Turkish Commercial Code

PRELIMINARY PROVISIONS

A) Scope of application of the Code

I – Commercial provisions

Article 1 – (1) The Turkish Commercial Code is an integral part of the Turkish Civil Code No. 4721 dated 22/11/2001. The provisions of this Code and the special provisions set out in other laws concerning transactions and acts relating to a commercial enterprise are commercial provisions.

(2) In commercial transactions for which there is no commercial provision, the court shall decide in accordance with commercial custom and usage and, failing that, in accordance with the general provisions.

II – Commercial custom and usage

Article 2 – (1) Unless there is a provision to the contrary in the Code, a practice may not form the basis of the court’s judgment unless it is established that it is accepted as commercial custom and usage. However, practices shall also be taken into account in the interpretation of declarations of intent.

(2) Commercial custom and usage specific to a region or to a branch of trade shall prevail over general ones. If the persons concerned are not in the same region, the commercial custom and usage of the place of performance shall apply, unless otherwise provided in the law or in the contract.

(3) Commercial custom and usage shall apply to persons who do not have the status of merchant only if it is known, or ought to be known, by them.

III – Commercial transactions

Article 3 – (1) All transactions and acts relating to the matters regulated in this Code and to a commercial enterprise are commercial transactions.

IV – Commercial cases, non-contentious proceedings and their evidence²

1. In general

Article 4 – (1) Civil actions and non-contentious proceedings arising from matters relating to the commercial enterprises of both parties, as well as, irrespective of whether or not the parties are merchants, civil actions and non-contentious proceedings arising from matters provided for

a) In this Code,

b) In Articles 962 to 969 of the Turkish Civil Code concerning persons engaged in the business of lending against pledge,

c) In Articles 202 and 203 concerning the takeover of assets or of an enterprise and the merger and change of form of enterprises, Articles 444 and 447 concerning the prohibition of competition, Articles 487 to 501 concerning the publishing contract, Articles 515 to 519 regulating the letter of credit and credit order, Articles 532 to 545 concerning the commission contract, Articles 547 to 554 provided for commercial agents, commercial representatives and other merchant’s assistants, Articles 555 to 560 concerning the order to pay (assignment), and Articles 561 to 580 regulating contracts of deposit, of the Turkish Code of Obligations No. 6098 dated 11/1/2011,

d) In the legislation on intellectual property law,

e) In the special provisions concerning stock exchanges, exhibitions, fairs and markets, as well as bonded warehouses and other places specific to trade,

f) In the regulations concerning banks, other credit institutions, financial institutions and money-lending transactions,

shall be deemed commercial cases and non-contentious proceedings of a commercial nature. However, actions arising from orders to pay, deposits and rights relating to intellectual and artistic works which do not concern any commercial enterprise are excepted from this.³

(2) (Amended: 28/2/2018-7101/61 art.) In commercial cases, too, evidence and its submission are subject to the provisions of the Code of Civil Procedure No. 6100 dated 12/1/2011; the simple trial procedure shall apply in commercial cases whose amount or value does not exceed one million Turkish liras. (Added sentence: 28/3/2023-7445/30 art.) The monetary limit specified in this paragraph shall be increased in accordance with the first paragraph of Additional Article 1 of Law No. 6100.⁴⁵

2. Courts that shall hear commercial cases and non-contentious proceedings⁶

Article 5 – (1) Unless there is a provision to the contrary, the commercial court of first instance has jurisdiction to hear all commercial cases and non-contentious proceedings of a commercial nature, irrespective of the value or amount of the subject matter of the action.⁷

(2) Where there is a commercial court of first instance in a locality, actions falling within the jurisdiction of the civil court of first instance which are deemed commercial pursuant to Article 4, and other matters to be heard by the commercial court pursuant to special provisions, shall be heard by the commercial court of first instance. Where there is more than one commercial court of first instance hearing commercial cases in a locality, one or more of the commercial courts of first instance may, in places where the workload so requires, be assigned by the Council of Judges and Prosecutors to hear exclusively civil actions relating to maritime commerce and marine insurance arising from this Code and other laws.

(3) (Amended: 26/6/2012-6335/2 art.) The relationship between the commercial court of first instance and the civil court of first instance and other civil courts is a relationship of subject-matter jurisdiction, and in this case the procedural provisions on subject-matter jurisdiction shall apply.

(4) (Amended: 26/6/2012-6335/2 art.) The fact that the rule of subject-matter jurisdiction has not been relied upon in a commercial case within a judicial district in which there is no commercial court of first instance does not require a decision of lack of jurisdiction; the civil court of first instance shall continue with the action.

3. Mediation as a condition of action

Article 5/A – (Added: 6/12/2018-7155/20 art.)

(1) Among the commercial cases specified in Article 4 of this Code and in other laws, in actions for receivables and compensation whose subject matter is a sum of money, actions for the annulment of an objection, actions for negative declaratory judgment and actions for restitution, it is a condition of action that an application has been made to a mediator before the action is filed.⁸

(2) The mediator shall conclude the application within six weeks from the date on which he or she was assigned. In compelling circumstances, this period may be extended by the mediator by a maximum of two weeks.

B) Miscellaneous provisions

I – Statute of limitations

Article 6 – (1) Unless there is a provision to the contrary in the Code, the limitation periods provided for in laws laying down commercial provisions may not be altered by contract.

II – Presumption of joint and several liability

Article 7 – (1) If two or more persons jointly incur a debt towards another person by reason of a transaction which is of a commercial nature for only one of them or for all of them, they shall be jointly and severally liable, unless otherwise provided in the law or in the contract. However, default interest may not be charged against the surety or sureties unless they have been notified that the undertaking or payment has not been made or performed.

(2) In the case of suretyship for commercial debts, the provision of the first paragraph shall also apply in the relations both between the principal debtor and the surety and among the sureties.

III – Interest in commercial transactions

1. Freedom of rate and conditions for compound interest

Article 8 – (1) In commercial transactions, the interest rate shall be freely determined.

(2) A stipulation that interest be added to the principal and that interest be charged again on the aggregate, for periods of not less than three months, is valid only in current accounts and in loan contracts which are of the nature of a commercial transaction for both parties. Provided that this paragraph shall not apply to contracting parties who are not merchants.

(3) The provisions concerning consumer protection are reserved.

(4) Interest charged in breach of the second and third paragraphs of this Article is null and void.

2. Applicable provisions

Article 9 – (1) In commercial transactions, the provisions of the relevant legislation shall apply with respect to statutory interest, contractual (principal) interest and default interest.

3. Commencement of interest

Article 10 – (1) Unless otherwise agreed, interest on a commercial debt shall begin to run from the expiry of the term and, if there is no specific term, from the day of the warning notice.

BOOK ONE

Commercial Enterprise

PART ONE

Merchant

A) Commercial enterprise

1. Principle of integrity

Article 11 – (1) A commercial enterprise is an enterprise in which activities aimed at generating income at a level exceeding the limit provided for tradesman’s enterprises are carried on continuously and independently.

(2) The limit between a commercial enterprise and a tradesman’s enterprise shall be determined by Presidential decision.⁹

(3) A commercial enterprise may be transferred as a whole, and may be the subject of other legal transactions, without the need for the dispositive transactions required for the transfer of the asset components it comprises to be carried out separately. Unless otherwise provided, the transfer contract is deemed to include fixed assets, goodwill, tenancy rights, the trade name and other intellectual property rights, and the asset components permanently allocated to the enterprise. This transfer contract and other contracts having the commercial enterprise as a whole as their subject shall be made in writing, and shall be registered in the trade registry and announced.

B) Merchant

I – Natural persons

1. In general

Article 12 – (1) A person who operates a commercial enterprise, even partly, in his or her own name is called a merchant.

(2) A person who has announced to the public by circulars, newspapers, radio, television and other means of announcement that he or she has established and opened a commercial enterprise, or who has had his or her enterprise registered in the trade registry and announced the situation, shall be deemed a merchant even if he or she has not actually started operating the enterprise.

(3) A person who, as if he or she had opened a commercial enterprise, carries out transactions either in his or her own name or, in the capacity of partner, in the name of an ordinary partnership or of any other company which is in any manner whatsoever not deemed to exist in law, shall be liable as a merchant towards third parties acting in good faith.

2. Minors and persons under guardianship

Article 13 – (1) The legal representative who operates a commercial enterprise belonging to minors or persons under guardianship in their name is not deemed a merchant. The status of merchant belongs to the person represented. However, the legal representative shall be liable as a merchant with respect to the application of penal provisions.

3. Persons prohibited from engaging in trade

Article 14 – (1) A person who operates a commercial enterprise in breach of a prohibition arising from the law or from a judicial decision by reason of his or her personal situation or the nature of the work he or she carries out, or by reason of his or her profession and duties, or without obtaining permission or approval although the permission of another person or of an official authority is required, shall also be deemed a merchant.

(2) The civil, criminal and disciplinary liability arising from conduct in breach of the first paragraph is reserved.

4. Tradesman

Article 15 – (1) A person engaged in a craft or trade, whether itinerant or established in a shop or at specific places in a street, whose economic activity is based more on his or her physical labour than on his or her capital and whose income does not exceed the limit shown in the decree to be issued pursuant to the second paragraph of Article 11, is a tradesman. However, Articles 20 and 53, which are specific to merchants, and the provision of the second paragraph of Article 950 of the Turkish Civil Code shall also apply to them.

II – Legal entities

Article 16 – (1) Commercial companies, foundations and associations operating a commercial enterprise in order to achieve their purpose, and institutions and organisations established by the State, special provincial administrations, municipalities and villages and other public legal entities to be managed in accordance with the provisions of private law or to be operated in a commercial manner pursuant to their own establishment laws, shall also be deemed merchants.

(2) The State, special provincial administrations, municipalities and villages and other public legal entities, as well as associations working for the public benefit and foundations spending more than half of their income on works of the nature of a public service, shall not themselves be deemed merchants, whether they operate a commercial enterprise directly or through a legal entity managed and operated in accordance with the provisions of public law.

III – Joint ownership of a ship (co-ownership in shipping)

Article 17 – (1) The provisions relating to merchants shall also apply as they stand to joint ownership of a ship.

C) Effects of being a merchant

I – In general

Article 18 – (1) A merchant is subject to bankruptcy for all kinds of debts; he or she is furthermore obliged to choose a trade name in accordance with the law, to have his or her commercial enterprise registered in the trade registry and to keep the commercial books required under the provisions of this Code.

(2) Every merchant must act as a prudent businessman in all activities relating to his or her trade.

(3) Between merchants, notices or warnings for placing the other party in default, for terminating the contract or for withdrawing from the contract shall be made through a notary, by registered letter, by telegram or through the registered electronic mail system using a secure electronic signature.

(4) Other provisions attached to the status of merchant are reserved.

II – In particular

1. Presumption of commercial transaction

Article 19 – (1) The debts of a merchant are, as a rule, commercial. However, where a merchant who is a natural person has expressly notified the other party, at the time of carrying out the transaction, that it is not related to his or her commercial enterprise, or where the circumstances do not permit the transaction to be deemed commercial, the debt shall be deemed ordinary.

(2) Contracts which are of the nature of a commercial transaction for only one of the parties shall also be deemed a commercial transaction for the other party, unless there is a provision to the contrary in the Code.

2. Right to claim remuneration

Article 20 – (1) A merchant who has performed a task or service relating to his or her commercial enterprise for a person, whether a merchant or not, may claim appropriate remuneration. Furthermore, the merchant is entitled to interest on the advances he or she has made and the expenses he or she has incurred, from the date of payment.

3. Invoice and letter of confirmation

Article 21 – (1) The other party may request from a merchant who, in the context of his or her commercial enterprise, has sold or produced goods, performed a task or provided a benefit, that an invoice be issued to it and, if the price has been paid, that this also be indicated in the invoice.

(2) A person who receives an invoice and has not raised an objection concerning the content of the invoice within eight days from the date of receipt shall be deemed to have accepted that content.

(3) A person who receives a writing confirming the content of declarations made by telephone, by telegram, by any means of communication or information technology or by another technical means, or of contracts concluded orally, and who has not raised an objection within eight days from the date of receipt, shall be deemed to have accepted that the said letter of confirmation conforms to the contract concluded or to the declarations made.

4. Reduction of remuneration and contractual penalty

Article 22 – (1) A debtor having the status of merchant may not, in the cases set out in the second paragraph of Article 121, the third paragraph of Article 182 and Article 525 of the Turkish Code of Obligations, request the court to reduce the remuneration or the contractual penalty on the ground that excessive remuneration or an excessive penalty has been agreed.

5. Commercial sale and exchange of goods

Article 23 – (1) Subject to the special provisions in this Article, the provisions of the Turkish Code of Obligations relating to the contract of sale and the contract of exchange shall also apply to sales and exchanges of goods between merchants.

a) Where, according to the nature of the contract, the purpose of the parties and the type of goods, it is possible for the contract of sale to be performed in instalments, or where, despite the absence of these conditions, the buyer has accepted partial delivery without raising any reservation, in the event that part of the contract is not performed the buyer may exercise his or her rights only in respect of the part that has not been delivered. However, if, because of the non-delivery of that part, the possibility of obtaining the benefit expected from the contract or of achieving the purpose pursued disappears or is weakened, or if it is understood from the situation and circumstances that the remaining part of the contract cannot be performed fully or properly, the buyer may terminate the contract.

b) If the buyer is in default, the seller may request the court to authorise the sale of the goods. The court shall decide that the sale be carried out by public auction or through a person authorised for this task. If the seller so wishes, the person authorised for the sale shall have the characteristics of the goods to be offered for sale determined by an expert. The money remaining after the sale expenses have been deducted from the sale price shall, subject to the seller’s right of set-off, be deposited by the seller in the name of the buyer with a bank and, if there is no bank, with a notary, and the situation shall immediately be notified to the buyer.

c) If the defect in the goods is clearly apparent at the time of delivery, the buyer must notify the seller of the situation within two days. If it is not clearly apparent, the buyer is obliged to examine the goods, or have them examined, within eight days after taking delivery of them and, if this examination reveals that the goods are defective, to notify the seller of the situation within this period in order to preserve his or her rights. In other cases, the second paragraph of Article 223 of the Turkish Code of Obligations shall apply.

PART TWO

Trade Registry

A) Establishment

I – In general¹⁰¹¹

Article 24 – (1) (Amended: 15/8/2017-KHK-694/162 art.; Adopted unchanged: 1/2/2018-7078/157 art.) Trade registry directorates shall be established by the Ministry of Customs and Trade so as to operate within the chambers of commerce and industry and the chambers of commerce in provincial centres. The Ministry may establish trade registry directorates in chambers outside provincial centres and may also establish branches attached to the directorates.

(2) (Added: 15/8/2017-KHK-694/162 art.; Adopted unchanged: 1/2/2018-7078/157 art.) The trade registry shall be kept by the trade registry directorates and their branches under the supervision and control of the Ministry.

(3) The procedures and principles concerning the keeping of trade registry records in electronic form shall be set out in the regulation to be issued pursuant to Article 26 of the Code. A central common database, in which these records and the contents required to be registered and announced are stored on a regular basis and which can be made available in electronic form, shall be created with the Ministry of Customs and Trade and the Union of Chambers and Commodity Exchanges of Türkiye.

(4) The conditions to be required for the establishment of a trade registry directorate and the principles concerning the ensuring of the necessary cooperation between chambers in relation to registry transactions shall be regulated by a communiqué to be issued by the Ministry of Customs and Trade.

(5) (Added: 26/6/2012-6335/3 art.) Personal data which must be collected and processed in order for trade registry recording transactions to be carried out in electronic form shall be protected in accordance with the legislation on the protection of personal data and the ensuring of information security.

II – Administration

Article 25 – (1) (Amended: 15/8/2017-KHK-694/163 art.; Adopted unchanged: 1/2/2018-7078/158 art.) The trade registry shall be administered by the trade registry director. The trade registry director shall be appointed by the Ministry of Customs and Trade, from among persons having the qualifications determined in the regulation issued pursuant to Article 26, upon the proposal of the chamber or, if no proposal is made within thirty days despite the warning of the Ministry of Customs and Trade, ex officio, and may be removed from office by the same procedure. By the same procedure, a sufficient number of deputy directors shall be assigned according to the workload of the trade registry directorate. The maximum and minimum salaries of the personnel to work in the trade registry directorates shall be determined each year by the Ministry of Customs and Trade after obtaining the opinion of the Union of Chambers and Commodity Exchanges of Türkiye.

(2) The State and the relevant chamber are jointly and severally liable for all damages arising from the keeping of the trade registry. The State and the institution authorised to appoint the registry officials shall have recourse against those at fault in the occurrence of the damage. The trade registry director, his or her deputies and other personnel shall be punished as public officials for offences relating to their duties, and offences committed against them shall be deemed to have been committed against a public official.

(3) The Ministry of Customs and Trade is authorised at all times to inspect the activities of the trade registry directorates and to take the necessary measures. The trade registry directorates are obliged to comply with the measures taken and the instructions given by the said Ministry. (Added sentence: 15/8/2017-KHK-694/163 art.; Adopted unchanged: 1/2/2018-7078/158 art.) The chambers may not assign to the trade registry director, the deputy directors and the personnel in charge of trade registry transactions any duty other than their own duties.

III – Regulation¹²

Article 26 – (1) The establishment of the trade registry directorate, the keeping of the registry books, the procedures and principles concerning the fulfilment of the obligation of registration, the means of objection against the decisions of the registry directors, the qualifications to be required of registry directors, their deputies and other personnel, (…)¹³ and other principles and procedures relating to this subject shall be regulated in the regulation to be issued by the President.¹⁴

B) Registration

I – Conditions

1. Request

Article 27 – (1) Registration in the trade registry shall, as a rule, be made upon request. The provisions concerning registrations to be made ex officio or upon the notification of the competent institution or organisation are reserved. In matters subject to fees, the date of the fee receipt is decisive in determining the moment of registration. The provisions of Article 34 are reserved.

(2) The trade registry directorates shall transmit to the relevant tax office a copy of the application documents of taxpayers who are corporate tax payers and who apply for registration pursuant to this Article. The obligations of these taxpayers to notify the commencement of business shall be deemed fulfilled.¹⁵

2. Persons concerned

Article 28 – (1) The request for registration shall be made to the competent registry directorate by the persons concerned, their representatives or their legal successors.

(2) Where more than one person is obliged and authorised to request the registration of a matter, unless there is a provision to the contrary in the law, a registration made upon the request of one of them shall be deemed to have been requested by all of them.

3. Form of the request

Article 29 – (1) The request for registration shall be made by petition.

(2) The petitioner is obliged to prove his or her identity. If the signature on the petition has been certified by a notary, there is no need for further proof of identity.

4. Time limit

Article 30 – (1) Unless there is a provision to the contrary in the law, the time limit for requesting registration is fifteen days.

(2) This time limit shall begin from the date on which the transaction or fact requiring registration occurs; in cases where its completion depends on the drawing up of an instrument or document, from the date on which that instrument or document is drawn up.

(3) For persons residing outside the territorial jurisdiction of the trade registry directorate, this time limit is one month.

5. Changes

Article 31 – (1) Any change of whatever kind occurring in registered matters shall also be registered.

(2) If the facts or transactions on which the registration is based end or cease to exist in whole or in part, the entry in the registry shall also be deleted in part or in whole.

(3) In both cases, the provisions of Articles 27 to 30 shall apply.

II – Duties of the registry director

1. Duty of examination and provisional registration

Article 32 – (1) The registry director is obliged to examine whether the statutory conditions required for registration exist.

(2) In the registration of legal entities, it shall be examined in particular whether the articles of association are contrary to mandatory provisions and whether the said articles contain the provisions which the law requires to be included.

(3) It is a requirement that the matters to be registered fully reflect the truth, are not of such a nature as to create a false impression on third parties, and are not contrary to public order.

(4) Matters whose resolution depends on a court decision, or about whose definitive registration the registry director has doubts, shall be registered provisionally upon the request of the persons concerned. However, if the persons concerned do not prove within three months that they have applied to the court or that they have reached an agreement between themselves, the provisional registration shall be deleted ex officio. If an application is made to the court, action shall be taken in accordance with the outcome of the final judgment.

2. Summons to register and penalty

Article 33 – (1) A registry director who learns of a matter whose registration is mandatory but whose registration has not been requested in the statutory form and within the time limit, or which does not comply with the conditions in the third paragraph of Article 32, shall summon the persons concerned, within an appropriate period to be determined by him or her, to fulfil their statutory obligations or to prove that the reasons requiring the registration of that matter do not exist.

(2) (Amended: 26/6/2012-6335/4 art.) A person who does not request registration within the period granted by the registry director and does not notify his or her reasons for refusal either shall be punished, upon the proposal of the registry director, by the highest local administrative authority with an administrative fine of one thousand (22.194) Turkish liras.¹⁶

(3) Where the reasons for refusal are notified within the time limit, the commercial court of first instance having jurisdiction to hear commercial cases at the place where the registry is located shall, after examining the file, order the registry director to register the matter if it concludes that there is a matter requiring registration; otherwise it shall reject the request for registration. The punishment, with the penalty in the second paragraph, of a person who does not request registration within the time limit or does not notify his or her reasons for refusal does not prevent the application of the provision of this paragraph.

3. Objection

Article 34 – (1) The persons concerned may, within eight days from their notification, file an objection by petition against the decisions to be given by the registry directorate in relation to requests for registration, amendment or deletion, with the commercial court of first instance having jurisdiction to hear commercial cases at the place where the registry is located.

(2) This objection shall be decided by the court upon examination of the file. However, if the decision of the registry director is contrary to the interests of third parties relating to matters recorded in the registry, the objecting party and the third party shall also be heard. If they do not appear before the court, a decision shall be given on the file.

III – Publicity

Article 35 – (1) The petition, declaration, instruments, documents and newspapers containing the announcements which form the basis of the registration transaction shall be kept by the registry directorate, with the date and numbers of the registry book written on them.

(2) Everyone may examine the contents of the trade registry and all instruments and documents kept in the directorate and may also obtain certified copies thereof upon payment of the cost. A certified document as to whether or not a matter is recorded in the registry may also be requested.

(3) Registered matters shall be announced, unless there is a provision to the contrary in the law or in the regulation to be issued pursuant to Article 26 of the Code.¹⁷

(4) The announcement shall be made in the Turkish Trade Registry Gazette, which is specific to the announcement of registry records throughout Türkiye.

IV – Effects

1. Effect of registration and announcement on third parties

Article 36 – (1) Trade registry records, wherever they may be located, shall produce their legal effects in respect of third parties from the business day following the day on which the registration is announced in the Turkish Trade Registry Gazette or, if the whole announcement has not been published in the same issue, the day on which its last part is published. These days shall also be the starting point for time limits which are to begin running from the date of the announcement of the registration.

(2) Special provisions to the effect that a matter shall produce effects in respect of third parties immediately upon registration, or that time limits shall begin to run immediately, are reserved.

(3) Claims of third parties that they did not know of registry records which have begun to produce effects against them shall not be heard.

(4) A matter which has not been registered although its registration is mandatory, or which has been registered but not announced although its announcement is mandatory, may be asserted against third parties only if it is proved that they knew or ought to have known of it.

2. Reliance on appearance

Article 37 – (1) In the event of a discrepancy between the registry entry and the situation announced, the reliance of third parties on the announced situation shall be protected, unless it is proved that they knew the true situation that was registered.

3. Liability

Article 38 – (1) (Amended first sentence: 26/6/2012-6335/5 art.) Persons who make untrue declarations for registration and recording shall be punished with an administrative fine of two thousand (44.443) Turkish liras. The rights to compensation of those who suffer damage due to untrue registration are reserved. ¹⁸

(2) Persons who do not request the correction of records although they have learned that the records do not comply with the provisions of the third paragraph of Article 32, and persons who, being obliged, by reason of the change, termination or removal of a registered matter, to request the amendment or deletion of the entry or to have registered a matter requiring re-registration, fail to do so, are obliged to compensate the damage suffered by third parties due to these faults.

PART THREE

Trade Name and Business Name

A) Trade name

I – Obligation to use

1. In general

Article 39 – (1) Every merchant is obliged to carry out the transactions relating to his or her commercial enterprise under his or her trade name and to sign the instruments and other documents relating to his or her enterprise under this name.

(2) (Amended first sentence: 26/6/2012-6335/6 art.) The registered trade name shall be written legibly at a visible place of the commercial enterprise. The merchant’s registry number, trade name, the seat of his or her enterprise and, if the merchant is subject to the obligation to create a website, the address of the registered website shall also be indicated in the commercial letters drawn up by the merchant in relation to his or her enterprise and in the documents on which the entries made in the commercial books are based. All this information shall also be published on the company’s website. On this website, there shall furthermore be published, in joint stock companies, the names and surnames of the chairperson and members of the board of directors and the amount of capital subscribed and paid in; in limited liability companies, the names and surnames of the managers and the amount of capital subscribed and paid in; and in partnerships limited by shares, the names and surnames of the managing partners and the amount of capital subscribed and paid in.

2. Registration

Article 40 – (1) Every merchant shall, within fifteen days from the day on which the commercial enterprise is opened, have his or her commercial enterprise and the trade name he or she has chosen registered and announced in the trade registry of the place where the seat of the enterprise is located.

(2) (Amended: 28/1/2021-7263/22 art.) The signatures of a merchant who is a natural person and of those authorised to sign on behalf of a merchant which is a legal entity shall be obtained electronically from the signature data kept in the databases of public institutions and organisations and recorded in the registry file in the central common database. Where there is no signature record in the databases of public institutions and organisations, the procedures and principles concerning the submission to the trade registry directorate of the signature declarations of persons authorised to sign, and other procedures and principles concerning the implementation of this Article, shall be determined by a communiqué to be issued by the Ministry of Trade.

(3) Branches of commercial enterprises whose seat is in Türkiye shall also be registered and announced in the trade registry of the place where they are located. The provisions of the first and second paragraphs concerning the trade name and specimen signatures shall also apply to these enterprises. Unless there is a provision to the contrary in the Code, entries made in the registry to which the head office is attached shall also be registered in the registry to which the branch is attached. However, in this respect the registry directorate of the place where the branch is located is under no obligation to carry out a separate examination.

(4) Branches in Türkiye of commercial enterprises whose seat is outside Türkiye shall be registered in the same way as domestic commercial enterprises, subject to the provisions of the laws of their own countries concerning trade names. For these branches, a fully authorised commercial representative (procurist) domiciled in Türkiye shall be appointed. If the commercial enterprise has more than one branch, the branches to be opened after the registration of the first branch shall be registered in the same way as branches of domestic commercial enterprises.

II – Form of the trade name

1. Natural persons

Article 41 – (1) The trade name of a merchant who is a natural person consists of his or her name and surname, to be written without abbreviation, together with the additions which he or she may make in accordance with Article 46.

2. Legal entities

a) General and limited partnerships

Article 42 – (1) The trade name of a general partnership shall contain the name and surname of all the partners or of at least one of the partners, together with an expression indicating the company and its type.

(2) The trade name of ordinary limited partnerships or of partnerships limited by shares shall contain the name and surname of at least one of the general (unlimited) partners, together with an expression indicating the company and its type. The names and surnames or trade names of the limited partners may not appear in the trade names of these companies.

b) Joint stock, limited liability and cooperative companies

Article 43 – (1) Joint stock, limited liability and cooperative companies may freely choose their trade names, provided that the subject of the enterprise is indicated and subject to the provision of Article 46.

(2) It is a requirement that the words “anonim şirket” (joint stock company), “limited şirket” (limited liability company) and “kooperatif” (cooperative) appear in their trade names. Where the name or surname of a natural person appears in the trade name of these companies, the expressions indicating the type of company may not be written in abbreviated form by initials or in any other manner.

c) Other legal entities deemed merchants and joint ownership of a ship

Article 44 – (1) The trade names of associations, foundations and other legal entities owning a commercial enterprise are their names.

(2) The trade name of a joint ownership of a ship shall contain the name and surname of at least one of the co-owning shipowners or the name of the ship used in maritime commerce. Surnames and the name of the ship may not be abbreviated. The trade name shall furthermore contain an expression indicating the joint ownership of a ship.

d) Common provisions

Article 45 – (1) Where it is necessary in order to distinguish a trade name from another name previously registered in any registry office in Türkiye, an addition shall be made to it.

3. Additions

Article 46 – (1) Provided that they are not of such a nature as to cause a false opinion to be formed by third parties as to the identity of the merchant or the size, importance and financial situation of his or her enterprise, and that they are not contrary to the truth or to public order, additions specifying the characteristics of the enterprise, indicating the identity of the persons appearing in the name, or consisting of fictitious names may be made to any trade name.

(2) Natural persons who engage in trade on their own may not make additions to their trade names which would give the impression that a company exists.

(3) The words “Türk”, “Türkiye”, “Cumhuriyet” and “Millî” may be included in a trade name only by Presidential decision.¹⁹

4. Continuation of the trade name

Article 47 – (1) If the name of the owner of the commercial enterprise or of a partner appearing in the trade name changes by operation of law or is changed by the competent authorities, the name may remain as it is.

(2) In the event of new partners joining a general or limited partnership or a joint ownership of a ship, the trade name may remain as it is without being changed. Upon the death of a partner whose name is included in the trade name of one of these companies, if his or her heirs take his or her place and accept the continuation of the company, or, although not joining the company, notify their consent on this matter in writing, the company name may be left as it is. The name of a partner who leaves the company may also remain in the company name, provided that his or her written consent is obtained.

5. Branches

Article 48 – (1) Every branch is obliged to use the trade name of its head office, indicating that it is a branch. Additions relating to the branch may be made to this name.

(2) Articles 41 and 45 shall also apply to the trade name of the branch.

(3) In the trade name of the branch in Türkiye of an enterprise whose head office is in a foreign country, it is a requirement that the places where the head office and the branch are located, and the fact that it is a branch, be indicated.

6. Transfer of the trade name

Article 49 – (1) A trade name may not be transferred to another person separately from the enterprise.

(2) The transfer of an enterprise results in the transfer of the name as well, unless otherwise expressly agreed. In the event of transfer, the transferee has the right to use the name as it is.

III – Protection of the trade name

1. Principle

Article 50 – (1) The right to use a trade name that has been duly registered and announced belongs exclusively to its owner.

2. Notification and penalty

Article 51 – (1) All courts, civil servants, chambers of commerce and industry, notaries and the Turkish Patent Institute are obliged, if they learn while performing their duties that a trade name has not been registered, or has been registered or is being used contrary to the provisions of the law, to notify the competent authorities of the situation.²⁰

(2) (Amended: 26/6/2012-6335/7 art.) Persons who violate Articles 39 to 45 or Article 48 shall be punished with an administrative fine of two thousand (44.443) Turkish liras.²¹

(3) (Added: 26/6/2012-6335/7 art.) Persons who violate Article 46, or who transfer a trade name contrary to Article 49, and the persons who acquire and use it, shall be punished with imprisonment from three months to two years or a judicial fine.

3. Rights of the person whose name is infringed

Article 52 – (1) Where a trade name is used by another person in a manner contrary to commercial honesty, the right holder may request a declaration and prohibition of this; if the unlawfully used trade name has been registered, its amendment in a manner compliant with the law or its deletion; the removal of the material situation resulting from the infringement; where necessary, the destruction of the instruments and the goods concerned; and, if there is damage, material and non-material compensation according to the gravity of the fault. As material compensation, the court may also award an amount equivalent to the benefit which the infringer could possibly have obtained as a result of the infringement.

(2) The court may, upon the request of the party who wins the action, also decide that the judgment be published in a newspaper, the costs to be borne by the person against whom judgment is given.

