directors by electing a chairman and deputy chairman from among its members every year has been abolished.
In line with the amendment made to the first paragraph of Article 366 of the Commercial Code, which regulates the distribution of duties of the board of directors, the chairman and vice chairman of the board of directors may be elected in accordance with the term of office of the board of directors. In this context, the board of directors, which can be elected to serve for a maximum of three years in accordance with the current regulation, will not have to make a decision on the distribution of duties every year, and the board of directors will be able to elect the chairman and vice chairman to serve for the duration of the board of directors.
2- The authority to appoint and dismiss branch managers and persons with
signatory authority has been removed from the scope of the non-transferable
and inalienable duties and powers of the board of directors.
As stated in the preamble of the article in the proposal regarding Law No. 7511, it is assessed that the inability of the board of directors to delegate the authority to appoint and dismiss employees at all levels in companies with a large branch network and a high number of employees
authorised to represent the company complicates business processes, and in order to facilitate the operations of companies, the appointment and dismissal of persons other than senior executives and managers of the company has been removed from the non-transferable and inalienable duties and powers of the board of directors.
3- Facilitating Innovations have been
introduced to the Call Procedure.
In cases where the chairman of the board of directors fails to call the board of directors for a meeting in accordance with the written request of the majority, or where the chairman or deputy chairman of the board of directors cannot be reached, the call for a meeting may be made directly by the requesting board members.
Article 392 of the Commercial Code regulates the right of each board member to request the chairman of the board of directors to call the board of directors for a meeting. However, in practice, there was a need to introduce a mechanism to prevent the interruption of the decision-making processes of the board of directors due to the indifference of the chairman of the board of directors to the meeting requests in cases where the need for a board meeting arose. With the amendment made to Article 392 of the Commercial Code With the amendment made to Article 392 of the Commercial Code, the chairman of the board of directors is obliged to call the board of directors for a meeting upon the written request of the majority of the members of the board of directors. In cases where the chairman of the board of directors fails to call the board of directors for a meeting within 30 days from the date of receipt of the request, or in cases where the chairman or deputy chairman of the board of directors cannot be reached, the call may be made directly by the requesting board members. In addition, it has also made possible to determine a different procedure for calling the board of directors for a meeting in the articles of association of the companies.
The meeting and decision quorums regulated in paragraph 1 of Article 390 of the Commercial Code shall be applied in the board of directors’ meetings to be held upon a call.
4- Pursuant to the Provisional Article 7 of the Commercial Code, in the reinstatement lawsuits filed due to the debts of the companies whose trade registry records have been cancelled, the relevant trade registry directorates will not be entitled to judicial expenses and attorney fees.
In the reinstatement lawsuits filed by the creditors and those who have legal interests due to the debts of the companies about the companies whose records have been deleted from the trade registry pursuant to the Provisional Article 7 of the Commercial Code, it will not be possible in the judgements to be rendered as of the effective date of the amendment to award judicial expenses and attorney fees against the trade registry directorates, which are obliged to participate in the lawsuit with the decision of reinstatement at the end of the trial.
5- Joint stock and limited liability companies, whose capital are below the minimum capital amounts, are obliged to increase their capital until 31 December 2026.
The minimum capital amounts of joint stock and limited liability companies determined in Articles 332 and 580 of the Commercial Code were amended as follows with the Presidential Decree dated 24 November 2023 and numbered 7887 on the Increase of the Minimum Capital Amount for Joint Stock and Limited Liability Companies:
– The minimum capital amount for joint stock companies was increased to 250,000 Turkish Liras,
– The minimum initial capital amount foreseen for non-public joint stock companies that have accepted the registered capital system is 500,000 Turkish Liras,
– The minimum capital amount for limited liability companies has been increased to 50,000 Turkish Liras.
Pursuant to the Presidential Decree, the minimum capital amounts were initially introduced only for joint stock and limited liability companies to be established after 1 January 2024. With the new amendment, all joint stock companies with a share capital below TRY 250,000 and all limited liability companies with a share capital below TRY 50,000 are obliged to increase their share capital to the minimum capital amounts until 31 December 2026. Until 31 December 2026, joint stock companies and limited liability companies that do not fulfil the capital increase obligation will be deemed to have dissolved.
Non-public joint stock companies that have adopted the registered capital system with an issued capital of at least TL 250,000 will not be deemed to have dissolved but will be deemed to have exited the registered capital system unless they increase their initial capital and issued capital to TL 500,000 by 31 December 2026.
It is also regulated in the relevant article that no meeting quorum will be required in the general assembly meetings to be held with the agenda of increasing the capital of the companies to the minimum capital amounts stipulated by law, the relevant capital increase decision will be taken with the majority of the votes present at the meeting and privileges cannot be used against these decisions.
As for the capital increase transactions to be carried out before 31 December 2026, it should be taken into consideration that the capital should not be less than the minimum capital amounts stated above, and this rule should be complied with in determining the amount of capital to be increased.
The 31 December 2026 deadline may be extended by the Ministry of Trade for a maximum of two times for one year.
