With development of technology, trading between merchants in Turkey and at other remote places in the world has been picked up speed.Therefore the updating of current Turkish Commercial Code provisions by consideration of trade application which are improving with each passing day, has inhered
After long working period the Turkish Commercial Code numbered 6102 that has been published at the Official Gazette dated 14.02.2011 and numbered 27846 and its provision regarding audit of Joint Stock Company and Limited Liability Company and conduction of new accounting regulation will be enacted on 01.01.2013,other provisions will be enacted on 01.07.2012 (Hereinafter referred to as “New TCC”) includes the provisions leading to significant amendments at the legal and administrative structure of companies. Limited Liability Companies which are extensively established and run in Turkey also will undergo some basic changes from legal, management and financial point of view.
Some basic renewals related to Limited Liability Companies taking place at New TCC namely are;
1. The numbers of founder shareholder and shareholders
The establishment of limited liability companies by one real person or legal entity becomes possible with article 573 of new TCC of which title is “Definition and establishment” However in case limited liability company is established by one person, managers of limited liability company should make register and announce that company is a limited liability company with one shareholder and the name,citizenship and domicile of one shareholder.
Furthermore in accordance with new TCC if limited liability company is established by more than one person, but the number of shareholder reduces to one, this situation and the transaction leading to this consequence should be declared in written way to company managers within seven days as of accrual date. On the other hand limited liability company managers should make register and announce that company is a limited liability company with one shareholder, and the name,citizenship and domicile of one shareholder until end of 7th day that begins after receiving date of declaration .
On the other hand new regulation is not allowed to acquisiton of its own shares causing that the company has become with one company shareholder.
The minimum capital amount for limited liability company is increased from 5.000 TL to 10.000 TL with new TCC. Contrary to current Turkish Commercial Code, the provision regarding payment of company capital by instalments and default provisions have been abrogated with new TCC. Consequently share amount will be paid at once. Furthermore binding of share of stock capital to the registered securities and issuing redeemed shares(In other words the deeds that entitle right to receive profit share of company without being shareholder), provided that it is written at company agreement will be possible.
3. Articles of Association and registration
At new TCC there is a seperation namely “Compulsory records” and “Binding provisions provided that foreseen at company agreements” in terms of records should be written at articles of association of company.Thus basic matters should be considered when articles of association of limited liability company is prepared are organised at article 577 of new TCC. Nonetheless provisions regarding private audit,audit with transaction auditors and auditors for Joint Stock Companies will be applied to limited liability companies too. Accordingly provisions related to concern of auditor should be taken place at articles of association. In addition, it becomes possible that limited liability companies can engage in the insurance business according to paragraph 3 of article 573 of new TCC.
Obligation of additional payment that will not exceed the double nominal amount of capital can be brought, if it is taken place at articles of association at company and this obligation might be demanded from assignor shareholder within 2 years as of share transfer registration date , if company becomes a bankrupt.
The registration duration has been determined as 30 days.
4. The transfer and registration of stock capital
There are some changes about transfer of stock capital of limited liability company at new TCC.According to this, if company agreement prohibits share transfer or general assembly rejects to give approval, the shareholder’s right of withdraw from company with righteous cause is reserved. Furthermore upon additional payment or obligations of lateral performance were foreseen, if the guarantee that is required from the assignee is not given by reason of ability to pay of assignee is uncertain, general assembly might reject the approval,eventhough there is no provision at company agreement. If general assembly does not reject within 3 months as of application date, this reckons as approval was given.
On the other hand,in accordance with article 598 of new TCC, when the transfer of stock capital share is not made within 30 days by company managers, right of cancel the record related to his/her share is enabled to withdrawing partner by application to Commercial Register. However it is enabled to pledge on the stock capital of company by general assembly resolution with new code.
5. Management and representation
At new TCC,contrary to the current code, management right of limited liability company is not given to the shareholders and an elected management has been constitued. The establishment application of company has been signed by managers.However nothwithstanding management authority is left to manage/managers, in accordance with article 623 of new TCC, if more than one manager has been appointed at company, at least one shareholder should be president of board of managers.
At new code the domiciles of limited liability company managers have been regulated too. According to this, it is signified that the domicile of at least one of company managers should be in Turkey and this manager should has got authority for sole representation of company.If it is determined that there is a contrary action to the stated article by the Commercial Registration Directorate, revising of this situation will be requested by giving appropriate term to company. Otherwise commercial registration officer can file lawsuit for annulment of company.
On the other hand the inalienable duties of limited liability company managers have been listed in limited way and thereby the limits of managers’ authority have been obviously stated.
Consequently, with new Turkish Commercial Code numbered 6102, it is observed that it is aimed that limited liability companies of which number of shareholders are decreased to minimum one display more activity at business .
Per contra especially to being subjected to independent audit and Turkey Accounting Standarts that is compatible to international financial reporting standarts cause that limited liability companies compare to Joint Stock Company and accordingly the development of strong enterprise structures at market is motivated with new code.Yet the obligation of being limited liability company manager’s domicile in Turkey is significant regulation.