B) Business name

Article 53 – (1) Names used directly to identify the enterprise and to distinguish it from similar enterprises, without relation to the owner of the enterprise, must also be registered by their owners. Articles 38, 45, 47, 50, 51 and 52 shall also apply to registered business names.

PART FOUR

Unfair Competition

A) In general

I – Purpose and principle

Article 54 – (1) The purpose of the provisions of this Part on unfair competition is to ensure fair and undistorted competition in the interest of all participants.

(2) Deceptive conduct, or conduct which in other ways is contrary to the rule of good faith, and commercial practices affecting the relations between competitors or between suppliers and customers are unfair and unlawful.

II – Conduct and commercial practices contrary to the rule of good faith

Article 55 – (1) The following are the principal cases of unfair competition:

a) Advertising and sales methods contrary to the rule of good faith and other unlawful conduct, and in particular:

1. Disparaging others or their goods, work products, prices, activities or business affairs by false, misleading or unnecessarily hurtful statements,

2. Making untrue or misleading statements about oneself, one’s commercial enterprise, business signs, goods, work products, activities, prices, stocks, the form of sales campaigns and business relations, or giving a third party an advantage in competition by the same means,

3. Attempting to create the belief that one possesses exceptional ability by acting as if one held titles, diplomas or awards although one has not received them, or using untrue professional titles and symbols suitable for this purpose,

4. Taking measures leading to confusion with the goods, work products, activities or business of another,

5. Comparing oneself, one’s goods, work products, activities or prices with others, their goods, work products or prices in a manner that is untrue, misleading, unnecessarily disparaging of the competitor or unnecessarily exploits the competitor’s reputation, or giving a third party an advantage by similar means,

6. Repeatedly offering for sale selected goods, work products or activities below the purchase price, specially emphasising these offers in its advertising and thereby misleading customers as to its own ability or that of its competitors; provided, however, that if the sale price is below the purchase price applied in the purchase of goods, work products or activities of the same kind in similar volumes, the existence of misleading shall be presumed; if the defendant proves the actual purchase price, this price shall form the basis of the assessment,

7. Misleading the customer about the actual value of the offer by means of additional performances,

8. Restricting the customer’s freedom to make decisions, in particular by aggressive sales methods,

9. Concealing the characteristics, quantity, intended uses, benefits or dangers of goods, work products or activities and thereby misleading the customer,

10. In public announcements concerning instalment sale contracts or similar legal transactions, failing to state clearly its trade name, or failing to state the cash or total sale price or the additional cost arising from the instalment sale in Turkish liras and in annual rates,

11. In public announcements concerning consumer loans, failing to state clearly its trade name or failing to make clear statements concerning the net amounts of the loans, their total costs and their effective annual interest rates,

12. Within the scope of the activities relating to its enterprise, offering or concluding instalment sale or consumer loan contracts and in this context using contract forms which contain incomplete or incorrect information concerning the subject of the contract, the price, the terms of payment, the contract period, the customer’s right of withdrawal or termination or the right to pay the remaining debt before maturity.

b) Inducing breach or termination of contract; in particular:

1. Inducing customers to act in breach of contracts they have concluded with others, so that one may conclude contracts with them oneself,

2. Attempting to obtain an advantage for oneself or for others by providing or offering to the employees, agents and other auxiliary persons of third parties benefits which they do not deserve and which may induce them to act in breach of their obligations in the performance of their work,

3. Inducing employees, agents or other auxiliary persons to disclose or obtain the production and business secrets of their employers or principals,

4. Inducing a buyer or borrower who has concluded an instalment sale, a cash sale or a consumer loan contract to withdraw from that contract, or a buyer who has concluded a cash sale contract to terminate that contract, so that one may conclude such a contract with that person oneself.

c) Unauthorised use of the work products of others; in particular:

1. Making unauthorised use of a work product entrusted to oneself, such as an offer, calculation or plan,

2. Making use of a work product belonging to third parties, such as an offer, calculation or plan, although it ought to be known that it has been entrusted or provided to oneself without authorisation,

3. Taking over and making use of another’s market-ready work products by technical reproduction methods without an appropriate contribution of one’s own.

d) Unlawfully disclosing production and business secrets; in particular, a person who exploits or communicates to others information which he or she has obtained secretly and without permission or has learned in some other unlawful manner, and the business secrets of the producer, acts contrary to good faith.

e) Failing to comply with conditions of work; in particular, persons who do not comply with conditions of work that are also imposed on competitors by law or contract or that are customary in a branch of profession or in a locality act contrary to good faith.

f) Using transaction terms contrary to the rule of good faith. In particular, persons who use pre-formulated general transaction terms which, in a misleading manner to the detriment of the other party,

1. Deviate to a significant extent from the statutory regulation applicable directly or by way of interpretation, or

2. Provide for a distribution of rights and obligations significantly contrary to the nature of the contract, act contrary to good faith.

B) Civil liability

I – Various actions

Article 56 – (1) A person whose customers, credit, professional reputation, commercial activities or other economic interests are damaged, or who may face such a danger, as a result of unfair competition may request

a) A declaration as to whether or not the act is unfair,

b) The prohibition of the unfair competition,

c) The removal of the material situation resulting from the unfair competition, the correction of the statements if the unfair competition was committed by false or misleading statements and, if unavoidable in order to prevent the infringement, the destruction of the instruments and goods instrumental in the commission of the unfair competition,

d) If there is fault, compensation for loss and damage,

e) The award of non-material compensation where the conditions provided for in Article 58 of the Turkish Code of Obligations exist.

In favour of the plaintiff and as compensation pursuant to subparagraph (d), the judge may also award an amount equivalent to the benefit which the defendant could possibly have obtained as a result of the unfair competition.

(2) Customers whose economic interests are damaged or who may face such a danger may also file the actions in the first paragraph, but may not request the destruction of the instruments and goods.

(3) Chambers of commerce and industry, chambers of tradesmen, commodity exchanges and other professional and economic unions which are authorised under their statutes to protect the economic interests of their members, as well as civil society organisations protecting the economic interests of consumers under their statutes and institutions of a public nature, may also file the actions set out in subparagraphs (a), (b) and (c) of the first paragraph.

(4) A judgment given against a person pursuant to subparagraphs (b) and (c) of the first paragraph shall also be enforced against persons who have acquired the goods that are the subject of the unfair competition from that person, directly or indirectly, for commercial purposes.

II – Liability of the employer

Article 57 – (1) If the act of unfair competition is committed by staff or employees while performing their services or work, the actions set out in subparagraphs (a), (b) and (c) of the first paragraph of Article 56 may also be filed against the employers.

(2) The provisions of the Turkish Code of Obligations shall apply to the actions set out in subparagraphs (d) and (e) of the first paragraph of Article 56.

III – Liability of press, broadcasting, communication and information technology organisations

Article 58 – (1) If unfair competition has been committed through any kind of press, broadcasting, communication and information technology enterprises, or through organisations which will commence operation as a result of future technical developments, the actions set out in subparagraphs (a), (b) and (c) of the first paragraph of Article 56 may be filed only against the owners of what is published in the press, of the programme, of what is displayed on screen, on an information technology device or in similar media, of what is broadcast as sound or of what is transmitted in any manner, and against the persons placing the advertisement; however:

a) If what is published in the written press, the programme, content, image, sound or message has been published without the knowledge of their owners or of the advertiser or contrary to their consent,

b) If disclosure of the identity of the owner or of the advertiser of what is published in the written press, of the programme, image, sound or message is refused,

c) If, for other reasons, it is not possible to identify the owner or the advertiser of what is published in the written press, of the programme, image, sound or message, or to file an action against them before a Turkish court,

the above-mentioned actions may be filed against the editor-in-chief, the general broadcasting director, the programme producer, the person who places or causes to be placed the image, sound or message on the broadcasting, communication and information technology medium, and the head of the advertising service; and, if these cannot be identified, against the owner of the enterprise or organisation.

(2) Except in the cases provided for in the first paragraph, an action may be filed, irrespective of the order, in the event of fault on the part of one of the persons listed in the same paragraph.

(3) In the actions set out in subparagraphs (d) and (e) of the first paragraph of Article 56, the provisions of the Turkish Code of Obligations shall apply.

(4) If the service provider has not initiated the transmission of the act of unfair competition, has not selected the recipient of the transmission or the content constituting the act, or has not modified it in such a way as to carry out the act, the actions in the first paragraph of this Article may not be filed against the service provider, and no interim measure may be ordered. In cases where the adverse consequences of the act of unfair competition are extensive or the damage it will cause is great, the court may, after also hearing the service provider concerned, order an interim measure for the termination or prevention of the act of unfair competition against the service provider as well, or may take other applicable measures appropriate to the specific case, including the temporary removal of the content.

IV – Announcement of the judgment

Article 59 – (1) The court may, upon the request of the party who wins the action, also decide that the judgment be announced after it has become final, the cost to be collected from the losing party. The court shall determine the form and scope of the announcement.

V – Statute of limitations

Article 60 – (1) The actions set out in Article 56 shall become time-barred upon the expiry of one year from the day on which the party entitled to bring the action learns of the arising of these rights and, in any event, three years from their arising. However, if the act of unfair competition is at the same time an act requiring a penalty subject to a longer prosecution limitation period under the Turkish Penal Code No. 5237 dated 26/9/2004, this period shall also apply to civil actions.

VI – Interim measures

Article 61 – (1) Upon the request of a person entitled to file an action, the court may, in accordance with the provisions of the Code of Civil Procedure on interim measures, decide on the preservation of the existing situation as it is, the removal of the material situation resulting from unfair competition as provided for in subparagraphs (b) and (c) of the first paragraph of Article 56, the prevention of unfair competition, the correction of false or misleading statements, and other measures.

(2) Furthermore, goods that are the subject of unfair competition requiring a penalty, where they constitute an infringement of the powers of the right holder, may be seized as an interim measure by the customs administrations during import or export upon the request of the right holder.

(3) Implementation relating to seizure is subject to the legislation on this matter.

(4) If, within ten days from the notification of the measure or seizure decision at the customs administrations, no action on the merits is filed with the relevant court or no decision in the nature of an interim measure is obtained from the court, the seizure decision of the administration shall cease to have effect.

C) Criminal liability

I – Acts requiring a penalty

Article 62 – (1) a) Persons who intentionally commit one of the acts of unfair competition set out in Article 55,

b) Persons who intentionally give false or misleading information about their personal situation, products, work products, commercial activity and business in order that their own offers and proposals be preferred to those of their competitors,

c) Persons who deceive employees, agents or other auxiliary persons in order to obtain the production or trade secrets of their employer or principals,

d) Employers or principals who, having learned that their workers or employees or agents have committed an act of unfair competition requiring a penalty while performing their work, do not prevent this act or do not correct the untrue statements,

shall, provided that the act does not constitute another offence requiring a heavier penalty, be punished, upon the complaint of one of the persons entitled to file a civil action under Article 56, with imprisonment of up to two years or a judicial fine for the acts falling within the scope of each subparagraph.

II – Criminal liability of legal entities

Article 63 – (1) If an act of unfair competition is committed in the course of the business of legal entities, the provision of Article 62 shall apply to the members or partners of the organ who acted or should have acted on behalf of the legal entity. Where the act of unfair competition is committed within the scope of the activity of a legal entity, the security measures specific to legal entities may also be ordered against the legal entity.

PART FIVE

Commercial Books

A) Bookkeeping and inventory

I – Obligation to keep books

Article 64 – (1) (Amended: 26/6/2012-6335/8 art.) Every merchant is obliged to keep commercial books and to set out in his or her books, in a clearly visible manner in accordance with this Code, his or her commercial transactions and the economic and financial situation of his or her commercial enterprise, his or her debt and receivable relationships and the results obtained in each accounting period. The books shall be kept in such a manner as to give third-party experts, in an examination carried out within a reasonable time, an overview of the activities and financial situation of the enterprise. It must be possible to trace the formation and development of the enterprise’s activities from the books.

(2) The merchant is obliged to keep a copy, in the form of a photocopy, carbon copy, microfiche, computer record or similar form, of every kind of document sent in relation to his or her enterprise, in written, visual or electronic form.

(3) (Amended: 26/6/2012-6335/8 art.) The opening certifications of the journal, the general ledger and the inventory book kept in physical form, and of the books listed in the fourth paragraph, shall be made by a notary at the time of incorporation and before they begin to be used. The opening certifications of these books in the subsequent operating periods shall be made by a notary by the end of the month preceding the first month of the operating period in which the books are to be used. The share ledger and the general assembly meeting and minutes book may, provided that they have sufficient pages, continue to be used in the subsequent operating periods without an opening certification being made. (Amended fourth sentence: 28/3/2013-6455/78 art.) The closing certification of the journal shall be made by a notary by the end of the sixth month of the subsequent operating period, and the closing certification of the board of directors’ resolution book by the end of the first month of the subsequent operating period. (Repealed fifth sentence: 15/2/2018-7099/22 art.) (…) In cases where the opening certification is made by a notary, the notary is obliged to require the trade registry certificate. (Added sentence: 15/2/2018-7099/22 art.) However, during the registration of joint stock and limited liability companies in the trade registry, the opening certifications of the books shall be made by the trade registry directorates. Where the commercial books are kept in electronic form, no notary or trade registry directorate certification shall be required for the opening of these books or for the closing of the journal and the board of directors’ resolution book. The manner in which commercial books kept in physical or electronic form are to be kept, the time of recording in the books, the renewal of certification and the form and principles of opening and closing certifications shall be determined by a communiqué issued jointly by the Ministry of Customs and Trade and the Ministry of Finance.²²

(4) Books not related to the accounting of the enterprise, such as the share ledger, the board of directors’ resolution book and the general assembly meeting and minutes book, are also commercial books. (Added sentences: 27/12/2020-7262/27 art.) The Ministry of Trade may make it mandatory for the share ledger, the board of directors’ resolution book and the general assembly meeting and minutes book to be kept in electronic form. The provisions of the Capital Markets Law are reserved.

(5) (Amended: 26/6/2012-6335/8 art.) Natural and legal persons subject to this Code are obliged to comply with the provisions of the Tax Procedure Law No. 213 dated 4/1/1961 concerning bookkeeping and the time of recording, and with the regulations made on the basis of the authority set out in Article 175 and repeated Article 257 of the same Law. The provisions of this Code on bookkeeping, inventory, the preparation of financial statements, capitalisation, provisions, accounts, valuation, retention and submission do not prevent the application of the provisions of Law No. 213 and of other tax laws regulating the same matters, the determination of the tax base in accordance with the tax laws or the preparation of financial statements for this purpose.

II – Keeping of books

Article 65 – (1) The books and other required records shall be kept in Turkish. Where abbreviations, figures, letters and symbols are used, their meanings must be clearly indicated.

(2) Entries in the books and other required records shall be made completely, accurately, in a timely manner and in an orderly fashion.

(3) An entry or record may not be struck through or altered in such a way that its previous content cannot be determined. Alterations of which it cannot be understood whether they were made at the time of recording or later are prohibited.

(4) The books and other required records may be kept in the form of filing the documents establishing facts and transactions, or by means of data carriers. (…)²³ Where the books and other required records are kept in electronic form, it is a requirement that access to them be ensured throughout the retention period of the information and that they can be easily read at any time during this period. In the case of keeping in electronic form, the provisions of the first to third paragraphs shall apply by analogy.

III – Inventory

Article 66 – (1) Every merchant shall, upon the opening of his or her commercial enterprise, draw up an inventory showing completely and accurately his or her immovables, receivables, debts, the amount of his or her cash and other assets, and specifying the values of his or her assets and debts one by one.

(2) After the opening, the merchant shall also draw up such an inventory at the end of each operating period. The operating period, or, in another statutory term, the financial year, may not exceed twelve months. The inventory shall be drawn up within the period consistent with the course of orderly business activity.

(3) Assets included in tangible fixed assets, as well as raw and auxiliary materials and operating supplies, shall, if they are regularly replaced and their total value is of secondary importance for the enterprise, be entered in the inventory at a constant quantity and value; provided that their stocks have undergone only minor changes in quantity, value and composition. However, as a rule, a physical count must be carried out once every three years.

(4) Stock items of the same type, other movable asset components of the same nature or of approximately the same value, and debts may be combined in separate groups and entered in the inventory at a weighted average value.

IV – Methods facilitating the inventory

Article 67 – (1) When the inventory is drawn up, the existing assets shall be determined by type, quantity and value according to the sampling method and with the aid of generally accepted mathematical-statistical methods. The method used must comply with the Turkish Accounting Standards. The results reached by an inventory drawn up in this manner must correspond to the results of the inventory that would have been obtained if a physical count had been carried out.

(2) A physical inventory is not necessary if, in drawing up the closing inventory of an operating period, the reliable determination of the existing assets by kind, quantity and value can be ensured through the application of another method compliant with the Turkish Accounting Standards.

(3) At the closing of the operating period, if the asset items have been shown, by kind, quantity and value, in a special inventory drawn up as at a day falling within the three months before or the two months after the closing of the operating period, using a physical count or another procedure permitted under the second paragraph, and if, furthermore, on the basis of this special inventory and by a forward-looking estimation method compliant with the Turkish Accounting Standards, the valuation of the assets existing at the end of the operating period as at the end of that operating period is carried out correctly, there is no need for an inventory of the assets to be made.

B) Opening balance sheet, year-end financial statements

I – General provisions

1. Obligation to prepare

Article 68 – (1) The merchant is obliged, at the beginning of his or her commercial activity and at the end of each operating period, to draw up the financial statement showing the relationship between the amounts of his or her assets and debts (respectively, the opening balance sheet and the annual balance sheet). The provisions of the year-end financial statements relating to the year-end balance sheet shall apply to the opening balance sheet.

(2) The merchant shall prepare the income statement.

(3) The balance sheet and the income statement form the year-end financial statements. The provisions of Article 514 and of the Turkish Accounting Standards on this matter are reserved.

2. Principles of preparation

Article 69 – (1) Year-end financial statements

a) Must be prepared in compliance with the Turkish Accounting Standards,

b) Must be clear and comprehensible,

c) Must be drawn up within the period required by the course of orderly business activity.

3. Language and currency

Article 70 – (1) Year-end financial statements shall be prepared in Turkish and in Turkish liras. The exceptions contained in other laws on this matter are reserved.

4. Signature

Article 71 – (1) The financial statements shall be dated and signed by the merchant.

II – Principles relating to items

1. Completeness and prohibition of set-off

Article 72 – (1) Subject to statutory provisions to the contrary and to the Turkish Accounting Standards, it is mandatory that the financial statements show all the assets, debts, prepaid expenses and income collected in advance, in technical terms the accrual (deferral) accounts, and all income and expenses of the commercial enterprise, correctly valued. Asset components acquired subject to retention of title and pledged or otherwise given as security for the debts of the enterprise itself or of third parties shall be shown in the balance sheet of the party providing the security. In cases involving cash deposits, these shall appear in the balance sheet of the party receiving the security. The provisions on financial leasing are reserved.

(2) Asset items may not be set off against liability items, expenses against income, or rights relating to immovables against the encumbrances relating to them.

2. Content of the balance sheet

Article 73 – (1) Unless otherwise provided in the Turkish Accounting Standards, fixed and current assets, equity, debts and accrual accounts shall be shown as separate items in the balance sheet and shall be structured in sufficient detail.

(2) Fixed assets shall include the assets permanently allocated to the enterprise.

3. Prohibition of capitalisation

Article 74 – (1) Unless otherwise provided in the Turkish Accounting Standards, no asset item may be entered in the balance sheet for expenditure incurred for the establishment of the enterprise and for the purpose of procuring equity.

(2) No item may be entered on the asset side of the balance sheet for intangible fixed assets acquired free of charge, unless otherwise provided in the Turkish Accounting Standards.

(3) Expenses necessary for the conclusion of insurance contracts may not be capitalised, unless otherwise provided in the Turkish Accounting Standards.

4. Provisions

Article 75 – (1) Provisions shall be set aside, in accordance with the rules provided for in the Turkish Accounting Standards, for liabilities whose occurrence is uncertain and for probable losses that may arise from pending transactions.

5. Accrual accounts

Article 76 – (1) The Turkish Accounting Standards shall apply to expenditure which will become an expense within a certain period after the balance sheet date and to collections which will constitute an income item.

6. Contingent liabilities

Article 77 – (1) Liabilities arising from the issuance of promissory notes and from the issuance and transfer of bills of exchange and cheques, from the acceptance of bills of exchange, from suretyships, from avals, from guarantee contracts, from confirmations of letters of credit, from security given for the debts of third parties and from undertakings in favour of third parties, as well as other liabilities provided for in the Turkish Accounting Standards, shall, if they are not shown on the liabilities side, be disclosed below the balance sheet or in the notes in accordance with the Turkish Accounting Standards. Liability relationships relating to receivables and debts arising from recourse shall also be specified in the notes.

III – Valuation principles

1. General valuation principles

Article 78 – (1) With regard to the assets and liabilities shown in the financial statements, the following valuation principles shall apply, without being limited to those below and taking into account also the principles provided for in the Turkish Accounting Standards:

a) The values in the closing balance sheet of the preceding period and the values in the opening balance sheet of the financial period must be identical.

b) Unless contrary to the factual or legal situation, valuations shall proceed on the basis of the continuity of the activity of the enterprise.

c) On the balance sheet closing day, assets and liabilities shall be valued item by item.

d) Valuation must be made with prudence; in particular, all probable risks and losses that have arisen up to the balance sheet date shall be taken into account even if they have become known between the balance sheet date and the date on which the year-end financial statements are drawn up; gains shall be taken into account if they have been realised as of the balance sheet date. In associating positive and negative valuation differences with the results of the period, the principles in the Turkish Accounting Standards shall be complied with.

e) The expenses and income of the financial year shall be included in the year-end financial statements irrespective of the dates of payment and collection.

f) The methods applied in the previous year-end financial statements shall be maintained.

(2) In the cases provided for in the standards and in exceptional circumstances, the principles in the first paragraph may be departed from.

2. Valuation measures for assets and liabilities

Article 79 – (1) Fixed and current assets shall be valued in accordance with the Turkish Accounting Standards according to the measures set out in those standards. The same standards shall also apply to liabilities and other items.

3. Acquisition and production values

Article 80 – (1) The determination of the values to be applied in valuation, their definitions and scope, the indication of the items to which they are to be applied, and changes thereto are subject to the Turkish Accounting Standards.

4. Methods simplifying valuation

Article 81 – (1) Where the conditions are fulfilled, the methods simplifying valuation provided for in the Turkish Accounting Standards shall be applied.

C) Retention and production

I – Retention of documents, retention period

Article 82 – (1) Every merchant;

a) Its commercial books, inventories, opening balance sheets, interim balance sheets, financial statements, annual activity reports, group financial statements and annual activity reports, and the working instructions and other organisational documents that facilitate the comprehensibility of these documents,

b) Commercial letters received,

c) Copies of commercial letters sent,

d) The documents on which the entries made pursuant to the first paragraph of Article 64,

is obliged to retain these in a classified manner.

(2) Commercial letters are all correspondence relating to a commercial transaction.

(3) With the exception of opening and interim balance sheets, financial statements and group financial statements, the documents listed in the first paragraph may, provided that this is also in conformity with the Turkish Accounting Standards, be retained on image or data carriers, on condition that:

a) When rendered readable, they correspond in content to the commercial letters received and the supporting documents of the books, as well as to visual and other documents;

b) The records are accessible at any time throughout the retention period and can be rendered readable within a reasonable time.

(4) If the records are transferred to an electronic medium pursuant to the second sentence of the fourth paragraph of Article 65, the information may also be retained in printed form instead of on computer. Such printed information may also be retained in accordance with the first sentence.

(5) The documents provided for in subparagraphs (a) to (d) of the first paragraph shall be retained for ten years.

(6) The retention period shall begin with the end of the calendar year in which the last entry was made in the commercial books, the inventory was taken, the interim balance sheet was drawn up, the year-end financial statements were prepared and the consolidated financial statements were prepared, the commercial correspondence was made or the accounting documents came into existence.

(7) If the books and documents that a merchant is obliged to retain are lost within the statutory retention period due to a disaster such as fire, flood or earthquake, or due to theft, the merchant may, within thirty days from the date on which it learns of the loss, request the competent court of the place where its commercial enterprise is located to issue it a document. This action shall be brought without an opposing party. The court may also order the collection of the evidence it deems necessary.²⁴

(8) In the event of the death of a merchant who is a natural person, its heirs, and in the event that it abandons trade, the merchant itself, are obliged to retain the books and papers in accordance with the first paragraph. In the event of the official liquidation of the estate or if the legal entity has ceased to exist, the books and papers shall be retained by the civil court of peace for ten years in accordance with the first paragraph.

II – Production in legal disputes

Article 83 – (1) In commercial disputes, the court may, ex officio or upon the request of one of the parties, decide on the production of the commercial books of the parties, even if they are foreign natural or legal persons.

(2) The provisions of the Code of Civil Procedure relating to preparatory acts in actions requiring adjudication and the provisions concerning the obligation to produce instruments shall also apply in commercial matters.

III – Taking of copies in disputes

Article 84 – (1) If the commercial books have been produced in a legal dispute, the parts of the books relating to the dispute shall be examined with the participation of the parties. If deemed necessary, copies shall be taken of the relevant pages of the books. (Repealed last sentence: 26/6/2012-6335/43 art.) (…)

IV – Examination of the books in their entirety

Article 85 – (1) In disputes relating to property law, in particular those relating to inheritance, community of property and the liquidation of a company, the court may decide on the delivery of the commercial books and the examination of their entire contents.

V – Production of documents transferred to image and data carriers

Article 86 – (1) A person who is able to produce documents that are required to be retained only by means of an image or other data carrier is obliged to keep available for use, at its own expense, the auxiliary means necessary for those documents to be read; where necessary, it must have the documents printed at its own expense and be able to submit copies that can be read without the need for auxiliary means.

VI – Application for those newly commencing trade

Article 87 – (1) For owners of enterprises who are obliged to have their enterprise registered in the trade registry, the provisions of this Part shall apply from the moment the obligation to have it registered in the trade registry arises.

VII – Authority of the Public Oversight, Accounting and Auditing Standards Authority²⁵

Article 88 – (Amended: 26/6/2012-6335/9 art.)

(1) Natural and legal persons subject to the provisions of Articles 64 to 88 are obliged, when drawing up their individual and consolidated financial statements, to comply with and apply the Turkish Accounting Standards published by the Public Oversight, Accounting and Auditing Standards Authority, the accounting principles set out in the conceptual framework and the interpretations forming an integral part thereof. Articles 514 to 528 and the other relevant provisions of this Law are reserved.

(2) These rules shall be determined and published solely by the Public Oversight, Accounting and Auditing Standards Authority, in a manner compatible with international standards, for the purpose of ensuring uniformity in practice and conferring validity on financial statements in international markets.

(3) The Public Oversight, Accounting and Auditing Standards Authority is authorised to set special and exceptional standards and to make different rules for different enterprise sizes, sectors and non-profit organisations. These standards and rules shall be deemed part of the Turkish Accounting Standards.

(4) Institutions and boards established by law to regulate and supervise specific fields may, provided that they are in conformity with the Turkish Accounting Standards, make limited detailed rules with regard to the standards that will apply to their own fields.

(5) In cases where there is no provision in the Turkish Accounting Standards, the detailed rules referred to in the fourth paragraph shall be applied, taking into account the field to which they relate, and, where there is no provision in the relevant rules either, the accounting principles generally accepted in international practice shall be applied.

(6) (Added: 2/6/2022-7408/9 art.) The Public Oversight, Accounting and Auditing Standards Authority is authorised to determine and publish the Turkish Sustainability Reporting Standards, in a manner compatible with international standards, for the purpose of ensuring uniformity in practice and the international validity of sustainability reporting for the enterprises and organisations it determines. Institutions and boards established by law to regulate and supervise specific fields may, provided that they are in conformity with the Turkish Sustainability Reporting Standards, make detailed rules with regard to the standards that will apply to their own fields.

PART SIX

Current Account

A) Definition and form

Article 89 – (1) A current account contract is a contract whereby two persons mutually waive the right to claim individually and separately their receivables arising from any legal cause or relationship and, by converting them item by item into credit and debit entries, agree that they may claim the surplus amount resulting after the account is closed.

(2) This contract shall not be valid unless made in writing.

B) Its provisions

I – In general

Article 90 – (1) Without prejudice to the provisions of Article 134 and of the second paragraph of Article 143 of the Turkish Code of Obligations, the provisions of the current account contract are as follows:

a) Unless otherwise agreed, the entry of a receivable or debt in the current account shall not extinguish the parties’ rights of action and defence relating to the contract or transaction giving rise to the receivable or debt. If the contract or transaction is annulled, the items arising therefrom shall be removed from the account.

b) If a receivable that arose before the conclusion of the current account contract is entered in the current account with the consent of the parties, that receivable shall not be novated unless otherwise agreed.

c) The entry of a commercial instrument in the current account shall be deemed to have been made on condition that it is valid if its value has been received.

d) At the end of each account period, after the amounts constituting the credits and debits have been set off against each other, the balance acknowledged or determined by judgment shall be carried to the account as an item belonging to the new account period; if the contract has terminated or the surplus amount has been attached, it must be paid.

e) For amounts entered in the credit column of the current account, interest shall accrue from the date of their entry, in accordance with the contract or commercial custom.

II – Special cases

1. Commercial instruments

Article 91 – (1) A commercial instrument entered in the current account as provided for in Article 90 but whose value could not be received shall be returned to its holder and its entry shall be deleted from the current account.

2. Fees and expenses

Article 92 – (1) The existence of a current account contract between the parties shall not constitute an obstacle to claiming the fee arising from a commission contract and expenses of every kind.

3. Receivables remaining outside the account

Article 93 – (1) Receivables that cannot be set off, and receivables arising from money and goods delivered to be spent for a specific purpose or to be kept separately at disposal, may not be carried to the current account.

III – Balance

1. Its determination

Article 94 – (1) In accordance with the contract or commercial custom, the period account shall be closed at the end of specified account periods and the difference between the credit and debit items shall be determined.

(2) If there is no contract or commercial custom regarding the account period, the last day of each calendar year shall be deemed to have been accepted by the parties as the day of closing the account. The party receiving the statement showing the surplus amount determined shall be deemed to have accepted the balance if it has not raised an objection, within one month from the date of receipt, through a notary, by registered letter, by telegram or by a document bearing a secure electronic signature.

2. Interest

Article 95 – (1) Where the conditions in Article 8 exist, interest shall accrue on the balance resulting from the setting off of the credit and debit items against each other from the date on which it is determined and entered in the account; no practice that may give rise to compound interest may be applied; no contract contrary to this provision may be stipulated.

3. Compound interest and provisions that may be determined by contract

Article 96 – (1) The parties may agree that interest be added to the principal starting from any moment they wish, provided that this is not less than three months, and they may also determine by contract the account periods and the amounts of interest and commission.

(2) The provisions of the second and third paragraphs of Article 8 are reserved.

IV – Principle of unity

Article 97 – (1) The credit and debit items carried to the current account form an indivisible whole. Before the current account is closed, neither party may be regarded as creditor or debtor. The legal position of the parties is determined only by the closing of the account at the end of the contract.

C) Termination of the current account

I – In general

Article 98 – (1) The current account contract;

a) Expiry of the agreed term,

b) Where no term has been agreed, the giving of notice of termination by one of the parties,

c) Bankruptcy of one of the parties,

shall terminate in the above cases.

