Client Alert:

THE LEGISLATOR INTRODUCES A MORE EFFICIENT AND FLEXIBLE CORPORATE GOVERNANCE IN TURKIYE

THE LEGISLATOR INTRODUCES A MORE EFFICIENT AND FLEXIBLE CORPORATE GOVERNANCE IN TURKIYE

As a result of the Turkish legislators' efforts to adapt the regulations to the current needs of companies, a new law amending the Turkish Commercial Code (“TCC”) came into force on 29th of May 2024. The amendments include significant changes to the operation of branch companies, board of directors’ meetings and share capitals.

In the last several years, Turkiye has been receiving an increasing amount of attention from foreign investors which established corporate presence in the major cities. For ease of operation throughout Turkiye, companies opt for establishing branches throughout the country. New regulation introduces a welcoming change. Previously, each branch manager had to be appointed by a board of directors’ (“BOD”) decision, which hindered company operations. With the amendments, the authority to appoint branch managers can now be transferred. Therefore, the BOD can delegate individuals to appoint branch directors.

Another significant amendment addresses a longstanding issue for Turkish companies regarding the convening of the BOD upon a member's request. With globalization necessitating frequent international travel for board members, convening the BOD became increasingly challenging. To expedite the process, the new procedure stipulates that if the majority of board members submit a written request, the chairman must convene the board within 30 days. If the chairman fails to call the meeting or the chairman or deputy chairman are unreachable, the requesting members are authorized to convene the meeting without the presence of the chairman.

Finally, a temporary clause was added to the TCC regarding the capital requirements. This amendment aims to facilitate companies adjusting their capital to the revised minimum amounts, prompted by economic fluctuations in Turkey (you may find more information here).    

According to the amendment, until the end of 2026,

  • (i) joint stock companies must increase their minimum capitals to 250.000 TRY,
  • (ii) limited liability companies must increase their minimum capitals to 50.000 TRY,

If these requirements are not met, the companies will be dissolved.

  • (iii) non-public joint stock companies with a registered capital system and an issued share capital of 250.000 TL must increase both their unproductive capital and issued capital to 500.000 TL,

Otherwise, the company will be considered to have exited the registered capital system.

To facilitate capital increases and thereby reduce the risk of company dissolution, the clause also specifies that the general assembly can take a decision to increase the capital to these minimum amounts by a majority of the votes present at the meeting. Furthermore, the Ministry of Commerce may extend this period until the end of 2028.

If you have any questions on or require clarification about this alert, please do not hesitate to contact us.

TAGS

corporate, finance, regulation, petroleum, arbitration, e-commerce, railway, advance dividends, istanbul, foreign awards, national markers, energy, natural resources, letter of guarantee, interim dividends

RECENT NEWS

We have received your submission. Thank you!