Important Amendments to the Turkish Commercial Code in 2024
Turkish Commercial Code Amendments: Law No. 7511 Summary
Law No. 7511 on Amending Turkish Commercial Code and Certain Laws was published in the Official Gazette on 29.05.2024 and brought significant changes for business world. Here is the summary of the main updates and simplifications in commercial law. A turkish corporate lawyer will be handy for companies to navigate these changes as they cover many operational and administrative areas that will directly affect companies’ internal policies and legal compliance.
Chairperson and Vice-Chairperson Term in Joint Stock Companies
Before, according to Article 366 of Turkish Commercial Code (TCC), chairperson and vice-chairperson of joint stock companies had to be elected every year which could cause management gaps if elections were delayed. With the Amending Law, chairperson and vice-chairperson terms are now same as the term of the board of directors, so there is no need for yearly elections and continuity in chair and vice-chair roles.
This means joint stock companies don’t need to go through the election process for chairperson and vice-chairperson every year or register these decisions with the trade registry every year. This will bring more continuity and less disruption to management.
More Flexibility in Appointing Branch Managers
Before, according to Article 375 of TCC, board of directors had exclusive authority over appointing and dismissing managers and signatories which could slow down decision making especially for branch management. Amending Law now allows delegation of these powers, so it will be easier to appoint or dismiss managers quickly. A turkey company attorney can help companies to navigate this delegation process and be in line with the new rules and increase operational efficiency.
New Process for Convening Board Meetings
Amending Law also changed the rules on convening board meetings which was regulated under TCC Article 392. Before it was sometimes difficult to hold meetings on time. Now, chairperson must convene a board meeting within thirty days of a written request from majority of the board members. If the request doesn’t reach the chairperson or vice-chairperson, the members who requested the meeting can convene the meeting. This change aims to hold meetings on time and efficiently.
Minimum Capital Amounts
A Presidential Decree published on 25.11.2023 updated the minimum capital requirements for joint stock and limited companies. As of 01.01.2024, joint stock companies shall have at least 250,000 TL capital, non-public joint stock companies using registered capital system shall have at least 500,000 TL capital and limited companies shall have at least 50,000 TL capital. Companies established before 01.01.2024 with capital below these amounts shall meet the new minimums by 31.12.2026. Those who fail to comply will be deleted from trade registry and go into liquidation.
Capital Requirements for Non-Public Joint Stock Companies
Also, non-public joint stock companies within the registered capital system will be out of the system if their issued capital is below 250.000 TL. These companies will be deleted from registry and liquidated. This is to ensure the minimum capital levels of the companies are reliable.
Lawsuits Against Trade Registry Offices and Litigation Costs
The Amending Law adds a provision that in the reinstatement lawsuits filed by the companies or cooperatives against trade registry offices, the registry office will not be liable for the litigation costs if the case is accepted.
These amendments took effect on May 29, 2024, the publication date of the Amending Law.