II – Cases of death and restriction

Article 99 – (1) If the contract is for a fixed term and one of the parties dies or is placed under restriction within that term, both parties and their legal representatives and successors may terminate the current account contract on condition of giving ten days’ prior notice. However, payment of the surplus amount may be claimed on the date on which the account is to be closed pursuant to Article 94.

D) Attachment of the balance

Article 100 – (1) On the day on which a creditor of one of the parties has the surplus amount belonging to that party attached, the account shall be closed and the surplus amount determined.

(2) In this case, if the party on whom the attachment for its debt has been served does not have the attachment lifted within fifteen days, the other party may terminate the contract; if it does not do so, the position of the person who caused the attachment may not be aggravated by carrying new items to the current account, unless the items carried to the account arise from a legal relationship that arose before the date of attachment.

(3) The attaching creditor may claim payment of the part of the balance covering its own receivable only at the moment when the account is to be closed pursuant to Article 94.

E) Statute of limitations

Article 101 – (1) Actions relating to the liquidation of the current account, to the surplus amount accepted or determined by court decision or to interest receivables, to errors and mistakes in the account, to items that should have been kept outside the current account or that were wrongfully carried to the current account, or to duplicated entries shall become time-barred upon the expiry of five years from the termination of the current account contract.

PART SEVEN

Agency

A) In general

I – Definition

Article 102 – (1) An agent is a person who, without having a legal position dependent on the enterprise, such as a commercial representative (procurist), commercial representative, sales clerk or employee of the enterprise, makes it its profession, on the basis of a contract, to act as an intermediary on a continuous basis within a specified place or region in contracts concerning a commercial enterprise, or to conclude such contracts in the name of that merchant.

(2) In cases where there is no provision in this Part, the provisions of the Turkish Code of Obligations on brokerage contracts shall apply to agents acting as intermediaries, the provisions on commission shall apply to agents concluding contracts and, in cases where there is no provision in these either, the provisions on mandate shall apply.

(3) Special rules relating to fields such as carriage, maritime commerce, insurance and tourism are reserved.

II – Scope of application

Article 103 – (1) Without prejudice to the provisions of special laws, the provisions of this Part shall also apply to the following:

a) Persons who are continuously authorised to conclude contracts for the account of a domestic or foreign merchant and in their own name.

b) Persons who carry out transactions within the country in the name and for the account of foreign merchants that do not have a head office or branch within the Republic of Türkiye.

III – Exclusivity

Article 104 – (1) Unless otherwise agreed in writing, the principal may not appoint more than one agent at the same time and within the same place or region in relation to the same branch of trade, nor may the agent act as agent in the same place or region for the account of more than one commercial enterprise in competition with each other.

B) Powers of the agent

I – In general

Article 105 – (1) The agent is authorised to make, in the name of its principal, and to receive declarations preserving rights, such as warnings, notices and protests of every kind, relating to the contracts in which it acts as intermediary or which it concludes.

(2) The agent may bring actions in the name of its principal in respect of disputes arising from these contracts, and actions may also be brought against it in the same capacity. Conditions contrary to this provision contained in contracts relating to persons acting as agents for foreign merchants are invalid.

(3) Decisions rendered as a result of actions to be brought in Türkiye against the persons in whose name and for whose account the agents act may not be enforced against the agents.

II – Cases requiring special and written authority

Article 106 – (1) Without the special and written permission or power of attorney of its principal, the agent is not authorised to accept the price of goods that it did not itself deliver or to take delivery of goods whose price it did not itself pay, nor may it novate or reduce the amount of a receivable arising from these transactions.

III – Power to conclude contracts

Article 107 – (1) Without obtaining special and written authority, the agent is not authorised to conclude contracts in the name of its principal.

(2) It is mandatory that the documents granting agents the power to conclude contracts in the name of their principals be registered and announced by the agent.

IV – Lack of authority

Article 108 – (1) If the agent concludes a contract in the name of its principal without authority or by exceeding the limits of its authority, the principal may ratify it as soon as it learns of it; if it does not do so, the agent itself shall be liable under the contract.

C) Obligations of the agent

I – In general

Article 109 – (1) The agent is obliged to attend to the business of its principal and to protect its interests within the region and branch of trade allotted to it under the contract.

(2) Unless it proves that it is not at fault, the agent shall in particular be liable for damage suffered by the goods or articles that it is keeping for the account of its principal.

II – Duty to give notice

Article 110 – (1) The agent is obliged to notify its principal in good time of the declarations of third parties that it is authorised to receive, of the financial situation and conditions of the market and customers in its region and changes occurring therein, and of all matters concerning the principal in relation to the transactions carried out.

(2) In matters on which the principal has given no express instruction, the agent may delay the transaction until it receives orders. However, if, owing to the urgent nature of the business, the situation does not permit instructions to be obtained from the principal, or if the agent is authorised to act within the framework of the most advantageous conditions, it shall carry out the transaction according to its own judgement, as a prudent merchant.

III – Measures

Article 111 – (1) If there are signs that the articles of which the agent has taken delivery for the account of its principal have suffered damage during carriage, the agent is obliged, in order to secure the principal’s right of action against the carrier, to have the damage determined and to take the other necessary measures, to protect the articles as far as possible or, if there is a danger of their total loss, to have them sold with the permission of the competent court pursuant to Article 108 of the Turkish Code of Obligations, and to notify its principal of the situation without delay. Otherwise, it shall compensate the damage arising from its negligence.

(2) If the goods sent to the agent for sale are of a perishable kind or of a nature to undergo changes that would reduce their value, and the time does not permit instructions to be obtained from the principal or the principal delays in giving permission, the agent is authorised, and, if the interests of the principal so require, obliged, to have the articles sold with the permission of the competent court pursuant to Article 108 of the Turkish Code of Obligations.

IV – Obligation to pay

Article 112 – (1) If the agent, being obliged to remit or deliver money belonging to its principal, fails to do so, it is obliged to pay interest from the date on which the obligation arose and, where necessary, also to pay compensation.

D) Rights of the agent

I – Remuneration

1. Transactions giving entitlement to remuneration

Article 113 – (1) The agent may claim remuneration for transactions concluded during the continuance of the agency relationship through its own efforts, or with third parties whom it has acquired for transactions of the same kind. This right to remuneration shall not arise if and to the extent that it belongs to the previous agent pursuant to the third paragraph.

(2) If a specific region or circle of customers has been allotted to the agent, the agent may also claim remuneration for transactions concluded during the continuance of the agency relationship with customers in that region or circle without its contribution. The second sentence of the first paragraph shall also apply here.

(3) For transactions concluded after the end of the agency relationship, the agent;

a) If it acted as intermediary in the transaction, or prepared the transaction to such an extent that its conclusion can be attributed to its own efforts, and the transaction was concluded within a reasonable time after the end of the agency relationship,

b) If, in relation to a transaction for which remuneration may be claimed pursuant to the first sentences of the first or second paragraphs, the offer of the third party reached the agent or the principal before the termination of the agency relationship,

may claim remuneration. If, according to the circumstances and conditions, sharing this remuneration is required by equity, the subsequent agent shall also receive an appropriate share.

(4) The agent may further claim a collection commission for sums collected by it in accordance with the instructions of its principal.

2. Time of entitlement to remuneration

Article 114 – (1) The agent becomes entitled to remuneration at the moment when and to the extent that the transaction concluded is performed. The parties may alter this rule by the agency contract; however, when the principal performs the transaction, the agent becomes entitled to an appropriate advance, which may be claimed on the last day of the following month. In any case, the agent becomes entitled to remuneration at the moment when and to the extent that the third party performs the transaction concluded.

(2) If it becomes certain that the third party will not perform the transaction, the agent’s right to remuneration shall lapse; amounts paid shall be returned.

(3) Even if it becomes certain that the principal will not perform the contract concluded through the agent’s intermediation, in part or in whole, or in the manner envisaged, the agent may claim remuneration. The agent’s right to remuneration shall lapse if and to the extent that the contract could not be performed for reasons not attributable to the principal.

3. Amount of remuneration

Article 115 – (1) If there is no provision in the contract, the amount of remuneration shall be determined according to the commercial custom at the place where the agent is located and, if there is no custom either, by the commercial court of first instance of that place according to the requirements of the case.

4. Time of payment of remuneration

Article 116 – (1) The remuneration to which the agent has become entitled must be paid within three months at the latest from the date on which it arose and, in any case, on the date on which the contract terminates.

(2) If the agent requests information on all matters material to the claim for remuneration, its maturity and its calculation, the principal is obliged to provide that information. The agent may further request its principal to send it copies of the book entries relating to the transactions on which remuneration depends. If the principal refuses to provide the copy of the books, or if there are justified reasons requiring doubt as to the accuracy and completeness of the books, the agent may either examine the relevant parts of the commercial books and documents itself or have them examined by an expert. If the principal does not permit this, the court shall decide the matter in the manner most appropriate to the situation.

(3) Agreements to the contrary of these provisions are invalid to the extent that they are to the detriment of the agent.

II – Reimbursement of extraordinary expenses

Article 117 – (1) The agent may claim payment only of the extraordinary expenses among those it has incurred in order to perform its obligations.

III – Right to claim interest

Article 118 – (1) The provision of the second sentence of the first paragraph of Article 20 shall apply to advances and extraordinary expenses.

IV – Right of retention

Article 119 – (1) Until all its receivables from its principal are paid, the agent has a right of retention over the movables and negotiable instruments it has received by reason of the agency contract which are either in its own hands or in the hands of a third party who continues to be in possession on the basis of a special reason, and over goods of which it can dispose by means of an instrument representing any article.

(2) If goods belonging to the principal have been sold by the agent pursuant to the contract or the law, the agent may refuse to pay the price of those goods.

(3) If the principal is insolvent, the provisions of the first and second paragraphs shall also apply in respect of the receivables of the agent that have not yet fallen due.

(4) The provisions of the second paragraph of Article 950 and of Articles 951 to 953 of the Turkish Civil Code are reserved.

E) Obligations of the principal

Article 120 – (1) The principal, towards the agent;

a) To provide the documents relating to the goods,

b) To notify the matters necessary for the performance of the agency contract and, in particular, that the volume of business may be considerably lower than the agent could normally expect,

c) To notify within a reasonable time whether it accepts the transactions carried out by the agent or whether they have not been performed,

d) To pay the remuneration that the agent has become entitled to claim,

e) To pay interest on remuneration, advances and extraordinary expenses in accordance with the provisions of Article 20,

is obliged.

(2) Conditions contrary to this Article are invalid to the extent that they are to the detriment of the agent.

F) Termination of the agency contract

I – Grounds

Article 121 – (1) Either party may terminate an agency contract concluded for an indefinite period on condition of giving three months’ prior notice. Even if the contract has been concluded for a fixed period, it may be terminated at any time for just cause.

(2) If an agency contract concluded for a fixed period continues to be performed after the expiry of the period, the contract becomes one of indefinite duration.

(3) In the event of the bankruptcy, death or restriction of the principal or the agent, the provision of Article 513 of the Turkish Code of Obligations shall apply.

(4) The party that terminates the contract without just cause or without complying with the three-month notice period is obliged to compensate the damage suffered by the other party owing to the non-completion of the business commenced.

(5) If the agency contract terminates owing to the death, loss of capacity or bankruptcy of the principal or the agent, an appropriate compensation, to be determined in proportion to the amount of remuneration that would have been payable to the agent upon completion of the business, shall be paid to the agent or to those taking its place according to the cases set out in this Article.

II – Claim for indemnity

Article 122 – (1) After the termination of the contractual relationship;

a) If the principal continues to derive substantial benefits, even after the termination of the contractual relationship, from new customers found by the agent,

b) If the agent, as a result of the termination of the contractual relationship, loses the right to claim remuneration which it would have obtained had the contractual relationship continued, in respect of business done or to be done within a short period with customers acquired for the enterprise by it, and

c) If, having regard to the particular features and circumstances of the specific case, payment is equitable,

the agent may claim appropriate compensation from the principal.

(2) The compensation may not exceed the average of the annual commission or other payments received by the agent as a result of its activity over the last five years. If the contractual relationship has continued for a shorter period, the average during the continuance of the activity shall be taken as the basis.

(3) If the agent has terminated the contract without the principal having committed an act that would justify termination, or if the contract has been terminated by the principal for just cause owing to the fault of the agent, the agent may not make a claim for indemnity.

(4) The claim for indemnity may not be waived in advance. The right to claim indemnity must be asserted within one year from the termination of the contractual relationship.

(5) Unless contrary to equity, this provision shall also apply upon the termination of exclusive distributorship and other similar continuing contractual relationships granting monopoly rights.

III – Non-competition agreement

Article 123 – (1) An agreement restricting the agent’s activities relating to its enterprise for the period after the termination of the contractual relationship must be made in writing, and a document containing the provisions of the agreement and signed by the principal must be given to the agent. The agreement may be made for a period of at most two years from the end of the relationship and may relate only to the region or circle of customers allotted to the agent and to the subject matters of the contracts whose conclusion it facilitated. It is a requirement that the principal pay the agent appropriate compensation on account of the restriction of competition.

(2) The principal may, until the termination of the contractual relationship, waive in writing the application of the restriction of competition. In this case, the principal shall be released from the obligation to pay compensation upon the expiry of six months from the declaration of waiver.

(3) If one of the parties terminates the contractual relationship for just cause owing to the faulty conduct of the other party, it may notify the other party in writing, within one month from the termination, that it is not bound by the non-competition contract.

(4) Conditions contrary to this Article are invalid to the extent that they are to the detriment of the agent.

BOOK TWO

Commercial Companies

PART ONE

General Provisions

A) Types

Article 124 – (1) Commercial companies consist of general partnerships, limited partnerships, joint stock companies, limited liability companies and cooperatives.

(2) In this Law, general partnerships and limited partnerships are deemed partnerships of persons; joint stock companies, limited liability companies and partnerships limited by shares are deemed capital companies.

B) Legal personality and capacity

Article 125 – (1) Commercial companies have legal personality.

(2) Commercial companies may enjoy all rights and assume obligations within the framework of Article 48 of the Turkish Civil Code. Statutory exceptions in this respect are reserved.

C) Applicable statutory provisions

Article 126 – (1) Without prejudice to the provisions specific to each type of company, the general provisions of the Turkish Civil Code relating to legal entities and, in matters for which there is no provision in this Part, the provisions of the Turkish Code of Obligations on ordinary partnerships shall also apply to commercial companies to the extent compatible with the nature of each type of company.

D) Obligation to contribute capital

I – Subject matter

Article 127 – (1) Unless otherwise provided by law, the following may be contributed as capital to commercial companies;

a) Money, receivables, negotiable instruments and shares in capital companies,

b) Intellectual property rights,

c) Movables and immovables of every kind,

d) Rights of benefit and use of movables and immovables,

e) Personal labour,

f) Commercial goodwill,

g) Commercial enterprises,

h) Values such as transferable electronic media, domains, names and signs that are rightfully used,

i) Mining licences and other similar rights having economic value,

j) Every kind of value that is transferable and can be valued in cash,

may be contributed.

(2) The provisions of the second paragraph of Article 307, the first paragraph of Article 342 and the first paragraph of Article 581 of the Law are reserved.

II – Effect

1. In general

Article 128 – (1) Each partner is indebted to the company for the capital it has undertaken to contribute under the company contract duly drawn up and signed.

(2) Immovables included in the company contract or the articles of association at the values determined by an expert shall be accepted as contributions in kind if an annotation has been made in the land register; intellectual property rights and other values if they have been entered, pursuant to this provision, in their special registers, where any exist; and movables if they have been deposited with a trustworthy person. Entry in the special register shall eliminate good faith.

(3) Provisions of the company contract containing an obligation to contribute, as capital, ownership of an immovable or a right in rem existing or to be established over an immovable are valid without the requirement of official form.

(4) Where the contribution as capital of an economic value other than money or of a movable is undertaken, the company may dispose of them directly in its capacity as owner from the moment it acquires legal personality.

(5) Where ownership of an immovable or another right in rem is contributed as capital, registration in the land register is necessary in order for the company to be able to dispose of them.

(6) Requests for registration of ownership and other rights in rem in the land register and notifications relating to registrations to be made in other registers shall be made ex officio and immediately to the relevant register by the trade registry director. The right of the company to make a unilateral request is reserved.

(7) The company may demand and sue for the performance by each partner of its obligation to contribute capital, and may also claim compensation for the damage it has suffered owing to delay in performance. A warning is a requirement for the claim for compensation. In partnerships of persons, this action may also be brought by the partners.

(8) For the protection of the rights that the partners have undertaken to contribute as capital, an interim injunction may be requested by the founders against the partners. For the actions to be brought following the injunction, the period provided for in the Code of Civil Procedure shall begin to run only from the date of registration and announcement of the company.

2. Default interest

Article 129 – (1) If the capital not contributed in time is money, default interest shall also be paid from the moment of registration of the company, without prejudice to the right to compensation pursuant to Article 128, unless there is a provision to the contrary in the company contract or the articles of association.

3. Liability

Article 130 – (1) A partner who has assigned its receivables to the company as capital shall not be released from its obligation to contribute capital unless the receivables have been collected by the company.

(2) If the receivable has not fallen due, it must be collected by the company, unless otherwise agreed, within one month from the due date, and if it has fallen due, within one month from the date of the company contract or the articles of association.

(3) If, for whatever reason, it cannot be collected within this period, the partner shall also pay default interest for the days elapsing from the expiry of the period, without prejudice to the company’s right to compensation on account of the delay.

(4) If the receivable has been partially collected, the above provisions shall apply in respect of the part that has not been collected.

4. Presumptions

Article 131 – (1) The values to be assessed by an expert for the assets in kind contributed as capital shall be deemed to have been accepted by the persons concerned.

(2) Unless otherwise agreed in the company contract or the articles of association, ownership of the assets in kind contributed as capital shall belong to the company and rights shall be transferred to the company.

(3) Where it is agreed that the remuneration to be paid in consideration of services shall be discharged in part or in whole by way of participation in profits, this stipulation shall not confer the status of partner on the employees.

5. Right to receive interest and remuneration

Article 132 – (1) Unless otherwise provided by law, it may be accepted by the company contract that partners be paid interest on the capital they have contributed and remuneration for their services in the company.

E) Personal creditors of the partners

Article 133 – (1) As long as a partnership of persons continues, a personal creditor of one of the partners may satisfy its claim from the share of profit falling to that partner according to the balance sheet of the company and, if the company has been dissolved, from its liquidation share. If a balance sheet has not yet been drawn up, the creditor may have an attachment placed on the profit and liquidation share that will fall to the debtor as a result of drawing up the balance sheet.

(2) In capital companies, the creditors may, in addition to satisfying their claims from the profit or liquidation share falling to that partner, request that the shares belonging to their debtors, whether or not represented by certificates, be attached and converted into money in accordance with the provisions on movables of the Execution and Bankruptcy Law No. 2004 dated 9/6/1932. Upon request, the attachment shall be entered in the share register.

(3) Apart from this, in all commercial companies the creditors also have the authority to satisfy their claims from the partner’s other receivables from the company and to have attachment levied for this purpose.

(4) The above provisions shall not prevent creditors from having recourse to the assets of the debtor partners outside the company.

F) Merger, demerger and change of legal form

I – Scope of application and concepts

1. Scope of application

Article 134 – (1) Articles 134 to 194 shall apply to mergers, demergers and changes of legal form of commercial companies.

(2) The provisions of other laws that are not contrary to Articles 135 to 194 of this Law are reserved.

2. Concepts

Article 135 – (1) In the application of Articles 134 to 194: “company” means commercial companies; “partner” means the shareholders of joint stock companies and the partners of limited liability companies, partnerships of persons and cooperatives; “partnership share” means the partnership share in partnerships of persons, the share in a joint stock company, the capital share in a limited liability company and the partnership share in a partnership limited by shares; “general assembly” means the general assembly in joint stock companies, limited liability companies, partnerships limited by shares and cooperatives, the partners’ meeting in partnerships of persons and, where necessary, all of the partners; “management body” means the board of directors in joint stock companies and cooperatives, the manager or managers in limited liability companies, and the executive in partnerships of persons and partnerships limited by shares; “company contract” means the articles of association in joint stock companies, the company contract in partnerships of persons and limited liability companies, and the articles of the cooperative in a cooperative.

(2) In determining small and medium-sized companies, the criteria provided for in Article 1522 shall be applied for partnerships of persons and those in Article 1523 for capital companies.

II – Merger

1. General provisions

a) Principle

Article 136 – (1) Companies;

a) One company taking over another, technically termed “merger by acquisition”, or

b) Their combining within a new company, technically termed “merger by formation of a new company”,

may merge by these means.

(2) In the application of Articles 136 to 158, the accepting company shall be called the “acquiring company” and the joining company the “transferring company”.

(3) A merger is effected by the automatic acquisition by the partners of the transferring company, in exchange for the assets of the transferring company, of the shares of the acquiring company according to an exchange ratio. The merger contract may also provide for a severance payment within the meaning of the second paragraph of Article 141.

(4) Through the merger, the acquiring company takes over the assets of the transferring company as a whole. Through the merger, the transferring company ceases to exist and is deleted from the trade registry.

b) Valid mergers

Article 137 – (1) Capital companies;

a) With capital companies,

b) With cooperatives, and

c) With general partnerships and limited partnerships, provided that they are the acquiring company,

may merge.

(2) Partnerships of persons;

a) With partnerships of persons,

b) With capital companies, provided that they are the transferring company,

c) With cooperatives, provided that they are the transferring company,

may merge.

(3) Cooperatives;

a) With cooperatives,

b) With capital companies, and

c) With partnerships of persons, provided that they are the acquiring company,

may merge.

c) Participation of a company in liquidation in a merger

Article 138 – (1) A company in liquidation may participate in a merger if the distribution of its assets has not commenced and provided that it is the transferring company.

(2) (Amended: 26/6/2012-6335/10 art.) The existence of the conditions in the first paragraph shall be proven by the documents submitted to the trade registry directorate of the place where the head office of the acquiring company is located.

d) Participation in a merger in the event of loss of capital or over-indebtedness

Article 139 – (1) A company half of the total of whose capital and statutory reserves has been lost through losses, or which is over-indebted, may merge with a company that has freely disposable equity in an amount capable of covering the lost capital or, where necessary, the over-indebtedness.

(2) (Amended: 26/6/2012-6335/11 art.) It is a requirement that the documents proving that the condition in the first paragraph has been fulfilled be submitted to the trade registry directorate of the place where the head office of the acquiring company is located.

2. Partnership shares and rights

a) Protection of partnership shares and rights

Article 140 – (1) The partners of the transferring company have the right to claim shares and rights in the acquiring company of a value corresponding to their existing partnership shares and rights. This right of claim shall be calculated taking into account the value of the assets of the companies participating in the merger, the distribution of voting rights and other matters of importance.

(2) In determining the exchange ratios of the partnership shares, the payment of a compensatory amount may be provided for, on condition that it does not exceed one tenth of the actual value of the partnership shares allotted to the partners of the transferring company.

(3) Partners holding non-voting shares of the transferring company shall be given non-voting or voting shares of the same value.

(4) In consideration of the privileges attached to the shares existing in the transferring company, equivalent rights or appropriate consideration shall be given in the acquiring company.

(5) The acquiring company is obliged to grant equivalent rights to the holders of usufruct certificates of the transferring company or to purchase the usufruct certificates at their actual value on the date on which the merger contract was concluded.

b) Severance payment

Article 141 – (1) The companies participating in the merger may, in the merger contract, grant the partners the right to choose between the acquisition of shares and partnership rights in the acquiring company and a severance payment equivalent to the actual value of the company shares to be acquired.

(2) The companies participating in the merger may, in the merger contract, provide only for the granting of a severance payment.

3. Capital increase, new formation and interim balance sheet

a) Capital increase

Article 142 – (1) In a merger by acquisition, the acquiring company is obliged to increase its capital to the level necessary for the protection of the rights of the partners of the transferring company.

(2) In a merger, the rules relating to contributions in kind and, in publicly held joint stock companies, the provisions relating to the public offering of new shares, with the exception of those relating to registration with the Capital Markets Board, shall not apply.

b) New formation

Article 143 – (1) In a merger by formation of a new company, the articles of this Law and of the Cooperatives Law No. 1163 dated 24/4/1969, other than their rules on contributions in kind and their provisions relating to the minimum number of partners, shall apply to the formation of the new company.

c) Interim balance sheet

Article 144 – (1) If more than six months have elapsed between the date on which the merger contract was signed and the balance sheet date, or if significant changes have occurred in the assets of the companies participating in the merger after the last balance sheet was drawn up, the companies participating in the merger are obliged to draw up an interim balance sheet.

(2) Subject to the following provisions, the provisions and principles relating to the annual balance sheet shall apply to the interim balance sheet. For the interim balance sheet;

a) It is not necessary to take a physical inventory;

b) The valuations accepted in the last balance sheet shall be changed only to the extent of the movements in the commercial books; depreciation, value adjustments and provisions, as well as changes in value significant for the enterprise that are not apparent from the commercial books, shall also be taken into account.

4. Merger contract and merger report²⁶

a) Merger contract

aa) Conclusion of the merger contract

Article 145 – (1) The merger contract shall be made in writing. The contract shall be signed by the management bodies of the companies participating in the merger and approved by their general assemblies.

bb) Content of the merger contract

Article 146 – (1) The merger contract;

a) The trade names, legal forms and head offices of the companies participating in the merger; in the case of a merger by formation of a new company, the form, trade name and head office of the new company,

b) The exchange ratio of the company shares and, if provided for, the compensatory amount; explanations concerning the shares and rights of the partners of the transferring company in the acquiring company,

c) The rights granted by the acquiring company to the holders of privileged and non-voting shares and to the holders of usufruct certificates,

d) The manner of exchange of the company shares,

e) The date from which the shares acquired through the merger become entitled to the balance sheet profit of the acquiring or newly formed company, and all particulars relating to this claim,

f) Where applicable, the severance payment pursuant to Article 141,

g) The date from which the transactions and acts of the transferring company shall be deemed to have been carried out for the account of the acquiring company,

h) The special benefits granted to the management bodies and managing partners,

i) Where applicable, the names of the partners with unlimited liability,

must contain.

b) Merger report

Article 147 – (1) The management bodies of the companies participating in the merger shall prepare, separately or jointly, a report on the merger.

(2) In the report;

a) The purpose and consequences of the merger,

b) The merger contract,

c) The exchange ratio of the company shares and, if provided for, the compensatory payment; the partnership rights granted to the partners of the transferring companies in the acquiring company,

d) Where applicable, the amount of the severance payment and the reasons for granting a severance payment instead of company shares and partnership rights,

e) The particulars relating to the valuation of the shares for the purpose of determining the exchange ratio,

f) Where applicable, the amount of the increase to be made by the acquiring company,

g) If provided for, information on the additional payment and other personal performance obligations and personal liabilities to be imposed on the partners of the transferring company by reason of the merger,

h) In mergers of companies of different forms, the obligations falling on the partners by reason of the new form,

i) The effects of the merger on the employees of the companies participating in the merger and, if possible, the content of a social plan,

j) The effects of the merger on the creditors of the companies participating in the merger,

k) Where necessary, the approvals obtained from the relevant authorities,

shall be explained from a legal and economic point of view and their justifications stated.

(3) In a merger by formation of a new company, it is a requirement that the contract of the new company also be annexed to the merger report.

(4) If all of the partners approve, small and medium-sized companies may dispense with drawing up the merger report.²⁷

c) Audit of the merger contract and the merger report

Article 148 – (Repealed: 26/6/2012-6335/43 art.)

5. Right of examination and changes in assets

a) Right of examination

Article 149 – (1) Each of the companies participating in the merger, at its head office and branches and, in the case of publicly held joint stock companies, at the places to be specified by the Capital Markets Board, within the thirty days preceding the general assembly resolution;

a) The merger contract,

b) The merger report,

c) (Repealed: 26/6/2012-6335/43 art.)

d) The year-end financial statements and annual activity reports for the last three years and, where applicable, the interim balance sheets,

is obliged to make these available for examination by the partners, the holders of usufruct certificates and the holders of securities issued by the company, persons having an interest and other persons concerned. These shall also be published on the websites of the relevant capital companies.

(2) The partners and the persons listed in the first paragraph may request that copies of the documents referred to in the same paragraph and, if any, their printed versions be given to them. No fee or reimbursement of expenses may be demanded for these.

(3) Each of the companies participating in the merger shall refer to the right of examination in the announcement published in the Turkish Trade Registry Gazette and also posted on its website.

(4) Each company participating in the merger shall announce, at least three business days before the deposit, in the Turkish Trade Registry Gazette and in the newspapers provided for in the company contract and, in the case of capital companies, also on their websites, where the documents referred to in the first paragraph have been deposited and where they are kept available for examination.

(5) If all of the partners approve, small and medium-sized companies may dispense with the exercise of the right of examination.²⁸

b) Information on changes in assets

Article 150 – (1) If a significant change has occurred in the assets or liabilities of one of the companies participating in the merger between the date of signature of the merger contract and the date on which this contract is to be submitted to the general assembly for approval, the management body shall notify this situation in writing to its own general assembly and to the management bodies of the other companies participating in the merger.

(2) In this case, the management bodies of all of the companies participating in the merger shall examine whether it is necessary to amend the merger contract or to abandon the merger; if they reach such a conclusion, the proposal for submission for approval shall be withdrawn. Otherwise, the management body shall explain at the general assembly the reasons why no adaptation of the merger contract is necessary.

c) Merger resolution

Article 151 – (1) The management body shall submit the merger contract to the general assembly. The merger contract, at the general assembly;

a) In joint stock companies and partnerships limited by shares, without prejudice to subparagraph (b) of the fifth paragraph of Article 421 of this Law, by three quarters of the votes present at the general assembly, provided that they represent the majority of the share capital or issued capital,

b) In capital companies to be taken over by a cooperative, by three quarters of the votes present at the general assembly, provided that they represent the majority of the capital,

c) In limited liability companies, by the votes of three quarters of all partners, provided that they hold shares representing at least three quarters of the capital,

d) In cooperatives, by a majority of two thirds of the votes cast; if additional payment and other performance obligations or unlimited liability are introduced in the articles of the cooperative, or if these exist and are extended, by a resolution of three quarters of all partners registered with the cooperative,

must be approved.

(2) In general partnerships and limited partnerships, the merger contract must be approved unanimously. However, the company contract may provide that the merger contract be approved by a resolution of three quarters of all the partners.

(3) Where a partnership limited by shares takes over another company, in addition to the quorum in subparagraph (a) of the first paragraph, it is necessary that all of the limited partners approve the merger in writing.

(4) In a joint stock company or partnership limited by shares taken over by a limited liability company, if additional obligations and personal performance obligations are also provided for by the takeover, or if these exist and are being extended, the unanimity of all the partners is required.

(5) If the merger contract provides for a severance payment, it is a requirement that this be approved by the affirmative votes of ninety per cent of the partners having voting rights if the transferring company is a partnership of persons, and of ninety per cent of the voting rights existing in the company if it is a capital company.

(6) If the merger contract provides for a change in the business purpose of the transferring company, the merger contract must also have been approved by the quorum required for amending the company contract.

6. Provisions relating to finalisation

a) Registration in the trade registry

Article 152 – (1) As soon as the merger resolution has been adopted by the companies participating in the merger, the management bodies shall apply to the trade registry for registration of the merger.

(2) If the acquiring company has increased its capital as a consequence of the merger, the amendments to the articles of association shall additionally be submitted to the trade registry.

(3) The transferring company is dissolved upon the registration of the merger in the trade registry.

b) Legal consequences

Article 153 – (1) The merger becomes effective upon the registration of the merger in the trade registry. At the moment of registration, all of the assets and liabilities of the transferring company pass automatically to the acquiring company.

