2 March 2021
Law on the Prevention of the Financing of the Proliferation of Weapons of Mass Destruction numbered 7262 ("Law No. 7262"), which foresees important changes in the Turkish Commercial Code numbered 6102 ("TCC"), has entered into force after being published in the Official Gazette numbered 31351 and dated 31 December 2020.
With the amendments to TCC, a requirement to notify the Central Registry Agency ("CRA") in terms of the transfer of bearer shares of private joint stock companies was introduced.
In addition, the Ministry of Commerce has been authorized to make it compulsory for companies to keep the share book, the board of directors’ minute book and the general assembly meeting and deliberation book in electronic environment.
You may find below a summary of the key changes introduced by the amendments.
1. The Ministry of Commerce has been authorized to make it compulsory to keep the books in electronic environment.
Until today, the Ministry of Treasury and Finance and the Ministry of Commerce had the authority to regulate the procedures and principles regarding commercial books kept in physical or electronic environment with jointly issued communiqués. In this context, for the taxpayers determined in the General Communiqué of the Tax Procedure Law numbered 421 and 454 and the Electronic Book General Communiqué No. 1 (for example, the companies subject to independent audit, the companies subject to the obligation of e-invoicing), it was obligatory to keep the books in electronic environment.
Currently, it is obligatory to keep only the accounting journal and the central ledger in electronic environment. With the amendment, keeping the share book, board of directors’ minute book and the general assembly meeting and deliberation book electronically may be rendered compulsory by secondary regulations of the Ministry of Commerce.
2. In terms of private joint-stock companies, the opportunity of the bearer share certificate holders to attend the general assembly meetings by proving that they are the possessor of the certificate has been abolished.
As of April 1, 2021, according to the new regulation, the board of directors will arrange the list of bearer shareholders who can attend the general assembly meeting according to the shareholders chart to be provided by CRA.
3. In order for bearer share certificate owners to exercise their rights arising from shareholding, they must be notified to CRA.
As of 1 April 2021, bearer shareholders of private joint-stock companies will need to be notified to CRA in addition to obligation to prove their possession of the relevant shares in order to exercise their rights arising from shareholding.
4. Before the distribution of share certificates to bearer shareholders, the information regarding the shareholders and the owned shares must be notified by the Board of Directors to CRA.
To be effective as of 1 April 2021, the Board of Directors of private companies will be obliged to notify CRA of the shareholders and the owned shares before the issuance and the distribution of bearer share certificates.
5. In order for the transfer of bearer share certificates to be valid, the transferee by way of transfer of possession must notify CRA of the transfer.
To be effective as of 1 April 2021, the transfer of bearer share certificates only by transfer of possession will not be valid for the company and third parties; but the transferee will also need to notify CRA of the transfer. Unless this notification is made, the rights arising from the share will not be eligible for use, and for the claims regarding the use of such rights, the date of notification to CRA will be taken as basis.
6. The shareholders’ list to be obtained from CRA will be taken as basis for the list of attendees to be prepared in joint-stock companies’ general assemblies. The transfer of bearer shares may be restricted limited to the date of general assembly meetings.
With the regulation which will be effective as of 1 April 2021, it is enabled for the transfer of bearer shares to be restricted as necessary limited to the date of the general assembly meetings by a decision of Capital Markets Board for dematerialized shares and by a Communique to be issued by the Ministry of Trade for other bearer shares.
7. In light of the above explanations, the holders of bearer shares which should be notified to CRA should apply to the joint-stock companies with their share certificates until the date of 31.12.2021.
To be effective as of 1 April 2021, the holders of bearer shares should apply to the joint-stock companies with their share certificates to be notified to CRA until 31 December 2021. The Boards of Directors should notify the bearer shareholders and the information relating to the owned shares to CRA within five business days. The bearer shareholders’ use of their rights arising from these shares will not be possible without application to the joint-stock company as described above. In addition, the sanctions specified below may be applied depending on the circumstances.
In case CRA is not notified of the issuance and transfer of bearer share certificates, administrative fines may be applied.
To be effective as of 1 April 2021, the following administrative fines may be applied in case of the below circumstances;
• In case of absence of notification to CRA before the distribution of bearer share certificates to shareholders by the Board of Directors, a penalty of twenty thousand Turkish Liras will be applied to the Board members,
• In case of absence of notification to CRA of the transfer of bearer shares, by the transferee of bearer share certificates via transfer of possession, a penalty of five thousand Turkish Liras will be applied to the relevant person, and
• In case of failure to apply to the joint-stock company until 31 December 2021 with their share certificates for enabling the notification to CRA, a penalty of five thousand Turkish Liras will be applied to the relevant persons.