What Changes are Set Forth in the Turkish Commercial Code?

The Law on Amending the Turkish Commercial Code and Certain Laws, numbered 7511 (Amending Law), has been published in the Official Gazette dated 29 May 2024 and a series of changes that will lead to significant transformations in the business world have entered into force. With the Amending Law, the innovations and conveniences we will encounter in the field of commercial law are summarized for you below:

— The phrase "every year" previously found in Article 366 of the TCC made it mandatory for joint stock companies to hold elections for the chairperson and vice-chairperson of the board of directors annually, resulting in the board being left without a chairperson and vice-chairperson if elections were not held the following year. The Amending Law sets forth aligning the election of the chairperson and vice-chairperson in joint stock companies with the term of the board of directors. With this change, the chairperson and vice-chairperson can be appointed for the term of the board, eliminating the need to repeat this process annually.

— In light of the above explanations, joint stock companies will no longer have to repeat the processes of deciding on the distribution of duties for the chairperson and vice-chairperson from among the board members and registering this decision with the trade registry every year; thus, it is expected that there will be no disruptions or vacancies in management.

— In the previous regulation, under Article 375 of the TCC, the appointment and dismissal of managers and signatories are among the non-delegable authorities of the board of directors. This situation could lead to issues such as restricting the ability to act according to business needs and making quick decisions, especially in the processes of appointing and dismissing branch managers. Under the changes in the Amending Law, the appointment and dismissal of branch managers and signatories will be removed from the non-delegable authorities of the board of directors and will be subject to delegation. Thus, businesses will be able to appoint and dismiss necessary individuals more quickly without a board decision. This change is considered an important step to enhance the operational efficiency and competitive strength of businesses.

— The Amending Law also brings significant changes regarding the calling of board meetings in the TCC. Under the previous regulation, Article 392 of the TCC, there were some ambiguities regarding the calling of board meetings, which could hinder decision-making processes. In the current situation, due to the lack of a specific period and method for calling meetings, it was difficult to hold meetings in a timely and effective manner. To address these issues, the Amending Law mandates that a meeting call must be made by the chairperson of the board within thirty days from the date the written request is received by the majority of the board members. If this call does not reach the chairperson or vice-chairperson, the call can be made by the board members who requested it.

— As will be recalled, the Presidential Decree published in the Official Gazette dated 25 November 2023 and numbered 32380 made changes to the minimum capital amounts for joint stock and limited companies in the TCC. The Decree stipulated that, effective from 01.01.2024, the minimum capital amounts for joint stock companies are 250,000 Turkish liras, for non-public joint stock companies that have adopted the registered capital system are 500,000 Turkish liras, and for limited companies are 50,000 Turkish liras. The Amending Law imposes the obligation for joint stock and limited companies established before 01.01.2024 with capital below the minimum thresholds set by the Decree to increase their capital to the specified minimums. However, companies in this situation will be given until 31.12.2026 to comply with the new regulations. Sanctions are also foreseen for ensuring compliance with this process; if existing companies do not adjust their capital to the new regulations by the specified date, their trade registry records will be deleted, and the companies will enter liquidation.

— Additionally, a different regulation is proposed for non-public joint stock companies that have adopted the registered capital system. These companies will only be considered to have exited the registered capital system as long as their issued capital is 250,000 Turkish liras or more. However, if their issued capital falls below 250,000 Turkish liras, these companies will also enter liquidation with the deletion of their trade registry records. With these changes, it is aimed to ensure certainty and reliability in the minimum capital amounts of companies.

— Another regulation introduced with the Amending Law is that in reinstatement lawsuits filed against trade registry offices by companies and cooperatives, the trade registry offices will not be held liable for litigation expenses if the lawsuits are accepted.

The regulations introduced to the TCC by the Amendment Law have come into effect as of 29 May 2024, the publication date of the Amendment Law.

In today's fast-changing commercial world, it is of great importance for companies to make quick and effective decisions. It can be said that the changes regarding the delegation of board authorities in the Amending Law aim to make internal company mechanisms work more efficiently. Additionally, extending the distribution of board duties from annually to up to three years is a well-placed step to prevent administrative and legal gaps. With the new regulations, the situation of companies with capital below the minimum amount will also be clarified. Overall, the Amending Law is expected to accelerate companies' decision-making processes, reduce administrative burdens, and facilitate long-term planning.

You can reach to the Amending Law from here (only available in Turkish).