(2) The partners of the transferring company become partners of the acquiring company. However, this consequence does not arise for shares held by the acquiring company or by a person acting in its own name but for the account of that company, or for shares held by the transferring company or by a person acting in its own name but for the account of that company.

(3) The provisions of the Law on the Protection of Competition No. 4054 dated 7/12/1994 are reserved.

c) Announcement

Article 154 – (1) The merger resolution shall be announced in the Turkish Trade Registry Gazette.

7. Simplified merger of capital companies

a) Scope of application

Article 155 – (1) a) If the acquiring capital company holds all of the voting shares of the transferring capital company, or

b) If a company or a natural person or groups of persons bound by law or contract hold all of the voting shares of the capital companies participating in the merger,

the capital companies may merge according to the simplified procedure.

(2) If the acquiring capital company holds not all of the shares of the transferring capital company but at least ninety per cent of its voting shares, for the minority shareholders;

a) In addition to the granting of shares in the acquiring company equivalent to these shares, a cash consideration fully equivalent to the actual value of the company shares has been offered pursuant to Article 141, and

b) No obligation to make additional payments, nor any personal performance obligation or personal liability, arises by reason of the merger,

in these cases, the merger may be effected by the simplified procedure.

b) Facilitations

Article 156 – (1) Capital companies participating in the merger that comply with the conditions provided for in the first paragraph of Article 155 shall include in the merger contract the particulars set out in subparagraphs (a) and (f) to (i) of the first paragraph of Article 146. These capital companies are not obliged to draw up the merger report provided for in Article 147 or to provide the right of examination regulated in Article 149, nor are they required to submit the merger contract to the approval of the general assembly pursuant to Article 151.²⁹

(2) Capital companies participating in the merger that comply with the conditions provided for in the second paragraph of Article 155 shall include in the merger contract only the particulars set out in subparagraphs (a), (b) and (f) to (i) of the second paragraph of Article 147. These companies are not obliged to draw up the merger report provided for in Article 147 or to submit the merger contract to the general assembly pursuant to Article 151. The right of examination provided for in Article 149 must have been provided thirty days before the application to the trade registry for registration of the merger.

8. Protection of creditors and employees

a) Securing of receivables

Article 157 – (1) If the creditors of the companies participating in the merger make a request within three months from the date on which the merger becomes legally effective, the acquiring company shall secure their receivables.

(2) (Amended: 26/6/2012-6335/12 art.) The companies participating in the merger shall notify their creditors of their rights by an announcement to be made three times at intervals of seven days in the Turkish Trade Registry Gazette and, in addition, by an announcement to be posted on their websites.

(3) (Repealed: 26/6/2012-6335/12 art.)

(4) If it is established that the other creditors will not suffer damage, the obliged company may pay the debt instead of providing security.

b) Personal liability of the partners and transfer of employment relationships

Article 158 – (1) The liability of the partners who were liable for the debts of the transferring company before the merger shall continue after the merger as well, on condition that these debts arose before the announcement of the merger resolution or that the causes giving rise to the debts came into existence before that date.

(2) Claims relating to the personal liability of the partners arising from the debts of the transferring company shall become time-barred upon the expiry of three years from the date of announcement of the merger resolution. If the receivable falls due after the date of announcement, the limitation period shall begin on the date of maturity. This limitation shall not apply to the liability of partners who are personally liable for the debts of the acquiring company.

(3) In the case of bonds and other debt instruments offered to the public, liability shall continue until the redemption date, unless the prospectus contains a different arrangement.

(4) The provision of Article 178 shall apply to employment relationships.

III – Demerger

1. General provisions

a) Principle

Article 159 – (1) A company may be demerged fully or partially.

a) In a full demerger, all of the assets of the company are divided into parts and transferred to other companies. The partners of the demerged company acquire the shares and rights of the acquiring companies. The company that is fully demerged and transferred ceases to exist and its trade name is deleted from the trade registry.

b) In a partial demerger, one or more parts of the assets of a company are transferred to other companies. The partners of the demerged company acquire the shares and rights of the acquiring companies, or the demerged company forms its subsidiary by obtaining the shares and rights in the acquiring companies in consideration of the parts of the assets transferred.

b) Valid demergers

Article 160 – (1) Capital companies and cooperatives may be demerged into capital companies and cooperatives.

c) Protection of company shares and rights

Article 161 – (1) In full and partial demergers, company shares and rights shall be protected in accordance with Article 140.

(2) To the partners of the transferring company;

a) Company shares in all of the companies participating in the demerger, in proportion to their existing shares, or

b) Company shares in some or all of the companies participating in the demerger, in proportions differing from the proportion of their existing shares,

may be allotted. The demerger in subparagraph (a) is a “demerger in which the proportions are preserved” and the demerger in subparagraph (b) is a “demerger in which the proportions are not preserved”.

2. Provisions relating to the implementation of the demerger

a) Reduction of capital

Article 162 – (1) In the event of a reduction of the capital of the transferring company by reason of the demerger, Articles 473, 474 and 592 and, in cooperatives, Articles 473 and 474 of this Law on the basis of Article 98 of the Cooperatives Law, shall not apply.

b) Capital increase

Article 163 – (1) The acquiring company shall increase its capital by an amount that will protect the rights of the partners of the transferring company.

(2) In a demerger, the provisions relating to contributions in kind shall not apply. By reason of the demerger, the capital may be increased without changing the ceiling, even if this is not permissible under the registered capital system.

c) New formation

Article 164 – (1) The provisions of this Law and of the Cooperatives Law relating to formation shall apply to the formation of a new company within the framework of a demerger. In the formation of capital companies, the provisions relating to the minimum number of founders and to contributions in kind shall not apply.

d) Interim balance sheet

Article 165 – (1) If more than six months have elapsed between the balance sheet date and the date of signature of the demerger contract or of drawing up the demerger plan, or if significant changes have occurred in the assets of the companies participating in the demerger since the last balance sheet was drawn up, an interim balance sheet shall be drawn up.

(2) Subject to the provisions provided for in subparagraphs (a) and (b) of this paragraph, the provisions and standards relating to the annual balance sheet shall apply to the interim balance sheet. For the interim balance sheet;

a) It is not necessary to take a physical inventory.

b) The valuations accepted in the last balance sheet shall be changed only to the extent of the movements in the commercial books; depreciation, value adjustments and provisions, as well as changes in value significant for the enterprise that are not apparent from the commercial books, shall also be taken into account.

3. Right to examine the demerger documents³⁰

a) Demerger contract and demerger plan

aa) In general

Article 166 – (1) If a company is to transfer parts of its assets to existing companies by way of demerger, a demerger contract shall be concluded by the management bodies of the companies participating in the demerger.

(2) If a company is to transfer parts of its assets to companies to be newly formed by way of demerger, the management body shall draw up a demerger plan.

(3) It is a requirement that both the demerger contract and the demerger plan be made in writing and approved by the general assembly in accordance with the provisions of Article 173.

bb) Content of the demerger contract and the demerger plan

Article 167 – (1) The demerger contract and the demerger plan shall in particular;

a) The trade names, head offices and forms of the companies participating in the demerger,

b) The division into parts and the allocation of the asset and liability items for the purpose of transfer; with a clear description, the inventory relating to these parts; a list showing individually the immovables, negotiable instruments and intangible assets,

c) The exchange ratio of the shares and, where applicable, the compensatory amount to be paid, and explanations concerning the partnership rights of the partners of the transferring company in the acquiring company,

d) The rights allotted by the acquiring company to the holders of usufruct certificates, non-voting shares and special rights,

e) The manner of exchange of the company shares,

f) The date from which the company shares become entitled to the balance sheet profit, and the particulars of this right of claim,

g) The date from which the transactions of the transferring company are deemed to have been carried out for the account of the acquiring company,

h) The special benefits granted to the members of the management bodies, managers, persons having management rights and auditors,

i) The list of employment relationships passing to the acquiring companies as a result of the demerger,

contain.

b) Assets remaining outside the demerger

Article 168 – (1) Over the asset items not allocated in the demerger contract or the demerger plan;

a) In a full demerger, all of the acquiring companies shall have co-ownership in shares, in proportion to the net assets passing to them according to the demerger contract or plan.

b) In a partial demerger, the assets in question shall remain with the transferring company.

(2) The provision of the first paragraph shall also apply by analogy to receivables and intangible asset rights.

(3) The companies participating in a full demerger are jointly and severally liable for debts not allocated to any company according to the demerger contract or the demerger plan.

c) Demerger report

aa) Content

Article 169 – (1) The management bodies of the companies participating in the demerger shall prepare a separate report on the demerger; a joint report is also valid.

(2) The report shall explain:

a) The purpose and consequences of the demerger,

b) The demerger agreement or the demerger plan,

c) The exchange ratios of the shares and, where necessary, the compensation amount to be paid, and in particular the explanations relating to the rights of the shareholders of the transferring company in the acquiring company,

d) The particularities relating to the valuation of the shares in determining the exchange ratio,

e) Where necessary, the additional payment obligations, other personal performance obligations and unlimited liability that will arise for the shareholders as a result of the demerger,

f) Where the companies participating in the demerger are of different types, the obligations of the shareholders arising by reason of the new type,

g) The effects of the demerger on the employees and its content; the content of the social plan, if any,

h) The effects of the demerger on the creditors of the companies participating in the demerger.

from the legal and economic perspectives and shall state the reasons therefor.

(3) Where a new company is formed, the articles of association of the new company shall also be annexed to the demerger plan.

(4) Small and medium-sized companies may waive the preparation of the demerger report if all shareholders approve.³¹

bb) Audit of the demerger agreement or the demerger plan and of the demerger report

Article 170 – (Repealed: 26/6/2012-6335/43 art.)

d) Right of inspection

Article 171 – (1) Each of the companies participating in the demerger shall, two months before the resolution of the general assembly, make available at its head office, and publicly held joint stock companies additionally at the places deemed appropriate by the Capital Markets Board:

a) The demerger agreement or the demerger plan,

b) The demerger report,

c) (Repealed: 26/6/2012-6335/43 art.)

d) The financial statements and annual activity reports of the last three years and the interim balance sheets, if any,

for inspection by the shareholders of the companies participating in the demerger.

(2) Small and medium-sized companies may waive the right of inspection provided for in the first paragraph if all shareholders approve.

(3) The shareholders may request the companies participating in the demerger to provide them with copies of the documents listed in the first paragraph. No fee or reimbursement of any expense may be requested for the copies.

(4) Each of the companies participating in the demerger shall publish in the Turkish Trade Registry Gazette, and capital companies additionally on their website, an announcement indicating the right of inspection.

e) Information relating to changes in the assets

Article 172 – (1) Article 150 shall apply by analogy to changes occurring in the assets of the companies participating in the demerger.

4. Demerger resolution

Article 173 – (1) After the security provided for in Article 175 has been furnished, the management bodies of the companies participating in the demerger shall submit the demerger agreement or the demerger plan to the general assembly.

(2) The approval resolution shall be adopted in compliance with the quorums provided for in the first, third, fourth and sixth paragraphs of Article 151.

(3) In a demerger in which the ratio is not preserved, the approval resolution shall be adopted in the transferring company by at least ninety per cent of the shareholders holding voting rights.

5. Provisions relating to protection

a) Protection of creditors

aa) Call

Article 174 – (1) The creditors of the companies participating in the demerger shall be called upon to declare their claims and to request that security be furnished, by an announcement to be published three times at seven-day intervals in the Turkish Trade Registry Gazette, (…)³² and, in the case of capital companies, additionally by an announcement to be placed on the website.

bb) Securing the claims

Article 175 – (1) The companies participating in the demerger are obliged to secure the claims of the creditors who have made a request within three months of the date of publication of the announcements provided for in Article 174.

(2) The obligation to furnish security shall cease if it is proven (…)³³ that the claims of the creditors are not endangered by the demerger.

(3) Where it is established that the other creditors will not suffer damage, the company may pay the debt instead of furnishing security.

b) Liability

aa) Secondary liability of the companies participating in the demerger

Article 176 – (1) If the company to which a debt has been allocated by the demerger agreement or the demerger plan, and which is thereby primarily liable, does not satisfy the claims of the creditors, the other companies participating in the demerger, being the secondarily liable companies, shall be jointly and severally liable.

(2) In order for the secondarily liable companies to be pursued, the claim must not have been secured and the primarily liable company must:

a) Have been declared bankrupt,

b) Have been granted a concordat period,

c) Be in a situation where the conditions for obtaining a certificate of definitive insolvency in enforcement proceedings brought against it have arisen,

d) Have moved its head office abroad and can no longer be pursued in Türkiye, or

e) Have changed the location of its head office abroad and, for that reason, legal pursuit against it has become considerably more difficult.

be in such a situation.

bb) Personal liability of the shareholders

Article 177 – (1) The provision of Article 158 shall apply to the personal liability of the shareholders.

6. Transfer of employment relationships

Article 178 – (1) In a full or partial demerger, the service contracts concluded with the employees shall, unless the employee objects, pass to the acquiring party together with all rights and obligations arising from such contract up to the date of transfer.

(2) If the employee objects, the service contract shall terminate at the end of the statutory notice period; the acquiring party and the employee are obliged to perform the contract until that date.

(3) The former employer and the acquiring party shall be jointly and severally liable for the employee’s claims that fell due before the demerger and for the claims that will fall due in the period until the date on which the service contract would normally terminate or terminates owing to the employee’s objection.

(4) Unless otherwise agreed or unless it follows from the circumstances, the employer may not transfer the rights arising from the service contract to a third party.

(5) The employees may request that their claims that have fallen due, and those that will fall due as provided for in the first paragraph, be secured.

(6) The shareholders of the transferring company who were liable for the company’s debts before the demerger shall continue to be jointly and severally liable for the debts arising from the service contract that fell due up to the date of transfer, and for the debts that would have fallen due had the service contract terminated normally or that will arise until the moment the service contract terminates owing to the employee’s objection.

7. Registration with the trade registry and validity

Article 179 – (1) Once the demerger has been approved, the management body shall apply for registration of the demerger.

(2) If the capital of the transferring company must be reduced by reason of a partial demerger, the amendment to the articles of association relating thereto shall also be registered.

(3) In the case of a full demerger, the transferring company shall be dissolved upon registration with the trade registry.

(4) The demerger shall become valid upon registration with the trade registry. Upon registration, all assets and liabilities included in the inventory at the time of registration shall pass to the acquiring companies.

IV – Change of legal form

1. General provisions

a) Principle

Article 180 – (1) A company may change its legal form. The company converted into the new type is the continuation of the former one.

b) Permissible changes of legal form

Article 181 – (1) a) A capital company, into:

1. A capital company of another type;

2. A cooperative;

b) A general partnership, into:

1. A capital company;

2. A cooperative;

3. A limited partnership;

c) A limited partnership, into:

1. A capital company;

2. A cooperative;

3. A general partnership;

d) A cooperative, into a capital company,

may be converted.

c) Special provisions relating to changes of legal form of general partnerships and limited partnerships

Article 182 – (1) A general partnership, into a limited partnership, in the event of:

a) A limited partner joining the general partnership,

b) A partner becoming a limited partner,

may be converted.

(2) A limited partnership, into a general partnership, by:

a) All limited partners leaving the company,

b) All limited partners becoming general partners,

may be converted.

(3) The provision of Article 257 relating to a general partnership or limited partnership continuing its activities as a sole proprietorship is reserved.

(4) The provisions of Articles 180 to 190 shall not apply to changes of legal form made pursuant to this Article.

2. Protection of the company shares and rights

Article 183 – (1) In a change of legal form, the company shares and rights of the shareholders shall be protected. For non-voting shares, their holders shall be given shares of equal value or shares carrying voting rights.

(2) In return for privileged shares, shares of the same value shall be given or appropriate compensation shall be paid.

(3) In return for dividend-right certificates, rights of the same value shall be given or the real value as at the date on which the change of legal form plan is drawn up shall be paid.

3. Formation and interim balance sheet

Article 184 – (1) In a change of legal form, the provisions relating to the formation of the new type shall apply; however, in capital companies, the provisions relating to the minimum number of shareholders, to contributions in kind and to the signing of the articles of association by the founders shall not apply.³⁴

(2) If more than six months have elapsed between the balance sheet date and the date on which the change of legal form report is drawn up, or if significant changes have occurred in the company’s assets since the date on which the last balance sheet was drawn up, an interim balance sheet shall be drawn up.

(3) Subject to the following provisions, the provisions and principles relating to the annual balance sheet shall apply to the interim balance sheet. For the interim balance sheet:

a) It is not necessary to take a physical inventory;

b) The valuations adopted in the last balance sheet shall be changed only to the extent of the movements in the commercial books; depreciation, value adjustments and provisions, as well as changes in value that are significant for the enterprise and are not apparent from the commercial books, shall also be taken into account.

4. Change of legal form plan

Article 185 – (1) The management body shall draw up a change of legal form plan. The plan is subject to written form and to the approval of the general assembly pursuant to Article 189. The change of legal form plan shall contain:

a) The trade name and head office of the company before and after the change of legal form and the designation relating to the new type,

b) The articles of association of the new type,

c) The number, class and amount of the shares that the shareholders will hold after the change of legal form, or explanations relating to the shares of the shareholders after the change of legal form,

as its contents.

5. Change of legal form report

Article 186 – (1) The management body shall prepare a written report on the change of legal form.

(2) In the report:

a) The purpose and consequences of the change of legal form,

b) That the formation provisions relating to the new type have been complied with,

c) The new articles of association,

d) The exchange ratio relating to the shares that the shareholders will hold after the change of legal form,

e) Where applicable, the additional payment and other personal performance obligations and personal liabilities arising from the change of legal form in respect of the shareholders,

f) The obligations arising for the shareholders by reason of the new type

shall be explained from the legal and economic perspectives and the reasons therefor shall be stated.

(3) Small and medium-sized companies may waive the preparation of the change of legal form report if all shareholders approve.³⁵

6. Audit of the change of legal form plan and of the change of legal form report

Article 187 – (Repealed: 26/6/2012-6335/43 art.)

7. Right of inspection

Article 188 – (1) The company shall make available:

a) The change of legal form plan,

b) The change of legal form report,

c) (Repealed: 26/6/2012-6335/43 art.)

d) The financial statements of the last three years and the interim balance sheet, if any,

for inspection by the shareholders at its head office, and in the case of publicly held joint stock companies at the places requested by the Capital Markets Board, thirty days before the resolution is adopted at the general assembly.

(2) Copies of the said documents shall be given free of charge to shareholders who so request. The company shall inform the shareholders in an appropriate manner that they have the right of inspection.

8. Change of legal form resolution and registration

Article 189 – (1) The management body shall submit the change of legal form plan and the articles of association of the new type to the general assembly. The change of legal form resolution shall be adopted with the following quorums:³⁶

a) In joint stock companies and partnerships limited by shares, without prejudice to the provision of subparagraph (b) of the fifth paragraph of Article 421 of the Law, by two thirds of the votes present at the general assembly, provided that they represent two thirds of the share capital or the issued capital; in the case of conversion into a limited liability company, with the approval of all shareholders if an additional payment or personal performance obligation will arise;

b) In the case of conversion of a capital company into a cooperative, with the approval of all shareholders;

c) In limited liability companies, by a resolution of three quarters of the shareholders, provided that they hold at least three quarters of the capital;

d) In cooperatives;

1. By a majority of the votes present at the general assembly, provided that at least two thirds of the members are represented,

2. If an additional payment, other personal performance obligations or personal liability are introduced, or if these obligations or liabilities are extended, by the affirmative vote of two thirds of the members registered in the cooperative,

e) In general partnerships and limited partnerships, the change of legal form plan shall be approved by the unanimous vote of all partners. However, the articles of association may provide that this resolution may be adopted by the affirmative vote of two thirds of all partners.

(2) The management body shall have the change of legal form and the articles of association of the new company registered. The change of legal form shall acquire legal validity upon registration. The change of legal form resolution shall be announced in the Turkish Trade Registry Gazette.

9. Protection of creditors and employees

Article 190 – (1) Article 158 shall apply to the personal liability of the shareholders and Article 178 shall apply to the debts arising from employment contracts.

V – Common provisions

1. Review of the membership shares and membership rights

Article 191 – (1) Where, in a merger, demerger or change of legal form, the membership shares and membership rights have not been duly preserved or the exit compensation has not been appropriately determined, each shareholder may, within two months of the announcement of the merger, demerger or change of legal form resolution in the Turkish Trade Registry Gazette, request the commercial court of first instance at the place where the head office of one of the companies participating in the said transactions is located to determine an appropriate compensation payment. The second paragraph of Article 140 shall not apply in determining the compensation payment.

(2) The court decision shall also take effect in respect of all shareholders of the companies participating in the merger, demerger or change of legal form, provided that they are in the same legal situation as the plaintiff.

(3) The costs of the action shall be borne by the acquiring company. Where special circumstances so justify, the court may impose the costs partly or wholly on the plaintiff.

(4) The action for review of the preservation of membership shares or membership rights shall not affect the validity of the merger, demerger or change of legal form resolution.

2. Annulment of the merger, demerger and change of legal form and consequences of deficiencies

Article 192 – (1) In the event of a violation of Articles 134 to 190, the shareholders of the companies participating in the merger, demerger or change of legal form who did not vote in favour of the merger, demerger or change of legal form resolution and who had this recorded in the minutes may bring an action for annulment within two months of the announcement of that resolution in the Turkish Trade Registry Gazette. Where an announcement is not required, the period shall begin from the date of registration.

(2) This action may also be brought where the resolution is adopted by a management body.

(3) Where there is any deficiency in the transactions relating to a merger, demerger or change of legal form, the court shall grant the parties a period to remedy it. If the legal defect cannot be or has not been remedied within the period granted, the court shall annul the resolution and take the necessary measures.

3. Liability

Article 193 – (1) All persons who have participated in any manner in merger, demerger or change of legal form transactions shall be liable to the companies, the shareholders and the creditors for the damage they have caused through their fault. The liability of the founders is reserved.

(2) (Repealed: 26/6/2012-6335/43 art.)

(3) The provisions of Articles 202 to 208, 555, 557 and 560 are reserved. In the event of the bankruptcy of a capital company or a cooperative, Articles 556 and 570 and Article 98 of the Cooperatives Law shall apply by analogy.

VI – Merger and change of legal form relating to a commercial enterprise

Article 194 – (1) A commercial enterprise may merge with a commercial company by being taken over by it. In this case, depending on the type of the acquiring commercial company, the provisions of Articles 138 to 140, 142 to 158 and, relating to the common provisions, Articles 191 to 193 shall apply by analogy.

(2) In the case of the conversion of a commercial enterprise into a commercial company, Articles 182 to 193 may apply by analogy.

(3) In order for a commercial company to be converted into a commercial enterprise, all the shares of the said commercial company must be taken over by the person or persons who will operate the commercial enterprise, and the commercial enterprise must be registered with the trade registry and announced in the name of that person or those persons. In this case, if the commercial company converted into a commercial enterprise is a general partnership or a limited partnership, the person or persons who will operate the commercial enterprise and the former partners of the commercial company shall also be jointly and severally liable, according to their capacities, for the debts of the said commercial company during the limitation period set out in Article 264. Articles 264 to 266 of this Law shall also apply to the conversion.

(4) The provision of the third paragraph of Article 182 is reserved.

G) Group of companies

I – Parent company and subsidiary

Article 195 – (1) a) If a commercial company, directly or indirectly, in another commercial company:

1. Holds the majority of the voting rights, or

2. Has the right, under the articles of association, to secure the election of such number of members as constitutes the majority capable of adopting resolutions in the management body, or

3. Forms, in addition to its own voting rights, on the basis of an agreement, alone or together with other shareholders or partners, the majority of the voting rights,

b) If a commercial company is able to keep another commercial company under its control by virtue of an agreement or in another way,

the first company is the parent company and the other is the subsidiary. If the head office of at least one of these companies is in Türkiye, the provisions of this Law relating to groups of companies shall apply.

(2) Apart from the cases provided for in the first paragraph, the fact that a commercial company holds the majority of the shares of another commercial company, or such amount of its shares as enables it to adopt resolutions capable of managing it, constitutes a presumption of the existence of the control of the first company.

(3) The control by a parent company of another company through one or more subsidiaries constitutes indirect control.

(4) The companies that are directly or indirectly dependent on the parent company form, together with it, a group of companies. Parent companies are in the position of mother companies, and subsidiaries in the position of daughter companies.

(5) Where the controlling party of the group of companies is an undertaking whose head office or domicile is located in Türkiye or abroad, Articles 195 to 209 and the provisions of this Law relating to groups of companies shall also apply. The controlling undertaking shall be deemed a merchant. The provisions relating to consolidated statements are reserved.

(6) In the application of the provisions relating to groups of companies, the term “board of directors” means the managers in limited liability companies, the executives in partnerships limited by shares and in partnerships, the management body in other legal entities, and the natural person himself or herself in the case of natural persons.

II – Calculation of share and voting ratios

Article 196 – (1) The percentage of a commercial company’s participation in a capital company is found by dividing the total nominal value of its share or shares in that capital company by the capital of the company in which the participation is held. The capital company’s own shares, both those held by itself and those acquired for its account but held by third parties, shall be deducted from the share capital or issued capital of that company in the calculation.

(2) The percentage of a commercial company’s voting rights in a capital company is found by dividing the total of the exercisable voting rights arising from the shares held by the commercial company in that capital company by the total of all exercisable voting rights in the capital company. In the calculation, the voting rights arising from the capital company’s shares, both those held by itself and those acquired for its account but held by third parties, shall be deducted.

(3) In calculating the shares held by a commercial company in a capital company, the shares held by its subsidiaries, or acquired for its account but held by third parties, shall also be taken into account.

III – Cross-shareholding

Article 197 – (1) Capital companies holding at least one quarter of each other’s shares are in a cross-shareholding relationship. Article 196 shall apply in calculating the percentages of these shares. If one of the said companies controls the other, the latter shall at the same time be deemed a subsidiary. If each of the companies in a cross-shareholding relationship controls the other, both shall be considered both a subsidiary and a parent company.

IV – Notification, registration and announcement obligations

Article 198 – (1) Where an undertaking, directly or indirectly, holds shares representing five, ten, twenty, twenty-five, thirty-three, fifty, sixty-seven or one hundred per cent of the capital of a capital company, or where its shares fall below these percentages, the undertaking shall notify the situation to the capital company and to the competent authorities indicated in this Law and in other laws within ten days following the completion of the transactions concerned. The acquisition or disposal of shares at the ratios specified above shall be disclosed under a separate heading in the annual activity and audit reports and shall be announced on the website of the capital company.

Article 196 shall apply in calculating the percentages of the shares. The members of the board of directors and the executives of the undertaking and of the capital company shall also make notifications in respect of the shares in that capital company held by themselves, their spouses, the children under their parental custody, and the commercial companies in which they hold at least twenty per cent of the capital. The notifications shall be made in writing and shall be registered with the trade registry and announced.

(2) As long as the notification and the registration and announcement obligation provided for in the first paragraph have not been fulfilled, the other rights attached to the relevant shares, including the voting right, shall be frozen. The provisions relating to the other legal consequences of the failure to fulfil the notification obligation are reserved.

(3) In order for a control agreement to be valid, it is a requirement that this agreement be registered with the trade registry and announced. The invalidity of the agreement shall not prevent the application of the provisions of this Law and other laws relating to the obligations and liabilities concerning groups of companies.

V – Reports of subsidiaries and parent companies

Article 199 – (1) The board of directors of the subsidiary shall, within the first three months of the financial year, draw up a report on the company’s relations with the parent company and the affiliated companies. The report shall set out all legal transactions that the company carried out in the past financial year with the parent company, with a company affiliated with the parent company, or, at the direction of the parent company, for the benefit of it or of a company affiliated with it, and all other measures taken or refrained from in the past financial year for the benefit of the parent company or a company affiliated with it. In legal transactions, the performance and the counter-performance, and in measures, the reason for the measure and its advantages and disadvantages for the company shall be specified. If the loss has been compensated, it shall additionally be reported how this was actually effected within the financial year or in respect of which benefits a right of claim was granted to the company.

(2) The report must comply with the principles of true and fair accountability.

(3) At the end of the report, the board of directors shall declare whether, according to the circumstances and conditions known to it at the time the legal transaction was carried out or the measure was taken or refrained from, the company received an appropriate counter-performance in each legal transaction and whether the measure taken or refrained from caused damage to the company. If the company has suffered damage, the board of directors shall additionally state whether the damage has been compensated. This declaration shall be included only in the annual activity report.

(4) Each member of the board of directors of the parent company may request the chairperson of the board of directors to have a report prepared, in accordance with the principles of diligent accountability reflecting the truth exactly and fairly, on the financial and asset-related situations and quarterly accounting results of the subsidiaries, on the relations of the parent company with the subsidiaries, of the subsidiaries with each other, and of the parent company and subsidiaries with the shareholders and their relatives, and on the transactions they have carried out and their results and effects, and to submit it to the board of directors, and to have its conclusion section annexed to the annual report and the audit report. Unless they are able to prove the existence of a just cause for refusal that is so clear as to leave no room for interpretation, the subsidiaries are obliged to provide the information and documents necessary for the preparation of this report to the experts of the parent company assigned to this task. A member of the board of directors who makes the request shall be liable for the consequences thereof if he or she has done so for the purpose of benefiting a third party.

VI – Obtaining information about subsidiaries

Article 200 – (1) Each shareholder of the parent company may request at the general assembly that satisfactory information be provided, in accordance with the principles of diligent accountability reflecting the truth exactly and fairly, on the financial and asset-related situations and accounting results of the subsidiaries, on the relations of the parent company with the subsidiaries, of the subsidiaries with each other, and of the parent company and subsidiaries with the shareholders, executives and their relatives, and on the transactions they have carried out and their results.

VII – Freezing of rights

Article 201 – (1) A capital company that acquires the shares of another capital company and knowingly enters into a cross-shareholding relationship may exercise only one quarter of the total votes and other shareholder rights arising from the shares that are the subject of the participation; with the exception of the right to acquire bonus shares, all other shareholder rights shall be frozen. The said shares shall not be taken into account in calculating the meeting and decision quorums. The provisions of Articles 389 and 612 are reserved.

(2) The restriction provided for in the first paragraph shall not apply where the subsidiary acquires the shares of the parent company or where both companies control each other.

VIII – Liability

1. Unlawful exercise of control

Article 202 – (1) a) The parent company may not exercise its control in such a way as to cause loss to the subsidiary. In particular, it may not direct the subsidiary to carry out legal transactions such as the transfer of business, assets, funds, personnel, receivables and debts; to reduce or transfer its profit; to encumber its assets with rights in rem or personal rights; to assume liabilities such as giving suretyships, guarantees and avals; to make payments; to adopt decisions or take measures that adversely affect its productivity or activity, such as not renewing its facilities or restricting or suspending its investments without a just cause; or to refrain from taking measures that would ensure its development; unless the loss is actually compensated within that financial year or a right of claim of equivalent value is granted to the subsidiary, at the latest by the end of that financial year, specifying how and when the loss will be compensated.

b) If the compensation is not actually effected within the financial year or an equivalent right of claim is not granted within the time limit, each shareholder of the subsidiary may request the parent company and those of its members of the board of directors who caused the loss to compensate the company’s damage. Upon request, or of its own motion where this would be equitable in the specific case, the judge may, instead of compensation, decide that the shares of the plaintiff shareholders be purchased by the parent company in accordance with the provisions of the second paragraph of this Article, or on another acceptable solution appropriate to the situation.

c) The creditors may also, pursuant to subparagraph (b), request that the company’s damage be paid to the company, even if the company has not been declared bankrupt.

d) Compensation may not be awarded if it is proven that the transaction causing the loss could also have been carried out or refrained from, under the same or similar conditions, by the members of the board of directors of an independent company who safeguard the company’s interests in accordance with the principle of good faith and act with the care of a prudent manager.

e) Articles 553, 555 to 557, 560 and 561 shall apply by analogy to the action to be brought by the shareholders and creditors. Where the head office of the controlling undertaking is located abroad, the action for compensation shall be brought before the commercial court of first instance at the place where the head office of the subsidiary is located.

