New Turkish Commercial Code
In accordance with the current needs and requirements of commercial life, Turkish Commercial Code (“Code”) has been completely renewed. The new Code came into effect on 01/07/2012 together with major innovations.
In order to provide information as to the new Code, some main changes on the Code should be briefly evaluated. Such as; previous Turkish Commercial Code was requiring at least two shareholders for Limited Liability Company and five shareholders for Joint Stock Company. This requirement was causing difficulties during the establishment of the company and investors were obliged to find a partner in order to run their businesses. As a result of this requirement there were plenty of companies which have two shareholders with the share ratios of 0,01 % and 99,99 %. As a result of recent amendments, now it is possible to establish Joint Stock Company or Limited Liability Company with only one shareholder which can be a real person or legal entity.
It should be also noted that, in accordance with the previous Commercial Code, management board (board of directors) of Joint Stock Company had to consist at least three members and such members had to own at least one share of the company. This requirement triggers unnecessary share transfers and paper works. According the new Code, board of directors of the company can be formed as one director and such director does not need to have a share of the company.
Company establishment procedure has also slightly changed and become simpler. The main change as to the company establishment procedure is the requirement of capital payment. In accordance with the recent changes at least ¼ of the capital of the company should be paid before the establishment. Since the capital of the company needs to be paid before the establishment, every bank created their own practice as to this requirement. Based on our recently completed projects, we experienced that some of banks use pool accounts regarding this kind of capital payments without requiring any documentation, alternatively some of banks open temporary accounts in the name of the company to be established.
Briefly, in Turkey, company establishment procedure is not troublesome and upon completion of required documentation, is finalized in a short term period.