The Law on the Amendment of Certain Laws for the Improvement of the Investment Environment numbered 7099 is published in the Official Gazette on March 10, 2018 and numbered 30356. The law introduced significant amendments to the Turkish Commercial Code regarding the preparation of documents during the incorporation of companies. Some of the amendments entered into force at the date of publication and on March 15, while some will enter into force on September 10, 2018. Also, a range of changes are adopted to the Communiqué on the Signing of the Articles of Association of the Companies Before the Trade Registry Offices published in the Official Gazette dated December 6, 2016. You may find below our explanations on these amendments and implementations.
I. LEGAL BACKGROUND
Law on the Amendment of Certain Laws for the Improvement of the Investment Environment numbered 7099 (published in the Official Gazette dated March 10, 2018 and numbered 30356) (the “Law”);
Turkish Commercial Code numbered 6102 (published in the Official Gazette dated February 14, 2011 and numbered 27846) (the “TCC”);
Communiqué on the Signing of the Articles of Association of the Companies Before the Trade Registry Offices (published in the Official Gazette dated December 6, 2016 and numbered 29910) (the “Communiqué”).
II. AMENDMENTS TO TCC
Article 40 of TCC is amended by Article 21 of the Law and accordingly merchants shall submit trade name and their signature to be used in company transactions to the related trade registry. In case the merchant is a legal entity, their authorized signature authorities shall also declare their signatures to the relevant trade registry. Signature statements shall be in writing and declared in the presence of a trade registry officer. However, foreign residents may provide signature statements approved by a Turkish Consulate where they reside. In previous practice, it was possible for local residents to provide signature statements in the presence of a Notary Public and foreign residents were able to provide notarized and apostilled signature statements. In practice trade registries still accepts notarized and apostilled signature statements from the foreign residents and notarized signature statements from the residents in Turkey.
Article 22 of the Law amended Article 64 of TCC as follows; opening approvals of books of joint stock companies and limited liability companies shall be carried out by the relevant Trade Registry. Previously, opening approvals of books were performed by the Notary Publics.
Articles 428, 430 and 431 of TCC are abolished by Law. Previously, if a company recommends a person who is related to the company in any way, in order for shareholders to appoint as their representative to perform relevant actions in the general assemblies on their behalf, it was also required to recommend another person who is entirely independent and neutral for the same duty and announce these two representatives according to the articles of association and indicate at the company website. The reason behind the abolishment is such additional cost caused significant problems in practice especially for the small sized joint stock companies.
Pursuant to the amendments made to Articles 575, 585 and 587 of TCC, articles of associations of companies shall be signed by the founders or their representatives authorized by proxy and in the presence of an officer of the Trade Registry of where the company will be incorporated.
As to the amendments made in Article 585 of TCC, payment of at east one fourth of the subscribed capital of the company prior to the establishment has been abolished in limited liability companies.
Pursuant to the Communiqué, the articles association of the company shall be prepared through the Turkish Central Registration System (“MERSIS”). Before the Communiqué entered into force, articles of the association prepared through MERSIS could be signed only before the Notary Publics.
If the founder is a Turkish citizen; valid identity card, passport or driving license must be submitted to the relevant trade registry and in case the founder is a foreign national valid passport will be sufficient.
After the submission of the above-mentioned documents to the related trade registry, the identity information and authority of the applicant will be verified by the authorized officer of the trade registry. Upon verification, the articles of association will be signed and sealed by the authorized officer of the trade registry. If the founder does not understand Turkish, sworn translator is required to be present. In the event of the signature is collected in the presence of sworn translator or witness, a minute shall be taken and such minute will also include identity details of the sworn translator or witness.
Registration applications for the incorporation of the company must be made within three months starting from the signature date of the articles of association. Otherwise, founders shall submit a statement indicating that their will to incorporate the company continues.
The information provided in this article is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The information is not intended create, nor does receipt of it constitute, an attorney-client relationship.
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