(2) In transactions such as merger, demerger, change of legal form, dissolution, issuance of securities and significant amendments to the articles of association, which are carried out through the exercise of control and for which there is no clearly comprehensible just cause from the standpoint of the subsidiary, the shareholders who have voted against the general assembly resolution and had this recorded in the minutes, or who have objected in writing to the resolutions of the board of directors on these and similar matters, may request the court to order the controlling undertaking to compensate their damage or to purchase their shares at no less than the stock exchange value, if any, or, where there is no such value or the stock exchange value is not equitable, at the real value or at a value to be determined according to a generally accepted method. In determining the value, the data as at the date closest to the court decision shall be taken as the basis. The action for compensation or for the purchase of the shares shall be time-barred two years from the date on which the general assembly resolution was adopted or the board of directors resolution was announced.

(3) When the action provided for in the second paragraph is brought, it shall be decided that a sum of money covering the plaintiffs’ probable damage or the purchase value of the shares be deposited as security, in the name of the court, with a bank to be determined by the court. As long as the security has not been deposited, no transaction relating to the general assembly or board of directors resolution may be carried out. Where the actions provided for in the first and second paragraphs of this Article are brought in bad faith, the defendant may request the plaintiffs to compensate jointly and severally the damage it has suffered and to deposit security with the court.

(4) Other rights granted to shareholders and partners in mergers, demergers and changes of legal form are reserved.

(5) The executives of the subsidiary may request the controlling undertaking to assume, by means of an agreement, all legal consequences of the liabilities that may arise towards the shareholders and creditors by reason of the provisions of this Article.

2. In the case of full control

a) Instruction

Article 203 – (1) If a commercial company directly or indirectly holds one hundred per cent of the shares and voting rights of a capital company, the board of directors of the parent company may give instructions relating to the direction and management of the subsidiary, even if such instructions are of a nature that may produce consequences capable of causing loss to it, provided that they are required by the defined and concrete policies of the group. The bodies of the subsidiary are obliged to comply with the instructions.

b) Exception

Article 204 – (1) No instruction may be given that clearly exceeds the solvency of the subsidiary, that may endanger its existence or that is of a nature that may lead to the loss of its significant assets.

c) Non-liability of the bodies of the subsidiary towards the company and the shareholders

Article 205 – (1) The members of the board of directors, the executives and the persons concerned who may be held liable in the subsidiary may not be held liable towards the company and the shareholders by reason of their compliance with instructions within the scope of Articles 203 and 204.

d) Right of action of the company’s creditors

Article 206 – (1) If the loss incurred in the subsidiary by reason of the instructions given by the parent company and its executives within the framework of Article 203 is not compensated within that financial year, or if an equivalent right of claim specifying the time and manner is not granted to the company, the creditors who have suffered damage may bring an action for compensation against the parent company and those of its members of the board of directors who are responsible for the loss. The defendants may rely on subparagraph (d) of the first paragraph of Article 202. Subparagraph (e) of the first paragraph of Article 202 shall apply to this action.

(2) In respect of claims arising from credit and similar causes, the defendants may be released from liability by proving that the plaintiff entered into the relationship giving rise to the said claim knowing that the compensation had not been made or the right of claim had not been granted, or that the plaintiff ought to have known this situation by the nature of the business.

IX – Miscellaneous provisions

1. Special audit

Article 207 – (1) If the auditor, (…)³⁷ the special auditor, or the committee for the early detection and management of risk has expressed an opinion indicating the existence of fraud or deceit in the relations of the subsidiary with the parent company or with another subsidiary, each shareholder of the subsidiary may request the commercial court of first instance at the place where the company’s head office is located to appoint a special auditor for the purpose of clarifying this matter.

2. Right of purchase

Article 208 – (1) If the parent company directly or indirectly holds at least ninety per cent of the shares and voting rights of a capital company, and the minority obstructs the operation of the company, acts contrary to the principle of good faith, creates appreciable difficulties or acts recklessly, the parent company may purchase the shares of the minority at the stock exchange value, if any, or, if not, at the value determined in the manner provided for in the second paragraph of Article 202.

3. Liability arising from trust

Article 209 – (1) Where the reputation of the group has reached a level that inspires trust in the public or in consumers, the parent company shall be liable for the trust aroused by the use of this reputation.

H) Regulatory and supervisory power of the Ministry of Customs and Trade³⁸

Article 210 – (Amended: 26/6/2012-6335/13 art.)

(1) The Ministry of Customs and Trade is authorised to issue communiqués concerning the application of the provisions of this Law relating to commercial companies. The trade registry directorates and the companies shall comply with these communiqués. The transactions of commercial companies within the scope of this Law shall be audited by the inspection staff of the Ministry of Customs and Trade. The principles and procedure of this audit and the transactions subject to audit shall be regulated by a regulation prepared by the Ministry.

(2) Other ministries, institutions, boards and organisations may make regulations concerning companies only on condition that they remain within the limits of the power granted to them by law and subject to the prescribed purpose, subject matter and form.

(3) Without prejudice to the provisions of special laws, an action for dissolution may be brought by the Ministry of Customs and Trade, within one year of learning of such transactions, preparations or activities, against commercial companies found to have engaged in transactions contrary to public order or to their field of business, or in preparations to that effect, or in simulated business and activities.

PART TWO

General Partnership

CHAPTER ONE

Nature and Formation of the Company

A) Definition

Article 211 – (1) A general partnership is a company established between natural persons for the purpose of operating a commercial enterprise under a trade name, in which the liability of none of the partners towards the company’s creditors is limited.

B) Agreement

I – Form

Article 212 – (1) The general partnership agreement is subject to written form; in addition, it is a requirement that the signatures in the agreement be certified by a notary or that the articles of association be signed in the presence of the trade registry director or his or her deputy. (Added sentence: 15/7/2016-6728/67 art.)No stamp duty on valuable papers shall be charged on the papers containing the articles of association at the formation of the company.³⁹

II – Mandatory entries

Article 213 – (1) It is mandatory that the following entries be written in the general partnership agreement:

a) The names and surnames, domiciles and citizenships of the partners.

b) That the company is a general partnership.

c) The trade name and head office of the company.

d) The field of business of the company, set out and defined with its essential points.

e) The amount of money that each partner has undertaken to contribute as capital; the value of non-monetary capital and the manner in which this value has been assessed; if personal labour has been contributed as capital, the nature, scope and value of this labour.

f) The names and surnames of the persons authorised to represent the company, and whether they are authorised to sign alone or jointly.

(2) The partners may include in the articles of association any entries they wish, provided that they are not contrary to mandatory provisions.

III – Deficiencies

Article 214 – (1) A general partnership whose agreement has not been made in the legal form, or in which one or more of the entries mandatorily to be included in the agreement are missing or invalid, shall be treated as an ordinary partnership, and, without prejudice to the provision of Article 216, the provisions of the Turkish Code of Obligations relating to ordinary partnerships shall apply to it.

(2) The provision of Article 12 is reserved.

C) Registration

I – Obligation

Article 215 – (1) The founders of a general partnership are obliged to submit a notarised copy of the articles of association to the trade registry at the place where the company’s head office is located within fifteen days of the date of certification and to apply for registration of the company. The copy shall be kept by the registry directorate, and the entries mandatorily to be included in the agreement pursuant to Article 213 and the other matters required by law shall be registered and announced. (Added sentence: 15/7/2016-6728/67 art.) Where the articles of association are signed in the presence of the trade registry director or his or her deputy, the copy shall likewise be kept by the trade registry directorate and the registration and announcement provided for above shall be effected.

II – Failure to fulfil the obligation

Article 216 – (1) If business has been commenced in the name of the company without the registration obligation having been fulfilled, the partners shall be jointly and severally liable to third parties for the transactions they have entered into.

(2) The same provision shall also apply where, without a general partnership agreement having been made, transactions are carried out with third parties under a joint name, even if it does not contain an entry indicating the type of the company, or a tort is committed against them.

CHAPTER TWO

Relations Between the Partners

A) Freedom of contract

Article 217 – (1) Freedom of contract applies in the regulation of the relations of the partners with one another.

B) Management of the company

I – To whom management belongs

1. In general

Article 218 – (1) Each of the partners individually has the right and duty to manage the company. However, the management of affairs may be entrusted to one, several or all of the partners by the articles of association or by a resolution of the majority of the partners.

(2) The provisions relating to commercial representatives (procurists) and other commercial representatives are reserved.

2. Removal from office

a) Appointment by the articles of association

Article 219 – (1) If the management of affairs has been entrusted to a partner by the articles of association, his or her right and duty of management may not be restricted by the other partners, nor may he or she be removed from office. However, where just causes exist, the right and duty of management may be restricted or withdrawn by a court decision upon the request of one of the partners. Circumstances such as imprudence, gross negligence in the performance of the duty or incapacity in management shall be deemed just causes.

b) Appointment by resolution of the partners

Article 220 – (1) If the management of affairs has been entrusted to a partner by a resolution adopted after the articles of association were made, that partner may be removed from office by a resolution of the majority of the partners. If a majority cannot be obtained, each partner may apply to the court for the removal from office of the managing partner concerned, claiming that the partner in charge of management has violated the articles of association or that there is a just cause in the case.

3. Acting alone or jointly in the management of affairs

Article 221 – (1) If the management of the company’s affairs has been entrusted to all or several of the partners, each of them alone has the right and duty of management. Nevertheless, if some of the partners responsible for managing the company assert that a transaction to be carried out is not in the interests of the company, the other partners having the right and duty of management may carry out that transaction by a majority resolution.

(2) If it is written in the articles of association that the partners to whom the management of the company’s affairs has been entrusted shall act jointly, the partners must agree on every transaction, except in cases where delay is deemed dangerous. If they cannot agree, the matter shall be referred to the partners’ meeting and action shall be taken in accordance with the resolution to be adopted by that meeting.

4. Objection of the other partners

Article 222 – (1) If management has been entrusted to a partner by the articles of association, that partner may carry out the transactions required for the management of the company, even if the other partners object and oppose, provided that this is not based on fraud.

II – Scope of management

Article 223 – (1) The matters within the scope of the management of the company are limited to the ordinary transactions and acts that must be carried out to achieve the purpose and object of the company. Those managing the company are also authorised, in matters they consider to be in the interests of the company and provided that they are limited to ordinary transactions and acts, to settle, waive and accept claims and to resort to arbitration. However, the unanimity of the partners is required in matters falling outside ordinary acts and transactions, such as making donations, acting as surety, giving guarantees in favour of third parties, appointing a commercial representative (procurist) and, if not falling within the company’s object, selling or purchasing immovables, furnishing security, disposing of means of production relating to the essence of the company, pledging, or establishing a commercial enterprise pledge.

III – Obligation to pay interest

Article 224 – (1) A partner is obliged to pay to the company, immediately, money that he or she has withdrawn from the company without authority and money collected from any source for the account of the company; and a loan received from the company, together with interest from the date of receipt.

C) Supervision

Article 225 – (1) Even if a partner does not have the right and duty of management, he or she has the right personally to obtain information about the course of the company’s affairs, to examine the company’s documents and books and, on the basis thereof, to draw up for himself or herself a statement of accounts showing the financial position of the company. Any agreement to the contrary is invalid.

D) Voting right and resolutions

Article 226 – (1) Each partner has one vote. Any agreement to the contrary is invalid.

(2) Resolutions relating to the amendment of the articles of association in any manner whatsoever shall be adopted unanimously, and other resolutions, unless otherwise provided in the law or the articles of association, by the votes of the majority of the partners.

(3) “Unanimity” means resolutions that must be adopted by the affirmative votes of all partners in the company, and “majority” means resolutions that must be adopted by the affirmative votes of the absolute majority of the partners in the company.

E) Right to a share of profit and participation in losses

I – Drawing up of financial statements

Article 227 – (1) The managing partners shall, at the end of the company’s financial period, prepare and sign the financial statements in accordance with the provisions of Articles 64 to 88 of this Law relating to commercial books and submit them for the approval of the partners’ meeting. The financial statements shall become final with the approval of the majority of the partners. Without prejudice to the provision of the second paragraph, the distribution of profit shall also be decided at the same meeting. If this resolution is contrary to the law, the articles of association, the company’s resolutions or the principle of good faith, the partners may bring an action for annulment within three months of the date of the resolution on the use of the profit.

(2) The partners may, by the articles of association or by a resolution they subsequently adopt, leave the determination of the share in profit and loss falling to them to one of themselves or to a third party. It is a requirement that the decision to be given by this partner or third party is not contrary to equity. The right of action shall lapse in situations indicating express or implied acceptance, such as the lapse of three months from learning of the said decision, the receipt by the partner of all or part of the determined share of profit or its transfer to another person, or the commencement of payment of the loss.

(3) If the decision on the sharing of profit and loss is contrary to the rules of equity, it shall be annulled by the court. In this case, the profit and loss shall be shared according to the provisions on ordinary partnerships.

(4) If provided for in the articles of association, interest and remuneration shall be paid during the financial period.

II – Claims of the partner

Article 228 – (1) Each partner has the right to claim from the company the share falling to him or her of the profit realised at the end of the financial period, interest on the money he or she has lent to the company and, if so agreed, on the capital he or she has contributed, and the remuneration to which he or she is entitled under the articles of association; and, if the year-end balance sheet has not been drawn up in accordance with the law or the articles of association, that it be drawn up, if the share of profit has not been determined in the balance sheet, that it be determined, and his or her receivables.

(2) Contractual terms resulting in the removal or restriction of the rights granted to the partner by this Article are invalid.

III- Share of loss

Article 229 – (1) Unless the partners decide unanimously, no partner may be compelled to make up the portion by which his or her capital has been reduced.

(2) The portion of the capital reduced by loss shall, unless otherwise decided, be covered by the profit to be realised.

F) Prohibition of competition

I – Rule

Article 230 – (1) A partner may not, without the permission of the other partners, carry out for his or her own account or for the account of another a business of the kind of commercial business carried out by the company of which he or she is a partner, nor may he or she join a company engaged in the same kind of commercial business as a partner with unlimited liability.

(2) If the other partners, knowing that a partner joining a newly established company is also one of the partners with unlimited liability of another previously established company, have not expressly agreed among themselves that his or her connection with the previous company be severed, they shall be presumed to have accepted this situation.

II – Contravention

Article 231 – (1) If a partner acts contrary to Article 230, the company is free to claim compensation from this partner or, instead of compensation, to deem the transactions carried out by this partner in his or her own name as having been carried out in the name of the company, and to request that the benefits arising from the transactions he or she has carried out for the account of third parties be handed over to the company.

(2) The other partners shall decide by majority on one of these options. This right shall be time-barred three months from the date on which it was learned that a transaction had been carried out or that the partner had joined another company and, in any event, one year after the date on which the transaction was carried out.

(3) The above provisions shall not affect the right of the partners whose rights have been violated to request the dissolution of the company.

CHAPTER THREE

Relations of the Company and the Partners with Third Parties

A) Acquisition of legal personality

Article 232 – (1) A general partnership shall acquire legal personality upon registration with the trade registry. Any agreement to the contrary is invalid against third parties.

B) Representation

I – Scope

Article 233 – (1) A person authorised to represent the company has the authority to carry out, in the name of the company, all kinds of business and legal transactions falling within the company’s field of business and to use the company’s trade name. Any condition restricting this authority may not be asserted against third parties acting in good faith.

(2) However, if joint signature has been made a requirement for binding the company under the provisions of the articles of association that are required to be registered and announced, this requirement is also valid against third parties.

II – Effects

Article 234 – (1) The company becomes creditor and debtor by virtue of the transactions carried out expressly or impliedly in the name of the company by the persons having the authority to represent the company.

(2) The company is also directly liable for torts committed by a partner while performing his or her duties relating to the company.

III – Revocation of the power of representation

Article 235 – (1) Where just causes exist, the power of representation may be revoked by the court upon the application of a partner. In cases where delay entails danger, the court may revoke the power of representation as an interim measure and confer this power on a curator. The court shall of its own motion have the appointment of the curator, his or her duties, the power of representation granted by the court and the limits thereof registered and announced.

(2) The commercial representative (procurist) may be removed from office, with effect against third parties, by all the partners having the power of representation.

C) Position of the company’s creditors

I – Personal liability of the partners

Article 236 – (1) The partners shall be jointly and severally liable, with all their assets, for the debts and undertakings of the company.

(2) A person newly joining the company shall be jointly and severally liable, together with the other partners and with all his or her assets, for the debts and undertakings of the company, even if they arose before the date of joining.

(3) Terms included in the agreement contrary to the first and second paragraphs shall not be valid in respect of third parties.

II- Degree of liability

Article 237 – (1) The company is primarily liable for the debts and undertakings of the company. However, if enforcement proceedings brought against the company have remained fruitless or the company has ended for any reason, an action may be brought and proceedings may be pursued against the partner alone or against the partner together with the company.

(2) The above provisions shall not prevent the imposition of a precautionary attachment on the personal assets of the partners. In respect of precautionary attachments imposed under this paragraph, the period provided for in the first paragraph of Article 264 of the Enforcement and Bankruptcy Law shall begin to run from the date on which the authority to commence an action or proceedings against the partner arises under the second sentence of the first paragraph. Nevertheless, if no proceedings or action is commenced against the company within the statutory period from the service of the precautionary attachment report, the precautionary attachment shall lapse.

III – Court decision

Article 238 – (1) A court decision obtained against the company alone may not be enforced against the partners unless the proceedings against the company have remained fruitless or the company has ended for any reason.

(2) If the debt is not paid despite service of the order for payment on the company, the creditor may also request the direct bankruptcy of the partners or of some of them together with the company.

IV- Bankruptcy

1. Bankruptcy of the company

Article 239 – (1) In the event of the bankruptcy of the company, the personal creditors of the partners may not have recourse to the company’s assets unless the company’s creditors have received their claims.

2. Bankruptcy of the company and the partners

Article 240 – (1) The bankruptcy of the company shall not entail the bankruptcy of the partners. However, if the money is not deposited despite a deposit order, the creditor may request the court that the deposit order also be served on the partners or on some of them and that, if they do not comply with it, their bankruptcy be adjudicated together with that of the company. The right of a creditor who has not exercised this right to pursue the partners separately by way of bankruptcy as well, in the event that he or she cannot receive his or her claim in full from the company’s estate, is reserved.

(2) If recourse is had to the assets of the partners by way of ordinary proceedings or bankruptcy, there shall be no right of priority or privilege between their personal creditors and the company’s creditors. However, the rights of those among the personal creditors who have a statutory right of priority are reserved.

3. Rights of the partners

Article 241 – (1) In the event of the bankruptcy of the company, the partners may not lodge claims in the estate for the capital they have contributed and for current interest; however, they may lodge claims in the estate, like any creditor, for accrued interest and remuneration and for the expenses they have incurred for the benefit of the company.

V – Set-off

Article 242 – (1) A person who is indebted to the company may not set off this debt against his or her claim against one of the partners.

(2) Nor may a partner set off his or her debt to his or her personal creditor against a claim of the company against the same person.

(3) On the other hand, if a creditor of the company is at the same time a personal debtor of one of the partners, both the company’s creditor and the partner shall have the right of set-off from the moment when the partner may be personally pursued for the company’s debt pursuant to Articles 237 and 240.

CHAPTER FOUR

Termination of the Company and Withdrawal of a Partner

A) Termination

I – Causes

1. In general

Article 243 – (1) Without prejudice to the provision of Article 253, general partnerships shall end upon the occurrence of one of the causes provided for in Articles 639 and 640 of the Turkish Code of Obligations and of the causes written below:

a) The bankruptcy of the company, even if it has resulted in a concordat.

b) The failure to decide to make up the capital or to be content with the remaining capital despite the loss of all or two thirds of the company’s capital.

c) The merger of the company with another company.

d) If the registration and announcement have not been made within or after the period indicated in Article 215 of the Law, regardless of how much time has elapsed, a decision of dissolution by the court upon the request of any of the partners, provided that this partner has sent to the other partners, through a notary, a warning containing an appropriate period.

e) Without prejudice to the provision of Article 254, the bankruptcy of one of the partners.

2. Exceptions

Article 244 – (1) A provision of a general nature in the articles of association stating, without specifying one or more particular causes, that the company shall not end in the event of the existence of any of the causes of dissolution by operation of law shall not be valid. However, provided that it is not contrary to the mandatory provisions of the law, it may be accepted in the articles of association that certain specific causes of dissolution shall not result in the termination of the company.

3. Just causes

Article 245 – (1) A just cause is the disappearance of the factual or personal reasons that led to the formation of the company in such a way as to make the achievement of the company’s field of business impossible or difficult; in particular, circumstances such as:

a) A partner having betrayed the company in the management of the company’s affairs or in the drawing up of its accounts,

b) A partner failing to perform the principal duties and obligations incumbent on him or her,

c) A partner misusing the company’s trade name or assets for the sake of his or her personal interests,

d) A partner losing, owing to a permanent illness he or she has suffered or another reason, the ability and capacity necessary to carry out the company affairs he or she has undertaken,

are among the just causes.

(2) A partner in whose person a cause for dissolution has arisen pursuant to subparagraphs (a), (b) and (c) has no right of action.

4. Special situations

a) Failure to fulfil the obligation to contribute capital

Article 246 – (1) In order to be able to bring an action for dissolution on account of the failure to fulfil the obligation to contribute capital, a notice containing an appropriate period shall first be sent to the partner through a notary. The notice shall also contain a warning to fulfil the obligation within the period granted.

b) Presumption

Article 247 – (1) Companies that have been impliedly extended by the continuation of business after the expiry of the company term provided for in the articles of association, or whose term has been tied to the life of a partner, shall be deemed companies of indefinite duration.

5. Position of the personal creditors

a) Right of objection in the case of extension of the company’s term

Article 248 – (1) The personal creditor of any of the partners may object to the resolution adopted by the partners on the extension of the company’s term.

(2) In order to be able to object, it is a requirement that the creditor relies on a court decision or a document of that nature or on finalised enforcement proceedings, and applies to a notary, within fifteen days of the date of announcement of the extension resolution, for service of the objection through the notary. If not made in time, the right of objection shall lapse.

(3) If the resolution on the extension of the term has not been registered and announced, the creditor may object to this resolution at any time.

b) Right of attachment and to request the dissolution of the company

Article 249 – (1) If the personal creditor of a partner cannot recover his or her claim from the personal assets of the debtor and from the debtor’s share of profit in the company pursuant to Article 133, he or she is entitled to have an attachment imposed on the share that will fall to the debtor partner at the end of liquidation and to request the dissolution of the company, by giving notice six months in advance and with effect as of the end of the financial year.

(2) If the company or the other partners pay the debt before the court decides on dissolution, the action for dissolution shall lapse.

II – Effects

1. Registration and announcement

Article 250 – (1) In the event of the termination of the company, the partners are obliged to have the termination registered and announced. Where the company is dissolved by reason of bankruptcy, this obligation lies with the bankruptcy officer.

(2) If the dissolution of the company results from the death of a partner, the petition for registration and announcement shall be submitted by all the other partners together with the heirs of the deceased partner; in cases where the participation of the heirs is not possible or is difficult, by the surviving partners.

2. Termination of the management rights of the partners

Article 251 – (1) Those authorised to manage the company may not carry out transactions in the name and for the account of the company that has ended; otherwise, they shall be jointly, severally and unlimitedly liable for these transactions. The provisions of Article 252 are reserved.

(2) Unless the dissolution has been registered and announced in accordance with the law, the liability of all the partners towards third parties shall continue.

3. Interim management

Article 252 – (1) Where a decision is given for the restriction (placing under guardianship) or the bankruptcy of a partner, Article 641 of the Turkish Code of Obligations shall apply.

B) Withdrawal of partners from the company

I – Special cases

1. Death of a partner

Article 253 – (1) If there is no provision in the articles of association that the company shall continue with the heirs of the deceased partner, the company may continue among the heirs and the other partners upon a resolution adopted unanimously by them. If the heirs or one of them do not consent to remain in the company, the other partners may exclude the non-consenting heirs of the deceased partner from the company by paying the shares falling to them and continue the company among themselves. In this situation, if unanimity cannot be achieved because one of the surviving partners does not consent to the continuation of the company, the company shall end.

(2) If there is a provision in the articles of association that the company shall continue as a general partnership between the heirs of the deceased partner and the other partners, the heirs are free to continue or not to continue in the company in the capacity of general partners. If the heirs wish the company to continue, the other partners are obliged to accept this wish. However, if there is an heir who does not wish to remain in the company in the capacity of a general partner, he or she may propose to be admitted to the company as a limited partner with the amount falling to him or her from the share of the deceased partner. The other partners are not obliged to accept this proposal. The heirs must notify the company within three months of the date of the partner’s death whether they will join the company as general partners or as limited partners. Until the notification of the situation to the company, the heirs shall be deemed to have remained in the company as limited partners. Heirs who have not made a notification within this period shall acquire the capacity of general partners as from the expiry of the period.

2. Bankruptcy of a partner

Article 254 – (1) In the event of the bankruptcy of one of the partners, the bankrupt partner may be excluded from the company. In this case, the company shall continue among the other partners and the bankrupt’s share shall be paid to the estate. However, this right of the partners may be excluded by agreement.

3. Just causes

Article 255 – (1) In situations where the dissolution of the company may be requested on account of reasons arising from a partner himself or herself, all the other partners may decide on the exclusion of that partner from the company and the continuation of the company. The articles of association may provide that this resolution be adopted by majority.

(2) The excluded partner may bring an action against the company for annulment of the exclusion within a three-month peremptory period from the service of this resolution through a notary.

(3) If an exclusion resolution cannot be adopted pursuant to the first paragraph, each partner may request the commercial court of first instance at the place where the company’s head office is located to exclude the said partner from the company and to determine the exit share.

4. Notice of dissolution

Article 256 – (1) In companies of indefinite duration, if one of the partners gives notice of dissolution of the company, the other partners may, by not accepting the dissolution, decide to exclude that partner from the company and to continue the company among themselves.

(2) The provision of the first paragraph also applies where the personal creditor of a partner exercises the right of objection or dissolution pursuant to Articles 248 or 249.

(3) In this case, the resolution that the company shall continue shall be served on the creditor and the debtor partner shall be excluded from the company at the end of the financial period.

5. In a two-person company

a) Where just causes exist

Article 257 – (1) In a general partnership consisting of only two persons, if there are just causes requiring the exclusion of one of the partners from the company, the court may, upon the request of the other partner, without deciding on dissolution and liquidation, decide that all the business and transactions, assets, receivables and debts of the company be left to the plaintiff partner and that the other partner be excluded from the company. In this case, the provision of Article 262 shall apply in respect of the excluded partner.

b) Where other causes exist

Article 258 – (1) In a company consisting of two persons, if the personal creditor of one of the partners exercises the right of objection or dissolution he or she has under Articles 248, 249 and 256, or if one of the partners becomes bankrupt, the other partner may benefit from Article 257.

II – Effects

1. Registration

Article 259 – (1) In the event of a partner withdrawing or being excluded from the company, the other partners are obliged to have this registered and announced.

(2) In the event of the death of a partner, the second paragraph of Article 250 shall apply.

(3) The withdrawal or exclusion of a partner from the company shall be effective against third parties only from the date of registration and announcement.

(4) The withdrawing or excluded partner shall be liable to third parties for the company’s transactions carried out up to the date on which this situation is registered and announced.

2. Share of the departing partner

a) Method of calculation

Article 260 – (1) Unless otherwise provided in the articles of association, the share of a partner who withdraws or is excluded from the company shall be calculated on the basis of the company’s assets as at the date on which the withdrawal was requested or the partner was excluded or, in the event of a dispute, as at the date closest to the date of the decision.

b) Method of payment

Article 261 – (1) The excluded or withdrawing partner may receive his or her share calculated pursuant to Article 260 from the company only in cash.

c) Time of payment

Article 262 – (1) The share of the withdrawing or excluded partner, to be calculated according to the rules set out in Article 260, shall be paid on the date indicated in the articles of association and, if there is no provision in the articles of association, on the date of the first balance sheet to be drawn up after the departure.

(2) The excluded or withdrawing partner may not receive his or her capital share in the company until the business entered into before the date of departure has been liquidated.

d) Uncompleted transactions

Article 263 – (1) The expelled or withdrawing partner shall participate in the rights and obligations that are the direct consequences of transactions commenced before his or her departure.

(2) The expelled or withdrawing partner may not prevent transactions previously commenced from being completed and brought to a conclusion by the remaining partners in a manner they consider beneficial. However, where the immediate liquidation of such transactions is not possible, the withdrawing or expelled partner may request, at the end of each financial period, the accounts of the transactions completed during that year and information on the status, as at that date, of the transactions still in progress.

e) Statute of limitations

Article 264 – (1) The claims that company creditors may assert against the partners in respect of the debts of the company shall become time-barred upon the expiry of three years from the publication in the Turkish Trade Registry Gazette of the partner’s departure from the company, the termination of the company or the declaration of its bankruptcy; however, where, owing to its nature, the claim is subject to a shorter statute of limitations, that limitation period shall apply.

(2) If the claim falls due after the announcement, the statute of limitations shall begin to run from the moment the claim falls due.

(3) The statute of limitations provided for in this Article shall not apply to the claims of the partners against one another.

f) Special cases

Article 265 – (1) The three-year statute of limitations set out in Article 264 may not be asserted against a creditor who has recourse solely to the undistributed company assets in order to obtain his or her right.

(2) If a partner takes over the commercial enterprise of the company, he or she may not assert the three-year statute of limitations against the creditors. On the other hand, the two-year statute of limitations under the provisions on the assumption of debt shall apply in respect of the partners who leave by reason of the takeover. Where a third person takes over the commercial enterprise together with its receivables and debts, the two-year statute of limitations shall apply.

g) Interruption of the statute of limitations

Article 266 – (1) The interruption of the statute of limitations against the continuing company or against another partner shall not have the effect of interrupting the statute of limitations against the partner who has left the company.

CHAPTER FIVE

Liquidation

A) General provisions

I – Freedom of contract

1. Rule

Article 267 – (1) Where the company agreement does not contain a different provision, liquidation shall be carried out in accordance with the provisions of this Chapter.

2. Obligation to comply with the resolutions of the partners

Article 268 – (1) During the liquidation, the liquidators shall act in accordance with the resolutions concerning the liquidation adopted unanimously by the partners.

(2) The right to participate in resolutions concerning the appointment and dismissal of the liquidators or the instructions to be given to them shall belong, in the event of a partner’s bankruptcy, to the bankruptcy administration, in the event of his or her death, to the heirs and, in the event of his or her being placed under guardianship, to his or her legal representative. The heirs shall have themselves represented, by a representative whom they shall appoint unanimously. Where unanimity is not reached, the appointment of the representative shall be a matter for the court.

(3) Disputes arising between the partners and the liquidators shall be decided in accordance with the simple procedure. In the proceedings, the liquidators and the partners shall be heard. The decision must be rendered as soon as possible. Decisions on this matter are final.

