The Law on Amending the Turkish Commercial Code No. 6102 and Some Laws by the Turkish Grand National Assembly (“Law No. 7511”), was adopted on May 23, 2024. Law No. 7511, which is drafted as an omnibus bill and envisages amendments to Article 366, 375, 392, Temporary Article 7 of the Turkish Commercial Code (“TCC”, “Law”), and the addition of a new temporary article. 7511 Sayılı Kanun, 29 Mayıs 2024 tarihli ve 32560 sayılı Resmi Gazete’de yayımlanmıştır.
Amendments to TCC
The requirement to elect the Chairman and Vice Chairman of the Board of Directors every year in joint stock companies is abolished.
With the Article 13 of Law No. 7511, an amendment was made to the first paragraph of Article 366 of the TCC titled as Distribution of Duties, and the phrase “The board of directors is elected annually from among its members” in the first sentence of the paragraph was amended to “The board of directors is elected from among its members.”
According to the current legislation, board members can be elected for a period of maximum of three years, while the board chairman and vice-chairman were elected each year, despite the fact that board of directors being elected for the maximum period of three years stipulated in the Law. In practice, this situation created uncertainty regarding who would exercise the powers and duties attributed to the board chairman and vice-chairman in cases where they were not elected in the following year.
The amendment to the article aims to allow the board chairman and vice-chairman to be elected in accordance with the term of office of the board of directors.
The power to appoint branch managers was excluded from the Board of Directors’ non-delegable and indispensable duties and powers in Joint Stock Companies.
With the Article 14 of Law No. 7511, the first paragraph of Article 375 of the TCC titled as Non-Delegable Duties and Powers was amended as follows:
“(d) Appointment and dismissal of directors and persons holding the same functions, except branch managers.”
In the first paragraph of Article 375 of the TCC, the appointment and dismissal of all directors, persons holding the same functions, and those authorized to sign were considered among the non-delegable duties and powers of the board of directors. These actions, which had to be carried out by a board decision, could not be subject to delegation. Although the term “directors and those holding the same functions” in the said paragraph was intended to regulate the top management mentioned in paragraph (a), due to the wording of paragraph (d), disputes arose in practice regarding the inclusion of the appointment and dismissal of all directors and signatories of the company among the non-delegable duties and powers of the board of directors.
However, with the aim of facilitating company operations and eliminating doubts in practice, the amendment removes the appointment and dismissal of persons other than the top executives of the company from the non-delegable and indispensable of the board of directors to facilitate company operations and eliminate doubts.
An obligation to call the board of directors for a meeting is imposed on the chairman in requests for a meeting made by the majority of the members of the board of directors.
With Article 15 of Law No. 7511, insertions were made to the 7th paragraph of Article 392 of the TCC titled as Right to Information and Inspection.
Under the current regulation, the authority to call a board meeting was only vested in the chairman of the board of directors, and in cases where the chairman of the board of directors could not be reached in accordance with the general provisions of the Law, this authority was given to the vice-chairman of the board of directors.
With the amendment, in the case of meeting requests made by the majority of the board of directors, the obligation to call the board of directors to a meeting within thirty days from the date of receipt of the chairman of the board of directors, and if the board of directors is not called to a meeting by the chairman, or if the chairman/vice-chairman cannot be reached, the request can be made directly by the callers.
Thus, it is understood that the aim is to contribute to the establishment of a negotiation environment in the management body of the joint stock companies.
In the proceedings to be held regarding the revival of the deregistered company and cooperative, it is regulated that the judicial expenses and attorney fees will not be awarded against the relevant registry.
With Article 16 of Law No. 7511, additions were made to the 15th paragraph of Temporary Article 7 of the TCC.
In practice, judicial expenses and attorney’s fees could be awarded against the trade registry directorates, in the revival actions filed against companies or cooperatives that were deregistered pursuant to the relevant article, which were obliged to participate in the lawsuit as legal adversaries. Considering that it was not appropriate to render judgments against the trade registry offices that are required to apply the provisions of the article and perform the necessary actions, additions were made to the 15th paragraph for the purpose of eliminating doubts and injustices in practice and for application in judgments to be rendered after the Law enters into force.
Joint stock and limited liability companies whose capital is below the new minimum capital amount are required to adapt to the new capital order until 31/12/2026.
Pursuant to the Presidential Decree No. 7887 published in the Official Gazette dated 25/11/2023 and numbered 32380, the minimum capital amount stipulated as TRY 50,000 for joint stock companies in the Article 332 of the TCC shall be increased to TRY 250,000 and the initial minimum capital amount stipulated as TRY 100,000 for non-public joint stock companies that have accepted the registered capital system shall be increased to TRY 500,000.
The minimum capital amount stipulated as TRY 10,000. for limited liability companies under the Article 580 of TCC has been increased to TRY 50,000.
New minimum capital amounts are applicable for joint stock and limited liability companies established after 1/1/2024.
With Article 17 of Law No. 7511, Provisional Article 15 of the TCC was amended to include a provision of capital adjustment for companies that were registered with the trade registry before this date 1/1/2024 and with a capital that is less than the new minimum capital amount.
Joint stock companies and limited liability companies whose capital is below the new minimum capital amounts are required to adapt to the new capital order until the date of 31/12/2026. Companies that do not make this capital adjustment will be deemed to have dissolved.
Non-public joint stock companies that have accepted the registered capital system with an issued capital of at least TRY 250.000 shall be deemed to have exited from this system unless they increase their initial capital and issued capital to TRY 500.000 until the date of 31/12/2016.
The amendments introduced by Law No. 7511 to TCC entered into force on the date of publication in the Official Gazette.
You can access the full text of the Law at the following link:
https://www.resmigazete.gov.tr/eskiler/2024/05/20240529-1.htm
