Limited Liability Companies In New Turkish Commercial Code

As 01.07.2012, the date of enforcement approaches, the discussions about the new Turkish Commercial Code intensify. On one hand, the new Turkish Commercial Code brings resolutions to some problems in practice and fills in some gaps, on the other hand, it brings some new terms and new regulations that wasn’t in the previous code. As many of the Refrigeration World readers have limited liability companies, we analysed the changes in the new Commercial Code regarding limited liability companies.
The differences in the new code about limited liability compaines are;

  • 1. Responsibility of the LLC members is clarified.1. The code currently in force states that “the responsibility of the members is limited to the capital they guarantee” which is misleading as it suggests they are responsible to the creditors for the amount of capital they guarantee. New Turkish Commercial Code doesn’t include this statement along with the definition of LLC, the regulation is now changed to “Members are not responsible for the company debts, they shall only pay the share of capital they guaranteed, and other additional payments and sub-obligations on the memorandum of association” This regulation clearly states that the members are not held responsible from the corporate debts. Also, the members are now obligated to make additional payments and fulfill other sub-obligations if the articles of incoporation foresees. If additional payments are regulated in the articles of incorporation, it mandates the members to make payments they normally don’t have to do if the company is in financial difficulty. The members can receive their payments back after the company is economically recovered. Sub-obligations include other services the members might be required to conduct according to the articles of incorporation. /li>
  • 2. It is now possible for LLCs to have one member. 2. Present code has the regulation “Limited liability company is the company founded by two or more real or legal entities under a commercial title. The responsibility of the members is limited to the capital they guarantee, and the capital of the company is fixed. The number of members shall be no less than two and no more than fifty.” In the new Code, this regulation is changed to “Limited liability company is founded by one or more real or legal entities under a commercial title, has fixed capital, and it consists of the sum of the capital stocks. ” şThe minimum number of members, which is two in the Code in force until 01.07.2012, is reduced to one in the new Code. The ventures who want to found a company can now found an LLC without another member.
  • 3. LLCs now have Auditors;3. According to a regulation that wasn’t in the previous Code, Auditors will supervise some operations. Whether or not all shares are guaranteed in the formation documents, minimum share price is deposited in accordance to the law, real capital or real properties acquired are evaluated by court-appointed experts, a court approved assessment report is added to the file, the interests of the founders aren’t conflicting with the law,, proper notarisations are made and permissions are received are determined in audition, in accordance with the accountability principle.
  • 4. LLCs now have general assembly meetings4. While the Turkish Commercial Code currently in force states that the general assembly regulations about joint-stock companies are also applied to limited liability companies, this is only the case if the company in question has minimum 20 members. As a result of this, almost none of the active LLCs hold general assembly meetings. However, the new Turkish Commercial Code doesn’t seek minimum conditions for general assemblies, therefore, LLCs will have to hold general assembly meetings withing 3 months following each fiscal period, starting 01.07.2012. Regulations regarding general assemblies will be applied in a similar manner as joint-stock companies.
  • 5. Exclusion from partnership in LLCs is enlarged upon. 5. According to the present Code, rightful exclusion of a member is only possible by a court order, which can cause difficulties. New Turkish Commercial Code, with good reason, retained the previous rightful exclusion regulation, however, it also regulates exclusion by general assembly decision, without applying to a court. By stating “It is possible to regulate reasons for exclusion of a member by general assembly decision in the articles of association”, the new Code regulates the exclusion of a member by general assembly decision for reasons stated in the articles of association, whether or not it constitutes just cause. As such, it would be appropriate to set the reasons to exclude a member in detail in the articles of incorporation.
  • 6. Share transfer is re-regulated.  6. Present Turkish Commercial Code “One member, one share” principle is discontinued, and it’s accepted that one member can have multiple shares and one share can be jointly owned. Service obligations, personal labour, commercial credit and maturing credits can’t be invested as capital. According to the present TCC, for a share transfer to be entered in the stock register, at least three quarters of the members must assent, and those members must have at least three quarters of the shares. If the capital invested is real property, it can’t be transferred in 3 years following the founding of the company. New TCC noticeably simplified this process and regulated that the share transfer can be done with the decision/approval of general assembly.
  • 7. Ultra vires is revoked. 7. Ultra vires regulation in the present Code states that the transactions with third parties outside of the field of the company aren’t binding for the company. According to this, commercial companies can receive rights and undertake obligations as long as they’re within the field of operation stated in the articles of association. New TCC lifts this restriction. If articles of association contains regulations limiting the capacity of the company to its field of operation against the new TCC, these regulations will be considered unwritten as soon as new TCC enters into force.
  • 8. Founding a website. 8. According to the new Code, starting 01.07.2013, limited liability companies will found a website and include some commercial and financial information here.
Of course, it’s not possible for us to analyse all the changes which also concerns limited liability companies here, such as mergers, spin-offs, etc. However, we tried to review the changes we consider important as best we can. Generally, we can say that the new Turkish Commercial Code wants companies to be stock corporations rather than private companies, and in our opinion this is right. Because the company is a distinct legal entity on its own, not X or Y’s company. Before entering in a commercial relationship with a company, the capital should be taken into consideration rather than the shareholders, and liability should be determined based on the capital. If the richest person in the world (let’s say Bill Gates) has a company with a capital of  10.000,00 TL, this is the maximum amount one can receive from this company.