II – Continuation of legal personality

Article 269 – (1) A company that has entered into liquidation shall, also in its relations with the partners and without prejudice to the provision of Article 293, retain its legal personality, its capacity being limited to this purpose until the end of the liquidation, and shall continue to use its trade name by adding thereto the words “in liquidation”.

III – Bankruptcy

Article 270 – (1) The fact that a general partnership is in liquidation shall not constitute an obstacle to its bankruptcy.

IV – Right of priority of company creditors

Article 271 – (1) The rights of priority which the creditors of a general partnership have over the company assets as against the personal claims of the partners shall continue after the termination of the company.

B) Liquidators

I – In general

Article 272 – (1) The liquidation of a general partnership, in cases of termination other than bankruptcy, shall be the responsibility of the liquidators.

II – Election and appointment

Article 273 – (1) The liquidators shall be elected by the company agreement, or unanimously by the partners during the existence of the company or after its termination.

(2) If no liquidator has been elected in accordance with the provisions of the first paragraph, all the partners or their legal representatives shall be deemed liquidators. Nevertheless, upon the request of one of the partners, the commercial court at the place where the company’s head office is located shall appoint one or more liquidators for the company in liquidation. The court may, if it deems necessary, hear the other partners by serving the petition on them.

(3) Liquidators, whether elected by the partners or appointed by the court, may be chosen from among the partners or from third persons.

III – Dismissal

1. Partners who are liquidators

a) Appointment before termination

Article 274 – (1) If the liquidators have been elected from among the partners by the company agreement or by a resolution of the partners before the termination of the company, they may be dismissed by a resolution which the other partners may adopt unanimously. Where unanimity cannot be reached, they may be dismissed by the court upon the request of any of the partners, if there are just causes.

(2) The action for dismissal may also be brought before the termination of the company.

b) Appointment after termination

Article 275 – (1) After the termination of the company, liquidators elected from among the partners may be dismissed by a resolution to be adopted unanimously by the other partners. Where unanimity cannot be reached, they may be dismissed by the court upon the request of any of the partners, if there are just causes.

2. Liquidators who are not partners

Article 276 – (1) Liquidators who are not partners, even if they have been elected by the company agreement or by a subsequent resolution or after the termination of the company, may be dismissed only by a resolution to be adopted unanimously by the partners. Where unanimity cannot be reached, they may be dismissed by the court for just causes upon the request of any of the partners.

(2) The action for dismissal may also be brought before the termination of the company.

3. Liquidators appointed by the court

Article 277 – (1) Article 276 shall also apply to the dismissal of liquidators appointed by the court.

IV – Provisions on the manner of acting

1. Acting jointly

Article 278 – (1) Liquidators who have not been authorised by the company agreement or by a subsequent resolution to conduct the liquidation affairs alone shall act jointly.

(2) If a liquidator is authorised to conduct the liquidation alone, this shall be registered and announced in the manner provided for in the law.

2. Prohibition of transfer and appointment of a proxy

Article 279 – (1) A liquidator may not transfer his or her duties to another liquidator or to third persons. However, for the conduct of certain specific affairs and transactions, the liquidators may appoint one or some of themselves, or a third person, as proxy.

3. Representation

Article 280 – (1) The company in liquidation shall be represented before the courts and otherwise by the liquidators.

(2) Where they consider it beneficial for the company, the liquidators shall also be authorised, provided that this is limited to ordinary transactions and affairs, to settle, to waive, to accept claims, to agree to arbitration and, in particular, to choose arbitrators; where necessary, they may also enter into new transactions.

(3) All documents and instruments drawn up in the name of a general partnership in liquidation must be signed by the liquidators with the addition of the words “the liquidators of such-and-such company in liquidation”.

(4) The company shall also be liable for the torts committed by a liquidator in the performance of his or her duties.

4. Acting alone

Article 281 – (1) It shall be sufficient for declarations by third persons such as proposals, offers, notifications, warnings and service to be made to only one of the liquidators.

(2) In situations where danger to the interests of the company is anticipated, in particular in having recourse to legal remedies, the liquidators may act individually.

5. Extension or restriction of powers

Article 282 – (1) The powers which the liquidators hold by law may be restricted or extended by the partners unanimously or, where there are just causes, by a court decision.

(2) Unless registered and announced, the restriction of powers may not be asserted against third persons acting in good faith.

V – Registration and announcement

Article 283 – (1) The provisions of the company agreement concerning the appointment, replacement, dismissal and powers of the liquidators, as well as the resolutions and decisions concerning the liquidation adopted by the partners or rendered by the court, must be registered and announced.

VI- Remuneration

Article 284 – (1) Liquidators elected from among the partners may not receive remuneration unless this is specified in the agreement or in a subsequent resolution.

(2) Liquidators appointed from among non-partners may, even if no remuneration has been agreed, claim an appropriate remuneration to be assessed according to the requirements of the situation; in the event of disagreement, the parties may have recourse to the courts.

VII – Liability

Article 285 – (1) Liquidators who cause loss to third persons or to the partners by acting contrary to the law, the company agreement or other provisions setting out the conditions for the conduct of affairs shall be held jointly and severally liable unless they prove that they are not at fault.

(2) The liquidators shall also be jointly and severally liable, pursuant to Article 116 of the Turkish Code of Obligations, towards both third persons and the partners for the acts, contrary to the law, the company agreement or other provisions setting out the conditions for the conduct of affairs, of the persons whom they have appointed and engaged in service.

(3) These actions shall become time-barred two years from the date on which the claimant learned of the loss and the perpetrator and, in any event, five years from the act giving rise to the loss. However, where the act giving rise to the loss constitutes an offence and is subject under the Turkish Penal Code to a longer prosecution limitation period, that limitation period shall also apply to the action for compensation.

C) Liquidation affairs

I – Protective measures

Article 286 – (1) The liquidators are obliged to take the necessary measures, as a prudent businessperson, for the protection of all the assets and rights of the company in liquidation, and to complete the liquidation as soon as possible.

II – Obligation to keep books

1. Opening inventory and balance sheet

Article 287 – (1) The liquidators, if they were elected in advance, in the days immediately following the termination of the company and, if they were elected by the partners or appointed by the court after the termination of the company, immediately after their election or appointment, shall summon the persons who conducted the affairs of the company and, together with them or, if they do not attend, alone, draw up an inventory and a balance sheet showing the financial position of the company. The liquidators may, if they deem necessary, consult experts in order to value the company assets. The inventory and balance sheet so drawn up shall be signed in the presence of the liquidators by those who managed the affairs of the company.

(2) After the signing of the inventory and the balance sheet, the liquidators shall take possession of all the assets of the terminated company recorded in the inventory, as well as its documents and books.

2. Books

Article 288 – (1) The liquidators are obliged to keep the books necessary to ensure the security of the liquidation transactions.

3. Final balance sheet

Article 289 – (1) At the end of the liquidation, the liquidators are obliged to draw up a balance sheet showing the shares of the partners in the capital and in the profit and loss, as well as their other rights, in accordance with the company agreement or the provisions of the law, and to serve it on the partners. If the partners do not object by applying to the court within one month, the balance sheet shall become final.

(2) Thereafter, if the partners refrain from receiving the shares due to them, the liquidators shall deposit these shares, separately in the name of each partner, with one of the banks indicated in Article 296.

4. Obligation of retention

Article 290 – (1) The provision of Article 82 shall apply to the retention of documents and books at the end of the liquidation.

III – Purpose of the liquidation

Article 291 – (1) The liquidators are authorised and obliged to complete the affairs and transactions commenced during the period in which the company was active but not yet concluded, to perform the debts and undertakings of the company, to collect the receivables of the company, where necessary through the courts, to convert the assets into money, and to carry out all affairs and transactions aimed at and serving the realisation of the net assets.

IV – New transactions

1. Rule

Article 292 – (1) The liquidators may not enter into any new transaction that is not required by the liquidation. Otherwise, they shall be jointly and severally liable towards the partners for such transactions.

2. Exception

Article 293 – (1) The liquidators may continue transactions falling within the scope of the company’s business only with the unanimous consent of the partners; in cases where dissolution has been ordered by the court, if the partners are unable to achieve unanimity, they may continue them with an approval decision of the court.

V – Conversion of assets into money

1. Separate sale

Article 294 – (1) In the event of the termination of the company, the liquidators may sell the movables belonging to the company either by auction or by negotiation, according to the requirements of the situation. Unless the partners determine another form of sale by a unanimous resolution, immovables may be sold only by public auction pursuant to the provisions of the Enforcement and Bankruptcy Law.

(2) The presence among the persons concerned of a minor or a person under guardianship shall not prevent the application of this provision.

2. Wholesale sale

Article 295 – (1) Unless the partners decide unanimously, the liquidators may not sell a substantial portion of the company assets en bloc; however, in cases where unanimity cannot be achieved, the court may order the sale en bloc.

3. Depositing of money

Article 296 – (1) The liquidators shall deposit, in the name of the company, any money in excess of one thousand Turkish liras obtained during the liquidation with a bank to be determined by the court.

VI – Payment of debts

Article 297 – (1) The liquidators shall be obliged to pay immediately, applying a discount, the debts of a general partnership in liquidation that have not yet fallen due, and the creditors shall be obliged to accept this manner of payment.

VII – Additional payments by the partners

Article 298 – (1) Where the assets of a general partnership are insufficient to cover all of its debts, the liquidators shall have recourse to the partners in order to ensure the payment of the remaining company debts.

VIII – Distribution of the liquidation surplus

1. Provisional payments

Article 299 – (1) The liquidators may provisionally distribute the available money among the partners, on condition that they retain an amount sufficient to cover the rights and claims of the creditors and the partners that are likely to arise in the future.

2. Final distribution

Article 300 – (1) The net assets of the company shall be distributed by the liquidators in accordance with the company agreement or a subsequent resolution. In the absence of a provision to the contrary in the agreement or of a resolution of the partners, the distribution shall be made in money.

IX – Right of supervision of the partners

1. Right to request information

Article 301 – (1) The liquidators are obliged to provide the partners at all times with information on the status of the liquidation affairs and, if the partners so request, with a signed document on this matter.

(2) At the end of the liquidation, the liquidators shall render account to the partners concerning the liquidation affairs and transactions.

2. Right to examine the books

Article 302 – (1) The liquidators are obliged, upon request, to show the partners all the books and documents relating to the company and to the liquidation at the place where the liquidation is being carried out. The liquidators may not prevent the partners from taking copies of these books and documents.

X – End of the liquidation

Article 303 – (1) Upon the completion of the liquidation, the liquidators shall notify the trade registry directorate of the situation so that the trade name of the company may be deleted from the registry and this may be registered and announced.

PART THREE

Limited Partnership

CHAPTER ONE

Nature and Formation of the Company

A) Definition

Article 304 – (1) A limited partnership is a company established for the purpose of operating a commercial enterprise under a trade name, in which the liability of one or more of the partners towards the company creditors is not limited and the liability of the other partner or partners is limited to a specific capital.

(2) Partners whose liability is not limited are called general partners (komandite), and those whose liability is limited are called limited partners (komanditer).

(3) General partners must be natural persons. Legal entities may only be limited partners.

B) Applicable provisions

Article 305 – (1) Without prejudice to the special provisions of this Chapter, Articles 212 to 216 concerning general partnerships shall also apply to limited partnerships.

(2) The company agreement shall expressly specify the amount and type of the capital of each limited partner and the management duties assigned to the limited partners which arise from their status as partners and which must not be in the nature of a right of management.

C) Agreement

I – Interpretation

Article 306 – (1) Whether a company is a limited partnership shall be determined according to the provisions of the agreement. The name and character given to the company by the partners shall not by themselves be sufficient to determine the type of that company.

(2) If it cannot be clearly established that a company is a limited partnership, that company shall be deemed to be a general partnership.

II- Obligation of the limited partners to contribute capital

Article 307 – (1) In addition to the particulars indicated in Article 213, the names of the limited partners and the type and amount of the capital contributed or undertaken to be contributed by each of them shall be written in the agreement of a limited partnership, and it shall be caused to be registered and announced.

(2) A limited partner may not contribute his or her personal labour and commercial reputation as capital.

CHAPTER TWO

Relations between the Partners

A) Freedom of contract

Article 308 – (1) In a limited partnership, the relations of the partners with one another shall be governed by the company agreement. In cases where the company agreement contains no provision, Articles 217 to 231 concerning general partnerships shall apply, without prejudice to the provisions set out in this Chapter.

B) Legal position of the limited partners

I – Management

Article 309 – (1) Each partner, whether a general partner or a limited partner, shall have one vote. Arrangements contrary to this rule are invalid.

(2) The company shall be managed by the general partners.

(3) The limited partners are neither charged with nor authorised to conduct the affairs of the company, nor may they object to transactions carried out by the persons holding the right of management within their powers. However, the limited partners shall also have the right to vote in extraordinary affairs and transactions, in structural changes such as the amendment of the company agreement, change of legal form, merger and demerger, and in fundamental transactions such as the admission of a partner to the company, the expulsion of a partner and the transfer of a share.

II – Supervision

Article 310 – (1) Each limited partner is authorised, at the end of the business year and during business hours, to examine the content of the company’s inventories and balance sheet and its other financial statements, as well as their accuracy and validity.

(2) The limited partner may carry out this examination personally or have it carried out by an expert. If an objection is raised concerning the person of the expert, the court shall, upon the request of the limited partner, decide on the appointment of an expert witness. This decision is final.⁴⁰

(3) Where there are just causes, the court may at any time, upon the request of the limited partner, permit the affairs and assets of the company to be examined personally or by an expert witness.

(4) Provisions of the company agreement contrary to the provisions of this Article are invalid.

III – Prohibition of competition

Article 311 – (1) Article 230, relating to the prohibition on general partners carrying out transactions of the same kind as those constituting the subject of the company, shall not apply to the limited partners. However, if a limited partner opens a commercial enterprise that is to engage in business falling within the scope of the company’s business, or becomes a partner of a person who opens such an enterprise, or joins a company of this nature, he or she shall lose the right to examine the documents and books of the limited partnership.

IV – Profit and loss

1. In general

Article 312 – (1) The limited partner shall receive in cash the share of profit realised at the end of the business year and the interest agreed upon in the company agreement. However, if the capital he or she has contributed has decreased for any reason, he or she may not claim profit and interest until the deficit has been made good. Nevertheless, out of the profit shares to be obtained in future years, the accumulated interest for past years shall be paid out of the excess remaining after the deficit in capital has been made good, before anything else.

2. Interest and profit shares not required to be returned

a) Those accrued in accordance with procedure

Article 313 – (1) The limited partners may not be compelled to return interest and profit shares previously received by them and accrued in accordance with procedure in order to cover losses subsequently incurred by the company.

b) Those accrued irregularly

Article 314 – (1) The limited partners may not be compelled to return profit shares, or interest accepted by the company agreement, which they received in good faith on the basis of a balance sheet drawn up in accordance with the law and the company agreement and showing a profit, but which were accrued irregularly.

V – Transfer of partnership

1. In the case of assignment

Article 315 – (1) A limited partner may transfer his or her share in the company to another person. However, if the other partners have not consented to the transfer, the provision of Article 632 of the Turkish Code of Obligations shall apply.

2. In the case of death

Article 316 – (1) The heirs of a deceased limited partner shall take his or her place.

CHAPTER THREE

Relations of the Company and the Partners with Third Persons

A) Applicable provisions

Article 317 – (1) In the relations of the company and the partners with third persons, Articles 232 to 242 concerning general partnerships shall apply, without prejudice to the special provisions of this Chapter.

B) Representation of the company

Article 318 – (1) Limited partnerships shall, as a rule, be represented by the general partners. The provisions concerning the scope and restriction of the power of representation of a general partnership shall also apply to a limited partnership.

(2) The limited partners may not be authorised to represent the company in their capacity as partners. However, provided that the company agreement does not contain a provision to the contrary, a limited partner may be appointed as a commercial representative (procurist), a commercial representative or a travelling sales representative.

C) Liability of the limited partner

I – In general

Article 319 – (1) The liability of a limited partner may not exceed the amount of capital he or she has contributed or undertaken to contribute.

II – Exceptions

1. Limited partner whose name appears in the trade name of the company

Article 320 – (1) A limited partner whose name appears in the trade name of the company shall be deemed liable towards third persons as a general partner.

2. Limited partner transacting on behalf of the company

Article 321 – (1) A limited partner who carries out transactions on behalf of the company without expressly stating that he or she is acting as a commercial representative (procurist), a commercial representative or a travelling sales representative shall be liable as a general partner towards third persons acting in good faith in respect of those transactions.

(2) If transactions have been carried out before the registration of the company in the trade registry, the limited partner shall be held liable towards third persons as a general partner for such company debts, unless he or she proves that they knew that his or her liability was limited.

(3) The creditor may prove that the value assessed for the capital contributed by the limited partner is below the value of that capital at the time it was contributed. The limited partner shall be liable for the amount of the difference.

(4) The limited partner shall also be liable, up to the amount of capital he or she has undertaken to contribute, for the debts arising before he or she joined the company.

(5) The fact that the limited partner gives advice or expresses opinions in a manner not amounting to interference in the management of the company, exercises the rights of supervision he or she holds over extraordinary affairs and transactions and over the affairs and transactions of the company, participates, in the cases set out in the law, in the appointment and dismissal of the persons conducting the management affairs, or is employed in secondary services and duties within the company, shall not affect his or her liability in the capacity of a limited partner.

III – Position of the creditors

1. Possibility of enforcement

Article 322 – (1) The limited partner shall be liable towards the company creditors up to the unpaid amount of the capital contribution he or she has undertaken to make. A limited partner against whom recourse is thus had shall be released from his or her capital contribution obligation to the extent of the amount paid to the company creditor. The company creditors may not have recourse to the limited partner unless the company has terminated or the enforcement proceedings brought against the company have remained fruitless.

(2) In the event of the bankruptcy of the company, the rights held by the creditors shall pass to the bankruptcy estate.

(3) If the limited partner has notified in writing or announced that he or she has assumed liability for an amount exceeding the capital he or she has undertaken to contribute to the company, he or she shall be liable up to that amount towards third persons or the addressee of the notification.

2. Reduction of capital

Article 323 – (1) Without prejudice to the provisions of Articles 313 and 314, a limited partner may not withdraw his or her capital wholly or partly, whether directly or indirectly by way of its being counted as interest or profit share, nor, if his or her capital has decreased for any reason, may he or she claim interest or profit share until the deficit has been made good. Otherwise, the limited partner shall be liable towards the company creditors, pursuant to the first paragraph of Article 322, up to the amount of money he or she has received.

3. Bankruptcy

a) Bankruptcy of the company

Article 324 – (1) In the event of the bankruptcy of a limited partnership, the personal creditors of the partners may not have recourse to the company assets until the company creditors have received their claims.

(2) The capital contributed by the limited partners shall also be counted among the assets from which the company creditors shall obtain their rights with priority as set out in the first paragraph.

b) Liability of the general partners

Article 325 – (1) If the assets of the company are insufficient for the company creditors, these creditors may have recourse to the personal assets of the general partners for the remainder of their claims.

(2) Where recourse is had to the personal assets of the partners, the company creditors shall have no right of priority over the personal creditors of the partners.

c) Bankruptcy of the limited partner

Article 326 – (1) If the company and, in the case of bankruptcy, its estate or the company creditors have recourse to the estate of a bankrupt limited partner, they shall have no right of priority over the personal creditors of the bankrupt limited partner.

4. Set-off

Article 327 – (1) If a person who has a claim against the company owes a debt to a limited partner who has not yet performed his or her capital contribution obligation or who has withdrawn the capital he or she contributed, that person may set off his or her claim against the company against his or her debt to the limited partner. The provision of Article 242 is reserved.

CHAPTER FOUR

Termination and Liquidation of the Company

A) Applicable provisions

Article 328 – (1) The provisions of Articles 243 to 303 concerning the termination and liquidation of general partnerships and the withdrawal and expulsion of partners from the company shall also apply to limited partnerships. However, unless the company agreement contains a provision to the contrary, the death of a limited partner or his or her being placed under guardianship shall not result in the termination of the company.

PART FOUR

Joint Stock Company

CHAPTER ONE

General Provisions, Formation and Fundamental Principles

A) General Provisions

I – Definition

Article 329 – (1) A joint stock company is a company whose capital is specified and divided into shares and which is liable for its debts only with its assets.

(2) The shareholders shall be liable only to the extent of the capital shares they have undertaken and only towards the company.

II – Joint stock companies subject to special laws

Article 330 – (1) The provisions of this Part shall apply to joint stock companies subject to special laws, except for the special provisions.

III – Purpose and subject

Article 331 – (1) Joint stock companies may be established for all kinds of economic purposes and subjects not prohibited by law.

IV – Minimum capital amount

Article 332 – (1) The share capital, which denotes the capital undertaken in its entirety in the articles of association, may not be less than fifty thousand Turkish Liras and, in joint stock companies not open to the public which have adopted the registered capital system indicating the ceiling of the authority granted to the board of directors for increasing the capital, the initial capital may not be less than one hundred thousand Turkish Liras. This minimum capital amount may be increased by the President.⁴¹⁴²

(2) Within the meaning of this Law, in joint stock companies with registered capital, the initial capital is the capital that must be held at the time of formation and upon first transition to the system; the issued capital represents the sum of the nominal values of all the issued shares.

(3) Joint stock companies not open to the public may leave the registered capital system by obtaining permission from the Ministry of Customs and Trade where they no longer meet the necessary conditions; furthermore, where they lose the qualifications required at the time of their admission to this system, they shall be removed from the system by the same Ministry even without their request.

(4) The provision of Article 12 of the Capital Markets Law No. 2499 dated 28/7/1981 is reserved.

V – Supervision by the State

1. Permission

Article 333 – (1) Joint stock companies whose fields of activity are to be determined and announced by a communiqué to be published by the Ministry of Customs and Trade shall be established with the permission of the Ministry of Customs and Trade. Amendments to the articles of association of these companies shall also be subject to the permission of the same Ministry. The Ministry’s examination may be carried out only as to whether there is any contravention of the mandatory provisions of the law. Apart from this, whatever its legal status, nature and business subject, the formation of a joint stock company and amendments to its articles of association may not be made subject to the permission of any authority.

2. Representation of public legal entities on the board of directors

Article 334 – (1) The State, a special provincial administration, a municipality, a village or any other public legal entity may be granted, by a provision to be laid down in the articles of association, the right to have a representative on the boards of directors of joint stock companies whose business subject is a public service, even if they are not shareholders.

(2) In the companies specified in the first paragraph, the representatives on the board of directors of public legal entities that are shareholders may be dismissed only by those entities.

(3) The representatives of public legal entities on the board of directors shall have the rights and duties of the members elected by the general assembly. Public legal entities shall be liable towards the company and its creditors and shareholders for the acts committed and transactions carried out by their representatives on the company’s board of directors in that capacity. The right of recourse of the legal entity is reserved.

B) Formation

I – Act of formation

Article 335 – (1) The company shall be formed by the founders declaring their intention to form a joint stock company in articles of association drawn up in accordance with the law, in which they unconditionally undertake to pay the entire capital, and whose signatures have been certified by a notary or which they have signed in the presence of the trade registry director or his or her deputy. (Added sentence: 15/7/2016-6728/67 art.) At the formation of the company, no stamped paper fee shall be charged for the papers containing the articles of association.⁴³

(2) The provision of the first paragraph of Article 355 is reserved.

II – Formation documents

Article 336 – (1) The articles of association, (…)⁴⁴ valuation reports, and the agreements relating to the formation concluded with the company being formed, the founders and other persons, including those relating to the takeover of assets in kind and of an enterprise, (…)⁴⁵ are formation documents. These shall be placed in the registry file and one copy of each shall be retained by the company for a period of five years.

III – Founders

1. Definition

Article 337 – (1) Natural and legal persons who undertake shares and sign the articles of association are founders.

(2) If the founders carry out the act specified in the first paragraph on behalf of a third person, that person shall also be deemed a founder with regard to liability arising from the formation. That third person may not claim that he or she did not know a matter which the person acting on his or her behalf knew or ought to have known.

2. Minimum number

Article 338 – (1) For a joint stock company to be formed, the existence of one or more founders who are shareholders is required. The provision of Article 330 is reserved.

(2) If the number of shareholders falls to one, the situation shall be notified in writing to the board of directors within seven days from the date of the transaction giving rise to this result. The board of directors shall, within seven days from the date of receipt of the notification, cause it to be registered and announced that the company is a single-shareholder joint stock company. In addition, both where the company is formed with a single shareholder and where the shares are concentrated in one person, the name, domicile and nationality of the sole shareholder shall also be registered and announced. Otherwise, the shareholder who failed to make the notification and the board of directors which failed to have the registration and announcement made shall be liable for the resulting loss.

(3) The company may not acquire, or cause to be acquired, its own shares in such a way that it would become its sole shareholder.

IV – Articles of association

1. Content

Article 339 – (1) The articles of association must be made in writing and the signatures of all the founders must be certified by a notary, or the articles of association must be signed in the presence of the trade registry director or his or her deputy.⁴⁶

(2) The following matters shall be written in the articles of association:

a) The trade name of the company and the place where its head office is to be located.

b) The business subject of the company, with its essential points specified and defined.

c) The capital of the company and the nominal value of each share, and the form and conditions of their payment.

d) Whether the share certificates are to be registered or bearer; the privileges granted to certain shares; restrictions on transfer.

e) Rights and assets in kind contributed as capital other than money; their values; the number of shares to be given in return for them; where the takeover of an enterprise and assets in kind is concerned, their price, and the prices of the goods and rights purchased by the founders on the company’s account for the formation of the company, as well as the amount of the fee, allowance or reward to be given to those who rendered services in the formation of the company.

f) The benefits to be provided out of the company’s profit to the founders, the members of the board of directors and other persons.

g) The number of members of the board of directors and those among them authorised to sign on behalf of the company.

h) How the general assemblies are to be convened; voting rights.

ı) If the company is limited to a period, that period.

i) How the company’s announcements are to be made.

j) The types and amounts of the capital shares undertaken by the shareholders.

k) The financial period of the company.

(3) The first members of the board of directors shall be appointed by the articles of association.

2. Mandatory provisions

Article 340 – (1) The articles of association may deviate from the provisions of this Law concerning joint stock companies only where the Law expressly permits this. Supplementary provisions of the articles of association which other laws permit to be laid down shall take effect as being specific to that law.

V – Approval of the undertaking

Article 341 – (Repealed: 26/6/2012-6335/43 art.)

VI – Capital in kind

1. Asset items that may be contributed as capital in kind

Article 342 – (1) Asset items, including intellectual property rights and virtual environments, which are free of any limited real right, attachment or injunction, which can be valued in cash and which are transferable, may be contributed as capital in kind. Service obligations, personal labour, commercial reputation and receivables not yet due may not constitute capital.

(2) The provision of Article 128 is reserved.

2. Valuation

Article 343 – (1) The capital in kind contributed, and the enterprises and assets in kind to be taken over during the formation, shall be valued by experts appointed by the commercial court of first instance at the place where the company’s head office is to be located. The valuation report shall explain, with satisfactory reasons and in accordance with the requirements of the principle of accountability, that the valuation method applied is the fairest and most appropriate choice for everyone in view of the characteristics of the specific case; that the genuineness and validity of the receivables contributed as capital and their conformity with Article 342 have been established, together with their collectability and full values; and the number of shares to be allocated in return for each asset contributed in kind and their equivalent in Turkish Lira. The founders (…)⁴⁷ and interested parties may object to this report. The expert decision approved by the court is final.

VII – Payment of share prices

1. Cash capital

Article 344 – (1) At least twenty-five per cent of the nominal values of the shares undertaken in cash shall be paid before registration, and the remainder within twenty-four months following the registration of the company. The entire issue premiums of the shares shall be paid before registration.

(2) The provisions of the Capital Markets Law relating to the payment of share prices are reserved.

2. Place of payment

Article 345 – (1) Cash payments shall be deposited in a bank subject to the Banking Law No. 5411 dated 19/10/2005, into a special account to be opened in the name of the company being formed, in such a way that only the company may use it. Payment of the amounts of the undertaken shares provided for in the law or in the articles of association, where higher than that set out in the law, shall be proved by a bank letter addressed to the trade registry. The bank shall pay this amount only to the company, upon the submission of a letter of the registry directorate stating that the company has acquired legal personality.

(2) If the company fails to acquire legal personality within three months from the date of the notarial certification provided for in the first paragraph of Article 335 or from the date of signing of the company agreement in the presence of the trade registry director or his or her deputy, the amounts shall be returned by the bank to their owners upon the submission of a letter of the registry directorate confirming this fact.⁴⁸

3. Shares to be offered to the public

Article 346 – (1) The consideration for the cash shares undertaken in the articles of association which, as stated in the articles of association and additionally guaranteed, are to be offered to the public by the subscribers within two months at the latest from the registration of the company, shall be paid from the proceeds of the sale. The public offering of share certificates shall be carried out in accordance with capital markets legislation. At the end of the sale period, the equivalent of the nominal values of the shares and of any issue premium shall be paid to the company, and the amount remaining after deduction of expenses shall be paid to the shareholders who offered the share certificates to the public.

(2) The entire price of shares offered to the public but not sold within the period, and twenty-five per cent of the price of shares not offered to the public within the period, shall be paid within three days following the two-month period.

VIII – Shares issued at a premium

Article 347 – (1) Shares may not be issued at a price below their nominal value. For shares to be issued at a price higher than their nominal value, there must be a provision in the articles of association or a resolution of the general assembly.

IX – Founders’ benefits

Article 348 – (1) No benefit that may result in a reduction of the company’s capital, such as the granting of money or of bonus share certificates, may be granted to the founders in return for the labour they expended in forming the company. Provisions of the articles of association contrary to this provision are invalid. However, out of the distributable profit, after the reserve fund specified in the first paragraph of Article 519 and a five per cent dividend for the shareholders have been set aside, at most one tenth of the remainder shall be paid to the founders in connection with the dividend-right certificates.

(2) Joint stock companies established after the entry into force of this Law shall, before offering their share certificates to the public, cancel the founders’ dividend-right certificates without paying any consideration; otherwise, the dividend-right certificates shall automatically be deemed invalid.

(3) If there is distributable profit, the holders of founders’ dividend rights shall receive the profit shares provided for in the articles of association even if the company has resolved not to distribute the profit.

X – Founders’ declaration

Article 349 – (Repealed: 15/7/2016-6728/73 art.)

XI – Undertaking for public offering

Article 350 – (1) Where shares have been undertaken for the purpose of being offered to the public pursuant to Article 346, the public offering shall be deemed to have been approved by the founders, the board of directors or any authorised body.

XII – Transaction auditor’s report

Article 351 – (Repealed: 26/6/2012-6335/43 art.)

XIII – Transfer of share subscription before formation

Article 352 – (1) The transfer of a share subscription before the registration of the company is invalid as against the company.

XIV – Action for dissolution

Article 353 – (1) No decision may be rendered as to the nullity or non-existence of a joint stock company. However, if, by acting contrary to the provisions of the law in the formation of the company, the interests of the creditors, the shareholders or the public have been seriously endangered or violated, the commercial court of first instance at the place where the company’s head office is located shall decide on the dissolution of the company upon the request of the board of directors, the Ministry of Customs and Trade, or the creditor or shareholder concerned. The court shall take the necessary measures on the date on which the action is brought.

(2) The court may grant a period for the remedying of deficiencies and the correction of matters contrary to the articles of association or the law.

