In limited and joint stock companies, share refers to the small units of capital companies that are transferable, subject to legal transactions and have economic value.
The share transfer procedure differs in limited and joint stock companies.
1. Share Transfer in Limited Liability Companies
Pursuant to Article 595 of the Turkish Commercial Code (“TCC”) titled “Transfer of the Capital Share” in the sixth part, which regulates the provisions regarding Limited Companies, “the transfer of the capital share and the transactions giving rise to the obligation of transfer shall be made in writing and the signatures of the parties shall be notarized. In addition, unless otherwise stipulated in the company agreement, the approval of the general assembly of shareholders is required for the transfer of the capital share. The transfer shall be valid upon this approval.”
In light of this article, it is clear that the transfer of shares in limited companies is subject to a certain procedure. According to this procedure, the transfer takes place following the notarization of the written share transfer agreement. Subsequent to this approval, the general assembly must be informed about the transfer verbally or in writing. The general assembly must notify its approval or rejection of the transfer within three months following this notification. Its silence within the said period means that it approves the transfer. As a result of explicit or implicit approval, the transfer of shares is recorded in the share ledger by the company manager. In the event that the transfer is refused to be recorded in the share ledger, it may be requested to be recorded in the trade registry through the court.
2. Share Transfer in Joint Stock Companies
Article 490 of the Turkish Commercial Code, titled “Principle in the Transfer of Registered Shares and Share Certificates”, which is titled “Share Certificates” in the fourth section, regulating the provisions on Joint Stock Companies, stipulates that “registered shares may be transferred without any restriction, unless otherwise stipulated in the law or the articles of association”. According to this article, unlike limited liability companies, in principle, shares in joint stock companies are freely tradable. However, this feature may be subject to certain legal or contractual restrictions.
As a matter of fact, the transfer of registered share certificates is subject to a legal restriction. Pursuant to Article 491 of the TCC, “registered shares that have not been fully paid for may be transferred only with the approval of the company; unlessthe transfer is realized through inheritance, division of inheritance, provisions on the property regime between spouses, or compulsory enforcement”. According to Article 492, “Restriction by articles of association”, the articles of association may stipulate that “registered shares may be transferred only with the approval of the company”.
The transfer of bearer share certificates is realized through the transfer of possession. The new shareholder must notify the central registry system in order to exercise the rights arising from the share.
In summary, the share transfer procedure differs in limited and joint stock companies, and share transfer in joint stock companies is an easier process compared to limited companies.