Att. Bülent KAPTAN
Patent & Marka Attorney
http://bkaptan.com/
kaptan@bkaptan.com

 

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Bülent KAPTAN has set up his private practice as a member of Izmir Bar Association in 1991.
He was registered as Trademark and Patent Attorney to TPE (Turkish Patent Institute, not Turkish Patent and Trademark Office) in 1999. He has attended to Patent Attorneys Professional Training Programmes given by World Intellectual Property Organization as a distant education and an 8 months programme in TPE collabration with European Patent Office.

In 2002, he participated an English Translation Training for 20 months, organized by one of the M.E.B (Ministry of Education) affiliated private education institution.

He is a member of ICC Turkish National Committee and PEM Trademark and Patent Attorneys’ Assocation.

He has been writing in “Refrigeration World”, a publication of Aegean Region Refrigeration Industry and Business Association, since 2002.

He speaks English and German.

Elif Benan YAMAN graduated from Izmir University of Economics Faculty of Law in 2017. She is currently having her Masters in Law on Private Law in Izmir University of Economics. Also, she is running the ELSA, European Law Students Association as the Local Board President of İzmir and a candidate member of JCI (Junior Chamber International) İzmir.

She participated ELSA Winter Law School in Austria at Innsbruck University on Sports Law and she is currently having courses from Kadir Has University’s Sports Law and Management Programme. She participated ELSA Summer Law School in Spain, in cooperation with Barcelona University and IELPO on International Investment and Dispute Resolutions. She also participated ELSA Winter Law School Greece, at Aristotales University on Migration Law and Refugee Issues and she received certificates for her participations.

She mainly practices on Trade Law, Intellectual Property Law, Foreigners Law and Enforcement and Bankruptcy Law.

She speaks English and German.

Ece KARAN BEKTAS has her law degree from Yasar University Faculty of Law. She mainly focuses on Trade Law, Labor Law, Enforcement and Bankruptcy Law, Administrative Law and Tax Law.

After graduation, she has participated a Training on Disputes Related to Labor Law and Amicus Curiae for Labor Law Cases, received a Certificate on that. Also, she has completed her Masters of Law in Dokuz Eylul University Social Sciences Institute on Labor and Social Security Law.

She has been working at Kaptan Law Firm since 2015.

Kadir UYANIK, graduated from Eskisehir Anadolu University Faculty of Law in 2017. He is currently having his Masters in Law in Izmir University of Economics on Private Law. He practices mainly focused on Intellectual Property Law, Trade Law, Urban Transformation Law and Construction Law. He worked as Intern Lawyer in Kaptan Law Firm and he has been working as a Lawyer since 2018.


Kübra YILDIZ, has graduated from Manisa Celal Bayar University Demirci Demirci Vocatioal School on Banking and Insurance in 2015. She has been working at our firm as Administrative Assistant since 2017.