(3) The evidence and all necessary information shall be attached to the statement of claim. Evidence may not be submitted during the proceedings, nor may the court be requested to await the outcome of another action or to obtain information. However, where the specific case justifies it, the court may, by setting a peremptory time limit, accept the claimant’s request to submit evidence and to have information obtained. The action is subject to the procedure for urgent matters.

(4) The action must be brought within a three-month peremptory period from the registration and announcement of the company.

(5) The bringing of the action and the final court decision shall, upon the notification of the court, be immediately and ex officio registered in the trade registry and announced in the Turkish Trade Registry Gazette. In addition, the board of directors shall place the registered and announced matter on (…)⁴⁹ the website.

XV – Registration and announcement of the company

Article 354 – (1) The entire articles of association of the company shall be registered in the trade registry of the place where the company’s head office is located and announced in the Turkish Trade Registry Gazette within thirty days following the obtaining of the permission, in the case of joint stock companies to be formed with the permission of the Ministry of Customs and Trade, and, in the case of other companies, following the formation of the company pursuant to the first paragraph of Article 335. The provision of the first paragraph of Article 36 shall not apply to the registered and announced articles of association, except for the matters listed below. These matters are as follows:

a) The date of the articles of association.

b) The trade name and head office of the company.

c) The duration of the company, if any.

d) The capital of the company, the form and conditions of its payment, the nominal values of the shares and the privileges, if any.

e) The types of the share certificates and whether they are bearer or registered.

f) How the company is to be represented.

g) The names and surnames, titles, places of residence and nationalities of the members of the board of directors and of the persons authorised to represent the company.

h) The form of the announcements to be made by the company; where the articles of association contain a provision to this effect, how the resolutions of the board of directors are to be notified to the shareholders.

(2) Branches shall be registered in the trade registry of the place where they are located, with reference to the registry entry of the head office.

(3) (Amended: 26/6/2012-6335/14 art.) The expert report issued pursuant to Article 343 shall be deposited with the trade registry directorate.

XVI – Acquisition of legal personality

Article 355 – (1) The company shall acquire legal personality upon registration in the trade registry.

(2) Those who carry out transactions and enter into undertakings on behalf of the company before registration shall be personally and jointly and severally liable for these transactions and undertakings. However, if it has been expressly stated that the transactions and undertakings were made on behalf of a company to be formed in the future, and these undertakings have been accepted by the company within a period of three months after the registration of the company in the trade registry, only the company shall be liable.

(3) If they are not accepted by the company, the formation expenses shall be borne by the founders. They shall have no right of recourse against the shareholders.

C) Evasion of the law

Article 356 – (1) Agreements concerning the takeover or lease of an enterprise or an asset in kind, within two years from the registration of the company, for a consideration exceeding one tenth of the capital, shall not be valid unless they are approved by the general assembly and registered in the trade registry. Any disposition, including payments made for the purpose of the performance of these agreements, made before their approval and registration is invalid.

(2) Before the general assembly adopts its resolution, an expert to be appointed, upon the request of the board of directors, by the commercial court of first instance at the place where the company is located shall value the enterprise and assets in kind to be taken over or leased by the company. The report shall have an official character.

(3) Paragraphs three and four of Article 421 shall apply to the meeting and decision quorums.

(4) The agreement shall be registered and announced together with the approval resolution of the general assembly.

(5) The provision of this Article shall not apply to assets in kind and enterprises which constitute the business subject of the company or which are acquired by way of compulsory enforcement.

D) Fundamental principles

I – Principle of equal treatment

Article 357 – (1) Shareholders shall be treated equally under equal conditions.

II – Prohibition on shareholders incurring debts to the company

Article 358 – (Amended: 26/6/2012-6335/15 art.)

(1) Shareholders may not become indebted to the company unless they have performed their matured debts arising from their capital undertaking and unless the profit of the company, together with the free reserve funds, is at a level sufficient to cover the losses of previous years.

CHAPTER TWO

Board of Directors

A) In general

I – Appointment and election

1. Number and qualifications of members

Article 359 – (1) A joint stock company shall have a board of directors consisting of one or more persons appointed by the articles of association or elected by the general assembly. (Repealed last sentence: 26/6/2012-6335/43 art.) (…)

(2) Where a legal entity is elected as a member of the board of directors, only one natural person, designated by the legal entity, shall also be registered and announced together with the legal entity, on behalf of the legal entity; furthermore, the fact that the registration and announcement have been made shall be disclosed immediately on the company’s website. Only this registered person may attend the meetings and vote on behalf of the legal entity.

(3) The members of the board of directors and the natural person to be registered on behalf of the legal entity must have full capacity to act. (Repealed second and third sentences: 26/6/2012-6335/43 art.)

(4) The grounds that terminate membership are also an impediment to election.

(5) (Added: 28/3/2013-6455/79 art.) In companies in which the State, a special provincial administration, a municipality, a village or any other public legal entity is a shareholder, the listed legal entities or their natural person representatives may be elected to the board of directors. In companies whose board of directors has more than two members, more than one natural person representing a public legal entity may be elected to the board of directors, provided that not all the members are representatives of the same public legal entity.

2. Representation of certain groups on the board of directors

Article 360 – (1) Provided that this is laid down in the articles of association, certain share groups, shareholders constituting a specific group by virtue of their characteristics and qualities, and the minority may be granted the right to be represented on the board of directors. For this purpose, the articles of association may provide that the members of the board of directors shall be elected from among the shareholders constituting a specific group, specific share groups and the minority, and the articles of association may also grant the right to propose candidates for membership of the board of directors. The candidate proposed to the general assembly for membership of the board of directors, or the candidate belonging to the group or minority to which the right has been granted, must be elected as a member unless there is a just cause. The right of representation granted in this manner may not, in joint stock companies open to the public, exceed half of the number of members of the board of directors. Arrangements concerning independent members of the board of directors are reserved.

(2) Shares to which the right to be represented on the board of directors has been granted under this Article shall be deemed privileged.

3. Insurance

Article 361 – (1) If the loss which the members of the board of directors may cause to the company through their fault in the performance of their duties has been insured for an amount exceeding twenty-five per cent of the company’s capital, and the company has thereby been secured, this shall be announced, in companies open to the public, in the bulletin of the Capital Markets Board and, additionally, if the share certificates are traded on the stock exchange, in the bulletin of the stock exchange, and shall be taken into account in the assessment of compliance with corporate governance principles.

4. Term of office

Article 362 – (1) The members of the board of directors shall be elected to serve for a maximum period of three years. Unless the articles of association provide otherwise, the same person may be re-elected.

(2) The provision of Article 334 is reserved.

II – Vacancy in membership

Article 363 – (1) Without prejudice to the provision of Article 334, if a membership becomes vacant for any reason, the board of directors shall elect a person meeting the legal requirements provisionally as a member of the board of directors and submit this to the approval of the first general assembly. The member elected in this manner shall serve until the general assembly meeting at which it is submitted for approval and, if approved, shall complete the term of his or her predecessor.

(2) If one of the members of the board of directors is adjudicated bankrupt or his or her capacity is restricted, or if a member loses the legal requirements for membership or the qualifications provided for in the articles of association, that person’s membership shall terminate automatically without the need for any action.

III – Dismissal

Article 364 – (1) The members of the board of directors, even if they have been appointed by the articles of association, may be dismissed at any time by a resolution of the general assembly where there is a relevant item on the agenda or, even if there is no such item on the agenda, where there is a just cause. A legal entity that is a member of the board of directors may at any time replace the person registered on its behalf.

(2) The provision of Article 334 and the right of the dismissed member to compensation are reserved.

B) Management and representation

I – In general

1. Principle

Article 365 – (1) A joint stock company shall be managed and represented by the board of directors. Exceptional provisions in the Law are reserved.

2. Distribution of duties

Article 366 – (1) The board of directors shall elect from among its members a chairperson and at least one deputy chairperson to act in his or her place when he or she is absent. The articles of association may provide that the chairperson and the deputy chairperson, or one of them, shall be elected by the general assembly.⁵⁰

(2) The board of directors may establish committees and commissions, which may include members of the board of directors, for the purpose of monitoring the course of affairs, preparing reports on matters to be submitted to it, having its resolutions implemented or internal audit.

3. Delegation of management

Article 367 – (1) The board of directors may be authorised, by a provision to be included in the articles of association, to delegate the management, in part or in whole, to one or more members of the board of directors or to a third person in accordance with an internal directive to be drawn up by it. This internal directive shall regulate the management of the company; it shall define the duties required for this purpose, indicate their positions and, in particular, determine who reports to whom and who is obliged to provide information. The board of directors shall, upon request, inform in writing the shareholders, and the creditors who convincingly demonstrate interests worthy of protection, about this internal directive.

(2) Where the management has not been delegated, it shall belong to all the members of the board of directors.

4. Commercial representatives (procurists) and commercial representatives

Article 368 – (1) The board of directors may appoint commercial representatives (procurists) and commercial representatives.

5. Duty of care and loyalty

Article 369 – (1) The members of the board of directors and third persons charged with management are under an obligation to perform their duties with the care of a prudent manager and to safeguard the interests of the company in compliance with the rules of good faith.

(2) The provisions of Articles 203 to 205 are reserved.

II. Power of representation

1. In general

Article 370 – (1) Unless otherwise provided in the articles of association, or unless the board of directors consists of a single person, the power of representation shall belong to the board of directors, to be exercised by two signatures.

(2) The board of directors may delegate the power of representation to one or more managing members or to third persons as managers. At least one member of the board of directors must hold the power of representation.

2. Scope and limits

Article 371 – (1) Those authorised to represent the company may carry out on behalf of the company all kinds of business and legal transactions falling within the purpose and business subject of the company and may use the company’s trade name for this purpose. The company’s right of recourse in respect of transactions contrary to the law and the articles of association is reserved.

(2) Transactions carried out with third persons outside the business subject by those authorised to represent the company shall also bind the company, unless it is proved that the third person knew that the transaction was outside the business subject or, owing to the circumstances, was in a position to know this. The fact that the articles of association of the company have been announced shall not by itself be sufficient evidence for the purpose of proving this matter.

(3) A restriction of the power of representation shall have no effect against third persons acting in good faith; however, registered and announced restrictions to the effect that the power of representation is confined to the affairs of the head office or of a branch, or is to be exercised jointly, are valid.

(4) The fact that a transaction carried out by persons authorised to represent the company is contrary to the articles of association or a resolution of the general assembly shall not prevent third persons acting in good faith from having recourse to the company in respect of that transaction.

(5) The company shall be liable for the torts committed by those authorised to represent or manage it in the performance of their duties. The company’s right of recourse is reserved.

(6) In single-shareholder joint stock companies, whether or not the company is represented by the sole shareholder at the time of the conclusion of the agreement, the validity of an agreement between that shareholder and the company shall be subject to the agreement being made in writing. This requirement shall not apply to agreements concerning everyday, insignificant and ordinary transactions at market conditions.

(7) (Added: 10/9/2014 – 6552/131 art.) The board of directors may, apart from the representatives specified above, appoint members of the board of directors who are not authorised to represent the company, or persons bound to the company by a contract of service, as commercial representatives with limited authority or as other merchant’s assistants. The duties and powers of those to be appointed in this manner shall be clearly determined in the internal directive to be prepared pursuant to Article 367. In this case, the registration and announcement of the internal directive is mandatory. Commercial representatives and other merchant’s assistants may not be appointed by the internal directive. Commercial representatives or other merchant’s assistants authorised pursuant to this paragraph shall also be registered in the trade registry and announced. The board of directors shall be jointly and severally liable for all kinds of loss that these persons may cause to the company and to third persons.

3. Form of signature

Article 372 – (1) The persons holding the power to sign on behalf of the company shall sign under the trade name of the company. The provision of the second paragraph of Article 40 is reserved.

(2) Documents to be drawn up by the company shall indicate the head office of the company, the place where it is registered in the registry and its registration number.

4. Registration and announcement

Article 373 – (1) The board of directors shall submit to the trade registry, for registration and announcement, a notarised copy of its resolution indicating the persons authorised to represent the company and the manner of their representation.

(2) After the registration of the power of representation in the trade registry, any legal defect concerning the election or appointment of the persons concerned may be asserted by the company against third persons only on condition that it is proved that the defect was known to them.

(3) (Added:28/1/2021-7263/23 art.) Public institutions and organisations shall rely on the trade registry records regarding the persons authorised to represent the company registered in the trade registry and the manner of their representation, and no document may be requested from the company other than the documents issued by the trade registry directorates relating to these records and the announcement published in the Turkish Trade Registry Gazette.

III – Duties and powers

1. In general

Article 374 – (1) The board of directors and, within the area delegated to it, the management are authorised to adopt resolutions on all kinds of business and transactions necessary for the realisation of the company’s business subject, except for those left within the competence of the general assembly under the law and the articles of association.

2. Non-transferable duties and powers

Article 375 – (1) The non-transferable and inalienable duties and powers of the board of directors are as follows:

a) The top-level management of the company and the issuing of instructions relating thereto.

b) The determination of the company’s management organisation.

c) The establishment of the system necessary for accounting, financial control and, to the extent required by the management of the company, financial planning.

d) (Amended:23/5/2024-7511/14 art.) The appointment and dismissal of managers, excluding branch managers, and of persons having the same function.

e) The ultimate supervision of whether the persons charged with management act in accordance with, in particular, the laws, the articles of association, the internal directives and the written instructions of the board of directors.

f) The keeping of the share register, the book of resolutions of the board of directors and the book of meetings and deliberations of the general assembly, the preparation of the annual activity report and the corporate governance statement and their submission to the general assembly, the preparation of general assembly meetings and the execution of general assembly resolutions.

g) Notification to the court in the event of over-indebtedness.

3. Loss of capital, state of over-indebtedness

a) Duty to convene and notify

Article 376 – (1) If it is understood from the last annual balance sheet that half of the total of the capital and the legal reserve funds has been left uncovered owing to losses, the board of directors shall immediately convene the general assembly and submit to this general assembly the remedial measures it deems appropriate.

(2) Where it is understood, according to the last annual balance sheet, that two thirds of the total of the capital and the legal reserve funds have been left uncovered owing to losses, the company shall automatically terminate unless the general assembly, convened immediately, resolves to be content with one third of the capital or to make up the capital.

(3) (Amended: 26/6/2012-6335/16 art.) If there are indications giving rise to the suspicion that the company is in a state of over-indebtedness, the board of directors shall draw up an interim balance sheet of the assets, both on a going-concern basis and on the basis of their probable sale prices. If it is understood from this balance sheet that the assets are insufficient to cover the claims of the company creditors, the board of directors shall notify this situation to the commercial court of first instance at the place where the company’s head office is located and request the bankruptcy of the company. This shall not apply if, before the bankruptcy decision is rendered, the creditors of company debts in an amount sufficient to cover the company’s deficit and to eliminate its state of over-indebtedness have accepted in writing that the ranking of their claims be placed after the ranking of all other creditors, and the appropriateness, genuineness and validity of this declaration or agreement have been verified by the experts appointed by the court to which the bankruptcy request is to be notified by the board of directors. Otherwise, the application made to the court for an expert examination shall be deemed a notification of bankruptcy.

b) Composition with creditors (konkordato)⁵¹

Article 377 – (Amended: 28/2/2018-7101/62 art.)

(1) The board of directors or any creditor may also request a composition with creditors (konkordato) pursuant to Articles 285 et seq. of Law No. 2004, together with the bankruptcy request to be made pursuant to the third paragraph of Article 376 or during the bankruptcy proceedings conducted within this scope.

4. Early detection and management of risk

Article 378 – (1) In companies whose share certificates are traded on the stock exchange, the board of directors is obliged to establish an expert committee, and to operate and develop the system, for the purpose of the early detection of causes endangering the existence, development and continuity of the company, the implementation of the necessary measures and remedies for this purpose, and the management of risk. In other companies, this committee shall be established immediately if the auditor deems it necessary and notifies the board of directors thereof in writing, and shall submit its first report at the end of one month following its establishment.

(2) In the report it shall submit to the board of directors every two months, the committee shall assess the situation, point out the dangers, if any, and indicate the remedies. The report shall also be sent to the auditor.

5. Acquisition by the company of its own shares or acceptance of them as pledge

a) In general

Article 379 – (1) A company may not, for consideration, acquire or accept as pledge its own shares in an amount which exceeds, or would exceed as a result of a transaction, one tenth of its share capital or issued capital. This provision shall also apply to shares acquired or accepted as pledge by a third person in his or her own name but on the company’s account.

(2) In order for shares to be acquired or accepted as pledge in accordance with the provision of the first paragraph, the general assembly must authorise the board of directors. This authorisation, which shall be valid for a maximum of five years, shall state the numbers of the nominal values of the shares to be acquired or accepted as pledge, together with their total nominal value, and indicate the lower and upper limits of the price that may be paid for the shares in question. In each request for permission, the board of directors shall state that the legal requirements have been fulfilled.

(3) In addition to the conditions in the first and second paragraphs, after deduction of the prices of the shares to be acquired, the remaining net assets of the company must be at least equal to the total of the share capital or issued capital and the reserve funds whose distribution is not permitted under the law and the articles of association.

(4) Pursuant to the above provisions, only shares whose prices have been paid in full may be acquired.

(5) The provisions in the above paragraphs shall also apply where shares of the parent company are acquired by a subsidiary company. With regard to companies whose share certificates are traded on the stock exchange, the Capital Markets Board shall make the necessary regulations in terms of transparency principles and rules relating to price.

b) Evasion of the law

Article 380 – (1) Legal transactions entered into by the company with another person, the subject of which is the granting of an advance, loan or security for the purpose of the acquisition of its shares, are null and void. This nullity provision shall not apply to transactions falling within the business subjects of credit and financial institutions, nor to legal transactions concerning the granting of advances, loans and security to the employees of the company or of its affiliated companies so that they may acquire shares of the company. However, these exceptional transactions are invalid if they reduce the reserve funds which the company is obliged to set aside under the law and its articles of association, or violate the rules on the use of reserve funds regulated in Article 519, and do not allow the company to set aside the reserve fund provided for in Article 520.

c) Prevention of imminent and serious loss

Article 381 – (1) A company may acquire its own shares even without a resolution of the general assembly granting authorisation pursuant to Article 379, where this is necessary in order to avoid imminent and serious loss.

(2) Where shares are acquired in this manner, the board of directors shall provide the first general assembly with written information on:

a) The reason for and purpose of the acquisition,

b) The number of the shares acquired, the total of their nominal values and the portion of the capital which they represent,

c) The price and the terms of payment.

d) Exceptions

Article 382 – (1) A company may acquire its own shares without being bound by the provisions of Article 379 if:

a) It is applying the provisions of Articles 473 to 475 concerning the reduction of the share capital or the issued capital,

b) The acquisition is required by the rule of universal succession,

c) The acquisition arises from a statutory purchase obligation,

d) The acquisition is aimed, by way of enforcement proceedings, at the collection of a receivable of the company, provided that the price of the shares has been paid in full,

e) The company is a securities company.

e) Acquisition without consideration

Article 383 – (1) A company may acquire its own shares without consideration, provided that their price has been paid in full.

(2) The provision of the first paragraph shall also apply by analogy where a subsidiary company acquires shares of the parent company without consideration.

f) Disposal

Article 384 – (1) Shares acquired pursuant to subparagraphs (b) to (d) of Article 382 and to Article 383 shall be disposed of as soon as their transfer is possible without causing any loss to the company and, in any event, within three years of their acquisition; unless the total of such shares held by the company and the subsidiary company does not exceed ten per cent of the share capital or the issued capital of the company.

g) Disposal in the case of unlawful acquisition

Article 385 – (1) Shares acquired or taken as pledge in breach of Articles 379 to 381 shall be disposed of, or the pledge on them shall be released, within six months at the latest from the date of their acquisition or of their acceptance as pledge.

h) Reduction of capital

Article 386 – (1) Shares which could not be disposed of pursuant to Articles 384 and 385 shall be cancelled forthwith by way of a reduction of capital.

ı) Reserved provisions

Article 387 – (1) The provisions of other laws concerning the possibility for a company to acquire its own shares are reserved.

i) Prohibition on subscribing for own shares

Article 388 – (1) The company may not subscribe for its own shares.

(2) The subscription for shares of the company by a third person or by a subsidiary company in its own name but on account of the company shall be deemed to be a subscription by the company for its own shares.

(3) In the event of action in breach of the first and second paragraphs, the shares concerned shall be deemed to have been subscribed for by the founders in the case of incorporation and by the members of the board of directors in the case of capital increases, and these persons shall be liable for the price of the shares. Founders and, in capital increases, members of the board of directors who prove that they bear no fault whatsoever in the unlawful subscription shall be released from liability.

(4) The provisions of the first and third paragraphs shall apply by analogy to subsidiary companies that subscribe for shares of the parent company. The shares concerned shall be deemed to have been subscribed for by the members of the board of directors of the subsidiary company. The members shall be liable for the price of the shares.

j) Exercise of rights

Article 389 – (1) The company’s own shares acquired by it and the shares of the parent company acquired by the subsidiary company shall not be taken into account in calculating the meeting quorum of the general assembly of the parent company. Except for the acquisition of bonus shares, the company’s own shares taken over by it shall confer no shareholder rights whatsoever. The voting rights attached to the shares of the parent company acquired by the subsidiary company and the rights connected therewith shall be suspended.

IV – Meetings of the board of directors

1. Resolutions

Article 390 – (1) Unless there is a contrary, more stringent provision in the articles of association, the board of directors shall meet with the majority of the total number of its members and shall adopt its resolutions by the majority of the members present at the meeting. This rule shall also apply where the board of directors meets in an electronic environment.

(2) Members of the board of directors may neither vote on behalf of one another nor attend meetings through a proxy.

(3) In the event of a tie, the matter shall be left to the next meeting. If there is again a tie at the second meeting, the proposal concerned shall be deemed rejected.

(4) Provided that none of the members requests that a meeting be held, resolutions of the board of directors may also be adopted by obtaining the written approval of at least the majority of the total number of members to a proposal on a specific matter made by one of the members of the board and drafted in the form of a resolution. The fact that the same proposal has been made to all members of the board of directors is a condition of validity of a resolution adopted in this manner. It is not necessary for the approvals to be on the same sheet of paper; however, for the validity of the resolution it is necessary that all of the sheets bearing the approval signatures be affixed to the resolution book of the board of directors, or that they be converted into a resolution bearing the signatures of those approving it and entered in the resolution book.

(5) The validity of resolutions depends on their being written down and signed.

2. Null and void resolutions

Article 391 – (1) A declaration from the court that a resolution of the board of directors is null and void may be requested. In particular, resolutions:

a) Which are contrary to the principle of equal treatment,

b) Which do not conform to the fundamental structure of the joint stock company or which disregard the principle of the preservation of capital,

c) Which violate the rights of the shareholders, in particular their inalienable rights, or which restrict or impede their exercise,

d) Which fall within the non-transferable powers of other organs or which concern the transfer of such powers,

are null and void.

3. Right to information and inspection

Article 392 – (1) Every member of the board of directors may request information, ask questions and carry out inspections concerning all business and transactions of the company. A member’s request that any book, book entry, contract, correspondence or document be brought before the board of directors, examined and discussed by the board or by the members, or that information on any matter be obtained from an executive or employee, may not be refused. If it has been refused, the provision of the fourth paragraph shall apply.

(2) At meetings of the board of directors, the persons and committees entrusted with the management of the company, like all members of the board of directors, are obliged to provide information. A member’s request in this respect may likewise not be refused; his or her questions may not be left unanswered.

(3) Every member of the board of directors may, outside meetings of the board of directors and with the permission of the chairperson of the board of directors, obtain information from the persons entrusted with the management of the company on the course of business and on specific individual transactions and, if necessary for the performance of his or her duties, may request the chairperson of the board of directors to make the books and files of the company available for his or her inspection.

(4) If the chairperson refuses a member’s request to obtain information, ask questions and carry out inspections as provided for in the third paragraph, the matter shall be brought before the board of directors within two days. If the board does not meet or rejects this request, the member may apply to the commercial court of first instance at the place where the head office of the company is located. The court may examine the request and decide on it on the basis of the file; the decision of the court is final.

(5) The chairperson of the board of directors may not, without the permission of the board, obtain information or inspect the books and files of the company outside meetings of the board of directors. If this request of the chairperson of the board of directors is refused, the chairperson may apply to the court in accordance with the fourth paragraph.

(6) The rights of a member of the board of directors arising from this Article may not be restricted or abolished. The articles of association and the board of directors may extend the members’ rights to information and inspection.

(7) Every member of the board of directors may request the chairperson in writing to convene a meeting of the board of directors. (Added sentences: 23/5/2024-7511/15 art.) If the request is found appropriate, the convening shall be made by the chairperson of the board of directors. However, upon the written request of the majority of the members of the board of directors, the chairperson of the board of directors is obliged to convene the board of directors to a meeting to be held within thirty days at the latest from the date on which the request reached him or her. Where the board of directors is not convened to a meeting within this period, or where the chairperson or the vice-chairperson of the board of directors cannot be reached, the convening may be made directly by those who made the request. At meetings held upon such convening, the first paragraph of Article 390 shall apply with regard to the meeting and decision quorums. A different procedure for convening the board of directors to a meeting may be laid down in the articles of association.

4. Prohibition on participation in deliberations

Article 393 – (1) A member of the board of directors may not participate in deliberations on matters in which the interests of the company conflict with his or her personal interest outside the company, or with the personal interest outside the company of one of his or her descendants or ascendants, or of his or her spouse, or of one of his or her blood relatives or relatives by marriage up to and including the third degree. This prohibition shall also apply in cases where non-participation of the member of the board of directors in the deliberations is required by the rule of good faith. In cases giving rise to doubt, the board of directors shall decide. The member concerned may not participate in this vote either. Even if the conflict of interest is not known to the board of directors, the member concerned is obliged to disclose it and to comply with the prohibition.

(2) The member of the board of directors acting in breach of these provisions, the members who, while the conflict of interest objectively exists and is known, do not object to the participation of the member concerned in the meeting, and the members of the board of directors who resolve that the said member may participate in the meeting are obliged to compensate the damage suffered by the company for this reason.

(3) The reason for non-participation in the deliberations by reason of the prohibition and the related transactions shall be recorded in the resolution of the board of directors.

V- Financial rights of the members of the board of directors

Article 394 – (1) Attendance fees, remuneration, bonuses, premiums and a share of the annual profit may be paid to the members of the board of directors, provided that their amount has been determined by the articles of association or by a resolution of the general assembly.

VI – Prohibition on transacting with the company and on borrowing from the company

Article 395 – (1) A member of the board of directors may not, without obtaining the permission of the general assembly, enter into any transaction with the company in his or her own name or in the name of another person; otherwise, the company may assert that the transaction entered into is null and void. The other party may not make such an assertion.

(2) (Amended: 26/6/2012-6335/17 art.) Members of the board of directors who are not shareholders and the relatives of members of the board of directors listed in Article 393 who are not shareholders may not borrow cash from the company. The company may not give a suretyship, guarantee or security for these persons, may not assume liability for them and may not take over their debts. Otherwise, the creditors of the company may, for the amount borrowed from the company, proceed directly against these persons for the debts of the company up to the amount for which the company has been made liable.

(3) Subject to the provision of Article 202, companies belonging to a group of companies may stand surety for one another and give guarantees to one another.

(4) The special provisions of the Banking Law are reserved.

VII – Prohibition of competition

Article 396 – (1) A member of the board of directors may neither, without obtaining the permission of the general assembly, carry out on his or her own account or on account of another person a transaction of a type of commercial business falling within the company’s field of activity, nor join a company engaged in the same type of commercial business as a partner with unlimited liability. The company is free to claim compensation from the members of the board of directors acting in breach of this provision or, instead of compensation, to treat the transaction carried out as having been made on behalf of the company and to bring an action claiming that the benefits arising from contracts concluded on account of third persons belong to the company.

(2) The choice of one of these rights shall belong to the members other than the member acting in breach of the provision of the first paragraph.

(3) These rights shall become time-barred upon the expiry of three months from the date on which the other members learnt that the commercial transactions concerned had been carried out or that the member of the board of directors had joined the other company and, in any event, one year from their occurrence.

(4) The provisions concerning the liability of the members of the board of directors are reserved.

CHAPTER THREE

Audit

A) In general

Article 397 – (1) (Amended: 26/6/2012-6335/18 art.) The financial statements of joint stock companies and of groups of companies that are subject to audit pursuant to the fourth paragraph shall be audited by the auditor in accordance with the Turkish Auditing Standards, which are compatible with the international auditing standards and are published by the Public Oversight, Accounting and Auditing Standards Authority. Whether the financial information contained in the annual activity report of the board of directors is consistent with the audited financial statements and reflects the truth also falls within the scope of the audit.

(2) (Amended: 26/6/2012-6335/18 art.) Those subject to audit are obliged to state clearly in the heading of the relevant financial statement whether the financial statements they have prepared have been audited and, if they have been audited, the auditor’s opinion. This provision shall also apply to the annual activity report of the board of directors. Financial statements and annual activity reports of the board of directors which have not been audited although they are subject to audit shall be deemed not to have been drawn up.

(3) If the financial statements of the company and of the group and the annual activity report of the board of directors have been amended after the submission of the audit report and the amendment is of a nature that may affect the audit reports, the financial statements and, within the framework of the first paragraph, the annual activity report of the board of directors shall be audited again. The re-audit and its result shall be specifically explained in the report. Appropriate additions reflecting the re-audit shall also be included in the auditor’s opinion.

(4) (Added: 26/6/2012-6335/18 art.) The companies that shall be subject to audit within the scope of Article 398 shall be determined by the President of the Republic.⁵²

(5) (Added: 28/3/2013-6455/80 art.) Joint stock companies falling outside the scope of the fourth paragraph (…)⁵³ shall be audited in accordance with the provisions of this paragraph. The procedures and principles relating to the audit, and matters relating to the qualifications of the auditors who will carry out audits pursuant to this paragraph, the ethical principles they shall observe, their duties and powers, their election, their removal from office or resignation, the content of the audit and of the audit reports and the submission of the report to the general assembly shall be regulated by a regulation to be issued by the President of the Republic. The provisions of the Law concerning the liability of the auditor shall also apply by analogy to auditors who will carry out audits pursuant to this paragraph.

(6) (Added: 28/3/2013-6455/80 art.) The financial statements and the annual activity report of the board of directors of those who, although subject to audit within the scope of the fifth paragraph, fail to have the said audit carried out shall be deemed not to have been drawn up.

B) Subject matter and scope

Article 398 – (1) The audit of the financial statements of the company and of the group and of the annual activity report of the board of directors is the audit of the inventory, of the accounting and, to the extent provided for by the Turkish Auditing Standards, of the internal audit, of the reports given pursuant to Article 378 within the meaning of the provisions of this Chapter, and of the annual activity report of the board of directors within the framework of the first paragraph of Article 397. This audit also covers the examination of whether the Turkish Accounting Standards, the law and the provisions of the articles of association relating to the financial statements have been complied with. The audit shall be carried out with care, in accordance with the requirements and ethics of the auditing profession, in the context of the principles determined by the Public Oversight, Accounting and Auditing Standards Authority. The audit shall be carried out in such a manner as to state honestly whether the asset and financial position of the company and of the group has been reflected in accordance with the true and fair view principle within the meaning of Article 515 and, if it has not been so reflected, the reasons therefor.⁵⁴

(2) The audit shall be carried out in such a manner as to state and explain whether:

a) The financial statements of the company and the annual activity report of the board of directors within the framework of the first paragraph of Article 397 and the second paragraph of Article 402,

b) The consolidated financial statements of the group and the annual activity report of the board of directors within the framework of the first paragraph of Article 397 and the second paragraph of Article 402,

are consistent with the information obtained by the auditor during the audit.

