Recent Amendments to the Turkish Commercial Code

The Law No. 7511 on Amending Turkish Commercial Code and Certain Laws has been published in the Official Gazette dated 29 May 2024 and numbered 32560 (the “Amendment Law”). The Amendment Law introduces several key changes to Turkish Commercial Code No. 6102 (“TCC”). You may find below a number of key takeaways in respect of the amended provisions of the TCC.

Extension of Terms of Chairman and Vice-Chairman

According to Article 366/1 of the TCC as currently in force, each year, the board of directors elects a chairman and at least one vice-chairman from among its members to act in the absence of the chairman. Article 12 of the Amendment Law aims at removing the reference to a yearly election requirement and allowing the chairman and vice-chairman to be elected for a period matching their term of office as members of the board of directors (i.e. up to 3 (three) years).

Appointment and Dismissal of Representatives

The current provisions of Article 375/1 paragraph (d) of the TCC, indicates that the appointment and dismissal of managers and persons with similar functions and signing authority are considered as being part of the non-transferrable powers of the board of directors. Pursuant to Article 13 of the Amendment Law, Article 375 paragraph (d) of the TCC is now expected to provide that the appointment and dismissal of branch managers and representative who does not have high level authorities shall fall outside the scope of the non-transferable rights of the board of directors. If enacted, this amendment will ease the operations of companies with large-scale business that have numerous branches and/or multiple representatives, as the board of directors will now be able to delegate the authority for the appointment and dismissal of such persons.

Convening of Board of Directors’ Meetings

According to the existing version of Article 392/7 of the TCC, any member of the board of directors is entitled to request in writing the chairman to call the board of directors to a meeting. Article 14 of the Amendment Law supplements this provision in order to facilitate the process of convening of board of directors’ meetings. According to the amended version of Article 392/7 of the TCC, if the chairman considers the request of a member as being appropriate, the later can call for a board of directors’ meeting. However, upon the written request of the majority of the members of the board of directors, the chairman of the board of directors shall be obliged to convoke the board of directors for a meeting to be held within 30 (thirty) days at the latest from the date of receipt of the request. In cases where the board of directors is not called for a meeting within such period or the chairman or deputy chairman of the board of directors cannot be reached, the call for a board of directors’ meeting may be made directly by the requesting board members. For such board of directors’ meetings, the meeting and decision quorums foreseen under Article 390/1 of the TCC will be applicable. It is also possible to establish a different procedure for convening of the board of directors’ meetings in the articles of association of the company.

Compliance With the New Minimum Share Capital Requirements

As explained in our previous client alert “Revised Requirements for Minimum Share Capital Amounts of Turkish Companies”, the minimum share capital requirement for Turkish companies has been amended by the Presidential Decree numbered 7887 and dated 24 November 2023, effective from 1 January 2024 (i.e. new minimum share capital amount of TRY 50,000 for limited liability companies, TRY 250,000 for joint-stock companies and TRY 500,000 for non-public joint stock companies with registered share capital).

According to Article 16 of the Amendment Law, joint stock and limited liability companies whose share capitals are below the minimum capital amount shall increase their share capital in accordance with the above amounts until 31 December 2026 (which can be extended by the Ministry of Commerce for 1-year period for at most two times), failing which they will be deemed dissolved. Non-public joint stock companies that have accepted the registered capital system with an issued capital of at least TRY 250,000 will be considered as having exited from this system unless they increase their initial capital and issued capital to TRY 500,000 by the said date. Please note that for the general assemblies convened for the purpose of share capital increase in order to comply with this requirements, no meeting quorum will be required and the relevant resolutions may be passed with the majority of the attendees and no special privileges can be exercised against these resolutions.