(3) The auditor responsible for the audit of the financial statements of the group shall examine, within the meaning of the first paragraph, the financial statements of the companies included in the consolidated statements of the group, in particular the adjustments and set-offs connected with the consolidation; unless the company included in the consolidation has been audited in accordance with the provisions of this Chapter, whether by law or without any such requirement. This exception shall also apply where a company whose head office is located abroad has been subjected to an audit equivalent to the audit provided for by this Law.

(4) The auditor shall draw up a separate report explaining whether the board of directors has established the system and the competent committee provided for in Article 378 in order to identify in good time the risks that threaten or may threaten the company and to carry out risk management, and, if such a system exists, its structure and the practices of the committee, and shall submit it to the board of directors together with the audit report. The principles of this report shall be determined by the Public Oversight, Accounting and Auditing Standards Authority.⁵⁵

C) Auditor

I – Election, removal from office and termination of the contract

Article 399 – (1) The auditor shall be elected by the general assembly of the company; the group auditor shall be elected by the general assembly of the parent company. The auditor must be elected for each financial year and, in any event, before the end of the financial year in which he or she is to perform his or her duties. After the election, the board of directors shall without delay have the auditor to whom it has assigned the audit engagement registered in the trade registry and shall announce this in the Turkish Trade Registry Gazette and on its website.

(2) The audit engagement may be withdrawn from the auditor only in the manner provided for in the fourth paragraph and if another auditor has been appointed.

(3) The auditor elected to audit the financial statements of the parent company included in the consolidation shall, unless another auditor is elected, also be deemed to be the auditor of the group financial statements.

(4) The commercial court of first instance at the place where the head office of the company is located may, upon the request of:

a) The board of directors,

b) Shareholders representing ten per cent of the capital or, in publicly held companies, five per cent of the share capital or the issued capital,

after hearing the persons concerned and the elected auditor, appoint another auditor where a just cause relating to the person of the elected auditor so requires, in particular where there is a suspicion that he or she has acted with partiality.

(5) The action for removal from office and appointment of a new auditor shall be brought within three weeks of the announcement of the election of the auditor in the Turkish Trade Registry Gazette. In order for the minority to be able to bring this action, it is required that they voted against the election of the auditor at the general assembly, had their dissenting vote recorded in the minutes and have held the status of shareholder of the company for at least three months counted backwards from the date of the general assembly meeting at which the election took place.

(6) If an auditor has not been elected by the fourth month of the financial year, the auditor shall be appointed by the court indicated in the fourth paragraph upon the request of the board of directors, of any member of the board of directors or of any shareholder. The same provision shall also apply where the elected auditor refuses the engagement or terminates the contract, where the resolution assigning the engagement is annulled or is null and void, or where the auditor is unable, for statutory reasons or for any other reason, to perform his or her duties or is prevented from performing them. The decision of the court is final. (Added two sentences: 5/6/2017-KHK-691/8 art.; Adopted verbatim: 31/1/2018-7069/8 art.) In companies whose trusteeship is carried out by the Savings Deposit Insurance Fund, where an auditor has not been elected by the fourth month of the financial year, the auditor shall be appointed, upon the proposal of the board of directors of the company, by the Minister with whom the Savings Deposit Insurance Fund is affiliated. The Minister may delegate this power to the Fund Board.

(7) Where the auditor is appointed by the court, his or her fee and the advance payment to be deposited with the court cashier for probable expenses shall be determined by the court, taking comparable cases into account. Objections may be raised against these within three working days. The decision of the court is final.

(8) The auditor may terminate the audit contract only if there is a just cause or if an action for his or her removal from office has been brought against him or her. Differences of opinion concerning the content of the opinion letter, the restriction of the audit by the company or refraining from issuing an opinion letter may not be deemed a just cause. The auditor’s termination of the contract must be in writing and reasoned. The auditor is obliged to submit to the general assembly the results he or she has obtained up to the date of termination; these results shall be put into the form of a report in accordance with Article 402 and given to the general assembly.

(9) Where the auditor gives notice of termination pursuant to the provision of the sixth paragraph, the board of directors shall immediately elect a temporary auditor and shall bring the notice of termination to the attention of the general assembly and submit the auditor it has elected for the approval of the same assembly.

II – Persons who may be auditors

Article 400 – (1) (Amended: 26/6/2012-6335/19 art.) The auditor may be persons who bear the title of sworn financial adviser or independent accountant and financial adviser licensed under the Law No. 3568 on Independent Accountancy, Financial Advisory and Sworn Financial Advisory dated 1/6/1989 and who are authorised by the Public Oversight, Accounting and Auditing Standards Authority to carry out independent audits, and/or a capital company whose partners consist of such persons. In the presence of one of the following circumstances, the sworn financial adviser, the independent accountant and financial adviser and/or the capital company and one of their partners, and the person or persons employed by their partners or with whom the persons mentioned in this sentence practise the profession jointly, may not be the auditor in the company concerned. Namely, if one of those listed in the preceding sentence:

a) Is a shareholder in the company to be audited,

b) Is an executive or employee of the company to be audited, or held such capacity within the three years preceding his or her appointment as auditor,

c) Is the legal representative or representative, a member of the board of directors, an executive or the owner of a legal entity, a commercial company or a commercial enterprise connected with the company to be audited, or holds more than twenty per cent of the shares therein, or is a descendant or ascendant, the spouse, or a blood relative or relative by marriage up to and including the third degree of a member of the board of directors or of an executive of the company to be audited,

d) Is employed in an enterprise that is connected with the company to be audited or that holds more than twenty per cent of the shares in such a company, or provides services in any manner to a natural person holding more than twenty per cent of the shares in the company of which he or she is to be the auditor,

e) Has been active or has contributed, other than by way of audit, in the keeping of the books or the preparation of the financial statements of the company to be audited,

f) Is the legal representative, representative, employee, member of the board of directors, partner or owner of, or personally as a natural person is, the natural or legal person, or one of its partners, who may not be auditor pursuant to subparagraph (e) because of having been active or having contributed, other than by way of audit, in the keeping of the books or the drawing up of the financial statements of the company to be audited,

g) Is employed by an auditor who may not be auditor because he or she meets the conditions set out in subparagraphs (a) to (f),

h) Has, within the last five years, derived more than thirty per cent of his or her total income arising from his or her professional activity relating to auditing from audit and consultancy activities provided to the company to be audited or to companies holding a participation of more than twenty per cent in it, and is expected to derive such income in the current year as well,

he or she may not be the auditor.

(2) (Amended: 26/6/2012-6335/19 art.) An auditor who has been elected as auditor for the same company for a total of seven years within ten years may not be re-elected as auditor until three years have elapsed. (Amended second sentence: 28/3/2013-6455/81 art.) The Public Oversight, Accounting and Auditing Standards Authority is authorised to determine the procedures and principles relating to the application of this paragraph and to shorten the periods specified in this paragraph.

(3) The auditor may not provide consultancy or services, other than tax consultancy and tax audit, to the company he or she audits, nor may he or she do so through a subsidiary company.

(4) (Repealed: 26/6/2012-6335/19 art.)

D) Obligation of submission and right to information

Article 401 – (1) The board of directors of the company shall have the financial statements and the annual activity report of the board of directors drawn up, approve them and give them to the auditor without delay. The board of directors shall provide the auditor with the facilities necessary to enable the books, correspondence, documents, assets, liabilities, cash, negotiable instruments and inventory of the company to be examined and audited.

(2) The auditor (…)⁵⁶ shall request the board of directors to give him or her all the information necessary for a lawful and diligent audit and to submit the documents that may form a basis therefor. Where necessary for the preparations for the year-end audit, the auditor shall also have the powers provided for in the second sentence of the first paragraph and the first sentence of this paragraph before the financial statements are drawn up. Where necessary for a diligent audit, the auditor may also exercise the powers set out in the first and second sentences of this paragraph in respect of subsidiary and parent companies.

(3) The board of directors of the company obliged to have consolidated financial statements drawn up is obliged to give to the auditor who will audit the consolidated financial statements the financial statements of the group, the group annual activity report, the financial statements of the individual company, the annual activity reports of the boards of directors of the companies and, if an audit has been carried out, the audit reports of the parent company and of the subsidiary companies. The auditor may also exercise the powers provided for in the first and second sentences of the first paragraph in respect of the parent and subsidiary companies.

(4) (Added: 20/11/2017-KHK-696/108 art.; Adopted verbatim: 1/2/2018-7079/101 art.) In companies in respect of which the appointment of a trustee has been decided pursuant to Article 133 of the Code of Criminal Procedure No. 5271 dated 4/12/2004 by reason of membership of, adherence to or connection with terrorist organisations, there is no obligation of approval within the scope of the first sentence of the first paragraph in respect of business and transactions carried out in the financial year in which the trustee was first appointed and before it.

E) Audit report

Article 402 – (1) The auditor shall draw up a report on the financial statements concerning the type, scope, nature and results of the audit carried out, with the necessary clarity, written in comprehensible and simple language and prepared on a comparative basis with the previous year.

(2) In addition, in a separate report, the assessments contained in the annual activity report of the board of directors concerning the situation of the company or of the group shall be evaluated by the auditor in terms of their consistency with the financial statements and their conformity with the truth.

(3) In making the evaluation, the auditor shall take as a basis the financial statements of the company and, if he or she audits them, of the parent company and of the group. In the report, an opinion shall first be expressed on the assessment of the board of directors regarding the financial situation of the company and of the group. In this opinion, in particular in the context of the audit of the financial statements of the company and of the parent company, in addition to an analysis of the ability of the company and of the group to continue as a going concern and of their future development, the financial situation of the company shall be examined to the extent made possible by the report of the board of directors of the company and the group annual activity report.

(4) In the main section of the audit report, it shall be stated clearly:

a) Whether the bookkeeping system, the financial statements and the group financial statements comply with the provisions of the law and of the articles of association relating to financial reporting,

b) Whether the board of directors has given the explanations and provided the documents requested by the auditor within the scope of the audit.

(5) Furthermore, it shall be stated whether the financial statements and the books on which they are based:

a) Have been kept in accordance with the prescribed chart of accounts,

b) Reflect truly and fairly, within the framework of the Turkish Accounting Standards, the picture of the assets, financial position and profitability of the company.

(6) If, within the framework of the audit, an evaluation has been made pursuant to the fourth paragraph of Article 398, its result shall be shown in a separate report.

(7) The auditor shall sign his or her report and submit it to the board of directors.

F) Opinion letters⁵⁷

Article 403 – (1) The auditor shall explain the result of the audit in the opinion letter. This letter shall contain, within the framework of the principles determined by the Public Oversight, Accounting and Auditing Standards Authority, in addition to the subject matter, type, nature and scope of the audit, the evaluations of the auditor. Where the auditor gives an unqualified opinion, he or she shall state in his or her letter, first, that in the audit carried out pursuant to Article 398 and the Turkish Auditing Standards no non-compliance whatsoever has been found with regard to the Turkish Accounting Standards and other requirements; and that, according to the information obtained during the audit, the financial statements of the company or of the group are correct, the picture of the assets, financial position and profitability has been found to be true and fair, and the statements reflect this fairly.

(2) The opinion letter shall indicate that there is no reason that would entail the liability of the board of directors with regard to matters relating to the financial statements, or, if there is such a reason, shall point it out. The opinion shall be written in the form determined by the Public Oversight, Accounting and Auditing Standards Authority and in language that everyone can understand.

(3) If he or she has reservations, the auditor may qualify the unqualified opinion letter or may give an adverse opinion. A qualified opinion shall be given in cases where the financial statements contain non-compliances that can be corrected by the competent boards of the company and the effects of these non-compliances on the result disclosed in the statements are not comprehensive and material. The subject matter and scope of the qualification and how the correction can be made shall be clearly shown in the qualified opinion letter.

(4) Where there are uncertainties in the books of the company to an extent that does not allow the audit to be carried out and conclusions to be reached in accordance with the provisions of this Chapter, or where significant restrictions have been imposed by the company on the matters to be audited, the auditor may, even if he or she does not have evidence capable of proving them, refrain from giving an opinion by explaining his or her reasons. A disclaimer shall produce the consequences of an adverse opinion. The Public Oversight, Accounting and Auditing Standards Authority shall regulate by a communiqué the reasons for and procedure of a disclaimer and the principles of the reasoning therefor.

(5) (Amended: 26/6/2012-6335/20 art.) In cases where an adverse opinion has been written, the board of directors shall, within four working days of the date of delivery of the opinion letter to it, convene the general assembly to a meeting, and the general assembly shall elect a new board of directors. Unless otherwise provided for in the articles of association, the former members of the board of directors may be re-elected. The new board of directors shall, within six months, have financial statements prepared in accordance with the law, the articles of association and the standards, and shall submit them to the general assembly together with the audit report. In cases where a qualified opinion has been given, the general assembly shall also decide on the necessary measures and corrections.

(6) (Added: 20/11/2017-KHK-696/109 art.; Adopted verbatim: 1/2/2018-7079/102 art.) In companies in respect of which the appointment of a trustee has been decided pursuant to Article 133 of Law No. 5271 by reason of membership of, adherence to or connection with terrorist organisations, the provisions of the fifth paragraph shall not apply as long as the duty of the trustee continues.

G) Liability of auditors arising from confidentiality

Article 404 – (1) (Amended first sentence: 26/6/2012-6335/21 art.) The auditor and the special auditor, their assistants and the representatives assisting them in carrying out the audit are obliged to carry out the audit honestly and impartially and to maintain confidentiality. They may not use without permission business and trade secrets relating to the audit which they have learnt in the course of their activities. Those who intentionally or negligently breach their obligations shall be liable to the company and, if they have caused damage to them, to affiliated companies. If there is more than one person who has caused the damage, liability shall be joint and several.

(2) Persons who have been negligent in fulfilling the obligation provided for in the first paragraph may, by reason of the damage they have caused, be ordered to pay compensation of up to one hundred thousand Turkish Liras for each audit and, in joint stock companies whose share certificates are traded on the stock exchange, up to three hundred thousand Turkish Liras. This limitation concerning persons who have caused damage through their negligence shall apply where more than one person has participated in the audit or more than one act giving rise to liability has been committed, and it shall also be valid where some of the participants have acted intentionally.

(3) Where the auditor is a capital company authorised to carry out independent audits, the obligation of confidentiality shall also cover the board of directors, the members and the employees of that institution.⁵⁸

(4) The obligation to compensate arising from these provisions may be neither excluded nor restricted by contract.

(5) Claims relating to the liability of the auditor arising from this Article shall become time-barred within five years from the date of the report. However, if the act constitutes an offence and is subject under the Turkish Penal Code to a longer prosecution limitation period, that limitation period shall also apply to the action for compensation.

(6) The provisions of criminal legislation concerning the reporting of offences are reserved.

H) Differences of opinion between the company and the auditor

Article 405 – (1) Differences of opinion arising between the company and the auditor concerning the interpretation or application of the provisions of the relevant law, of an administrative act or of the articles of association with regard to the year-end accounts and financial statements of the company and of the group and the activity report of the board of directors shall be decided, upon the request of the board of directors or of the auditor, by the commercial court of first instance at the place where the head office of the company is located, on the basis of the file. The decision is final.

(2) The company is the debtor of the costs of the proceedings.

I) Special audit of group relations

Article 406 – (1) a) If the auditor has written a qualified opinion or a disclaimer in respect of the company’s relations with the controlling company or with group companies, or

b) If the board of directors has disclosed that the company has been caused a loss by the group through certain specific legal transactions or measures applied, and that no compensation has been made in respect thereof,

a special auditor may be appointed, upon the request of any shareholder, by the commercial court of first instance at the place where the head office of the company is located in order to examine the relationship of the company with the controlling company or with one of the companies affiliated to the controlling company.

CHAPTER FOUR

General Assembly

A) In general

Article 407 – (1) Shareholders shall exercise their rights relating to the affairs of the company at the general assembly. Statutory exceptions are reserved.

(2) It is compulsory for the managing members and at least one member of the board of directors to be present at the general assembly meeting. Other members of the board of directors may attend the general assembly meeting. The auditor (…)⁵⁹ shall be present at the general assembly. The members and the auditors may express their opinions.

(3) A representative of the Ministry of Customs and Trade shall also take part in the general assembly meetings of the companies determined pursuant to Article 333. For other companies, the cases in which a representative of the Ministry shall be present at the general assembly, the procedures and principles relating to the assignment of representatives for general assembly meetings, their qualifications, duties and powers, as well as the fee tariffs, shall be regulated by a regulation to be issued by the Ministry of Customs and Trade. The expenses of attending the meeting and the fees of the Ministry representative shall be borne by the company concerned.

B) Duties and powers

Article 408 – (1) The general assembly shall adopt resolutions in the cases expressly provided for in the law and in the articles of association.

(2) Without prejudice to the non-transferable duties and powers provided for in various provisions, the following duties and powers of the general assembly may not be transferred:

a) Amendment of the articles of association.

b) Election of the members of the board of directors, determination of their terms of office, remuneration and rights such as attendance fees, bonuses and premiums, adoption of resolutions on their release from liability, and their removal from office.

c) (Amended: 26/6/2012-6335/22 art.) Except for the exceptions provided for in the Law, election and removal from office of the auditor.

d) Adoption of resolutions on the financial statements, the annual report of the board of directors, the disposal of the annual profit, the determination of dividends and profit shares, and the use of the reserve fund, including its addition to the capital or to the profit to be distributed.

e) Except for the exceptions provided for in the Law, dissolution of the company.

f) Sale of a substantial amount of company assets en bloc.

(3) In joint stock companies with a single shareholder, that shareholder shall have all the powers of the general assembly. In order for the resolutions to be adopted by the single shareholder in the capacity of general assembly to become valid, they must be in writing.

C) Meetings

Article 409 – (1) General assemblies shall meet in ordinary and extraordinary meetings. The ordinary meeting shall be held within three months of the end of each financial year. At these meetings, deliberations shall take place and resolutions shall be adopted on the election of the organs, the financial statements, the annual report of the board of directors, the manner of use of the profit, the determination of the rates of the profit and dividend shares to be distributed, the release from liability of the members of the board of directors and other matters concerning the financial year that are deemed necessary.

(2) Where necessary, the general assembly shall be convened to an extraordinary meeting.

(3) Unless there is a provision to the contrary in the articles of association, the general assembly shall meet at the place where the head office of the company is located.

D) Convening

I – Authority

1. Authorised and competent organs

Article 410 – (1) The general assembly may be convened to a meeting by the board of directors, even if the latter’s term of office has expired. Liquidators may also convene the general assembly to a meeting for matters relating to their duties.

(2) Where the board of directors is permanently unable to meet, where it is impossible for the meeting quorum to be formed, or where the board does not exist, a single shareholder may, with the permission of the court, convene the general assembly to a meeting. The decision of the court is final.

2. Minority

a) In general

Article 411 – (1) Shareholders representing at least one tenth of the capital or, in publicly held companies, one twentieth thereof, may request the board of directors in writing, stating the reasons requiring it and the agenda, to convene the general assembly to a meeting or, if the general assembly is to meet in any event, to place on the agenda the matters on which they wish a resolution to be adopted. The right to convene may be granted by the articles of association to shareholders holding a smaller number of shares.

(2) The request for an item to be placed on the agenda must have reached the board of directors before the date of payment of the announcement fee for the publication of the convening notice in the Turkish Trade Registry Gazette.

(3) The request for convening and for placing an item on the agenda shall be made through a notary.

(4) If the board of directors accepts the request for convening, the general assembly shall be convened to a meeting to be held within forty-five days at the latest; otherwise, the convening shall be made by those who made the request.

b) Permission of the court

Article 412 – (1) Where the requests of shareholders for convening or for placing an item on the agenda are rejected by the board of directors or no affirmative response is given to the request within seven working days, the commercial court of first instance at the place where the head office of the company is located may, upon the application of the same shareholders, decide that the general assembly be convened to a meeting. If the court considers the meeting necessary, it shall appoint a curator to draw up the agenda and to make the convening in accordance with the provisions of the Law. In its decision, it shall indicate the duties of the curator and his or her powers relating to the preparation of the documents necessary for the meeting. Unless it is necessary, the court shall decide by examining the file. The decision is final.

II – Agenda

Article 413 – (1) The agenda shall be determined by the person convening the general assembly to the meeting.

(2) Matters which are not on the agenda may not be deliberated or resolved upon at the general assembly. Statutory exceptions are reserved.

(3) The removal from office of the members of the board of directors and the election of new members shall be deemed to be related to the agenda item on the deliberation of the year-end financial statements.

III – Form of convening

1. In general

Article 414 – (1) The general assembly shall be convened to a meeting, in the manner indicated in the articles of association, by an announcement published on the website of the company and in the Turkish Trade Registry Gazette. This convening shall be made at least two weeks before the date of the meeting, excluding the days of the announcement and of the meeting. The day of the meeting, the agenda and the newspapers in which the announcement has appeared or will appear shall be notified by registered letter with return receipt to the shareholders recorded in the share register and to the shareholders who have previously notified the company of their addresses by delivering to it share certificates or documents evidencing their shareholding.

(2) The provision of the sixth paragraph of Article 11 of the Capital Markets Law is reserved.

2. Shareholders entitled to attend the general assembly

Article 415 – (1) Shareholders whose names appear in the “list of attendees” drawn up by the board of directors may attend the general assembly meeting.

(2) The holders of uncertificated shares, of share receipts and of registered shares whose names appear in the list of attendees, and holders of shares monitored in book-entry form pursuant to Article 13 of the Capital Markets Law, or the representatives of the aforementioned, shall attend the general assembly. Natural persons must show their identification and the representatives of legal entities must submit a power of attorney.⁶⁰

(3) (Repealed: 27/12/2020-7262/28 art.)

(4) The right to attend the general assembly and to vote may not be made subject to the condition that the shareholder deposit with the company, a credit institution or elsewhere the documents evidencing that he or she is the owner of the shares or the share certificates.

3. General assembly without convening

Article 416 – (1) The holders of all shares or their representatives may, provided that none of them raises an objection, and without prejudice to the provisions relating to attendance at the general assembly and the holding of general assembly meetings, meet as a general assembly without complying with the procedure relating to convening, and may adopt resolutions as long as this meeting quorum exists.

(2) At a general assembly meeting held without convening, items may be added to the agenda unanimously; any provision of the articles of association to the contrary is invalid.

E) Holding of the meeting

I – List of attendees⁶¹

Article 417 – (1) The board of directors shall draw up the list relating to the holders of bearer shares and the holders of shares monitored in book-entry form who may attend the general assembly pursuant to Article 13 of the Capital Markets Law on the basis of the “schedule of shareholders” to be obtained from the Central Registry Agency.

(2) In drawing up the list of those who may attend the general assembly in respect of shares not monitored in book-entry form, the board of directors shall take into account the share register entries (…) for uncertificated or registered shares and for holders of share receipts.

(3) The list of those who may attend the general assembly to be drawn up pursuant to the first and second paragraphs of this Article shall be signed by the chairperson of the board of directors and shall be kept, before the meeting, at the place where the general assembly is to be held. The list shall show in particular the names and surnames or trade names of the shareholders, their addresses, the amount of shares they hold, the nominal values of the shares, their groups, the share capital of the company and the amount paid in or the issued capital, and the places for the signatures of those who will attend the meeting in person or by way of representation.

(4) The list signed by those attending the general assembly shall be called the “list of attendees”.

(5) (Amended: 27/12/2020-7262/29 art.) The procedures and principles for obtaining the schedule of shareholders from the Central Registry Agency, the prohibition, where necessary, of the transfer of shares limited to the day on which the general assembly meeting is to be held, and other related matters shall be regulated by a communiqué issued by the Capital Markets Board with regard to shares monitored in book-entry form pursuant to Article 13 of the Capital Markets Law, and by the Ministry of Trade with regard to bearer shares.

II – Meeting and decision quorum

Article 418 – (1) Except in cases where a more stringent quorum to the contrary is provided for in this Law or in the articles of association, general assemblies shall meet with the presence of the holders or representatives of shares representing at least one quarter of the capital. This quorum must be maintained throughout the meeting. If the said quorum is not reached at the first meeting, no quorum shall be required for the holding of the second meeting.

(2) Resolutions shall be adopted by the majority of the votes present at the meeting.

III – Chairmanship of the meeting and internal directive

Article 419 – (1) Unless there is any provision to the contrary in the articles of association, the meeting shall be conducted by a chairperson elected by the general assembly, who need not have the status of shareholder. The chairperson shall form the chairmanship by designating a minute-taker and, if he or she deems it necessary, a vote collector. Where necessary, a vice-chairperson may also be elected.

(2) The board of directors of the joint stock company shall prepare an internal directive containing the rules relating to the working principles and procedures of the general assembly, the minimum elements of which shall be determined by the Ministry of Customs and Trade, and shall put it into force after the approval of the general assembly. This internal directive shall be registered and announced.

IV – Adjournment of the meeting

Article 420 – (1) Upon the request of shareholders holding one tenth of the capital or, in publicly held companies, one twentieth thereof, the deliberation of the financial statements and related matters shall be postponed by one month by decision of the chairperson of the meeting, without any need for the general assembly to adopt a resolution. The adjournment shall be notified to the shareholders by announcement in the manner set out in the first paragraph of Article 414 and shall be published on the website. For the subsequent meeting, the general assembly shall be convened to a meeting in compliance with the procedure provided for in the law.

(2) In order for a further postponement of the deliberation of the financial statements to be requested after it has been adjourned once upon the request of the minority, it is required that the points of the financial statements that have been objected to and recorded in the minutes have not been answered by the persons concerned in accordance with the principles of the standard of honest accounting.

V – Meeting and decision quorums for amendments to the articles of association

Article 421 – (1) Unless there is a provision to the contrary in the Law or in the articles of association, resolutions amending the articles of association shall be adopted at a general assembly at which at least one half of the capital of the company is represented, by the majority of the votes present at the meeting. If the meeting quorum provided for is not obtained at the first meeting, a second meeting may be held within one month at the latest. The meeting quorum for the second meeting is the representation at the meeting of at least one third of the capital of the company. Provisions of the articles of association which reduce the quorums provided for in this paragraph or which provide for a relative majority are invalid.

(2) The following resolutions amending the articles of association shall be adopted unanimously by the holders or representatives of the shares constituting the entire capital:

a) Resolutions imposing obligations and secondary obligations for covering balance sheet losses.

b) Resolutions relating to the transfer of the head office of the company abroad.

(3) The following resolutions amending the articles of association shall be adopted by the affirmative votes of the holders or representatives of shares constituting at least seventy-five per cent of the capital:

a) Complete change of the company’s field of activity.

b) Creation of privileged shares.

c) Restriction of the transfer of registered shares.

(4) If the quorums provided for in the second and third paragraphs are not reached at the first meeting, the same quorum shall also be required at subsequent meetings.

(5) In companies whose share certificates are traded on securities exchanges, unless there is a provision to the contrary in their articles of association, the meeting quorum in Article 418 shall apply at the general assembly meetings to be held in order for resolutions to be adopted on the following matters:

a) Amendments to the articles of association relating to the increase of capital and the raising of the registered capital ceiling.

b) Resolutions relating to merger, demerger and change of legal form.

(6) Holders of registered shares who voted against the resolution of the general assembly relating to the complete change of the field of activity or the creation of privileged shares shall not be bound, for six months from the publication of this resolution in the Turkish Trade Registry Gazette, by the restrictions on the transferability of the shares.

VI – Minutes

Article 422 – (1) The minutes shall contain the shareholders or their representatives, the shares they hold, their groups, numbers and nominal values, the questions asked at the general assembly, the answers given, the resolutions adopted, and the number of affirmative and negative votes cast for each resolution. The minutes shall be signed by the chairmanship of the meeting and the Ministry representative; otherwise they are invalid.

(2) The board of directors is obliged to give a copy of the minutes certified by a notary to the trade registry directorate forthwith and to have the matters contained in these minutes that are subject to registration and announcement registered and announced; the minutes shall in addition be placed immediately on the website of the company.⁶²

VII – Effect of resolutions

Article 423 – (1) Resolutions adopted by the general assembly are also valid in respect of shareholders who were not present at the meeting or who voted against them.

VIII – Resolution on the approval of the balance sheet

Article 424 – (1) The resolution of the general assembly on the approval of the balance sheet shall, unless the resolution expressly provides otherwise, have the effect of releasing the members of the board of directors, the executives and the auditors from liability. However, if certain matters have not been stated at all or have not been stated properly in the balance sheet, or if the balance sheet contains certain matters that would prevent the true situation of the company from being seen, and if this was done knowingly, the approval shall not have the effect of a release.

F) Personal rights of the shareholder

I – Attendance at the general assembly

1. Principle

Article 425 – (1) In order to exercise the rights arising from his or her shares, the shareholder may attend the general assembly in person or may send to the general assembly as his or her representative a person who may or may not be a shareholder. A provision of the articles of association requiring the representative to be a shareholder is invalid.

2. Authorisation vis-à-vis the company

Article 426 – (1) Shareholder rights arising from uncertificated shares, registered share certificates and share receipts shall be exercised by the shareholder recorded in the share register or by a person authorised in writing by the shareholder.

(2) A person who proves that he or she is the possessor of a bearer share certificate and who has been notified to the Central Registry Agency is entitled to exercise vis-à-vis the company the rights arising from shareholding.⁶³

3. Representation of the shareholder

a) In general

Article 427 – (1) A person exercising rights of participation as a representative shall comply with the instructions of the person represented. Non-compliance with the instructions shall not render the vote invalid. The rights of the person represented against the representative are reserved.

(2) A person who holds a bearer share certificate by reason of a pledge, a right of retention, a contract of deposit or a loan for use contract and similar contracts may exercise the shareholder rights only if he or she has been authorised by the shareholder by a special written document.

b) Representative of an organ, independent representative and institutional representative

Article 428 – (Repealed: 15/2/2018-7099/23 art.)

c) Depositary representative

Article 429 – (1) If the depositary representative is authorised to exercise on behalf of the depositor the rights of participation and voting rights arising from the shares and share certificates deposited with him or her, he or she is obliged to apply to the depositor before each general assembly meeting in order to receive instructions as to how he or she should act.

(2) If instructions were requested in good time but could not be obtained, the depositary shall exercise the rights of participation and voting rights in accordance with the general instructions of the depositor; in the absence of such instructions, the vote shall be cast in line with the proposals made by the board of directors.

(3) The persons acting as depositaries within the meaning of this Article, the principles and procedures to which they shall be bound and the content of the representation document shall be regulated by a regulation of the Ministry of Customs and Trade.

d) Declaration

Article 430 – (Repealed: 15/2/2018-7099/23 art.)

e) Notification

Article 431 – (Repealed: 15/2/2018-7099/23 art.)

4. More than one right holder

Article 432 – (1) If a share is in the co-ownership of more than one person, they may appoint one of themselves or a third person as representative to exercise the rights arising from the share at the general assembly.

(2) Where there is a usufruct on a share, unless otherwise agreed, the voting right shall be exercised by the holder of the usufruct. However, the holder of the usufruct is liable to the shareholder for not having acted with equitable regard to the interests of the shareholder.

II – Unauthorised participation

Article 433 – (1) The transfer of shares or share certificates, or the handing over of share certificates to another person, for the purpose of circumventing or in any way rendering ineffective the restrictions relating to the exercise of the voting right, is invalid.

(2) With regard to unauthorised participation, every shareholder may raise an objection with the chairmanship of the meeting and may have his or her objection, and the fact that he or she has also raised an objection with the board of directors, recorded in the minutes.

III – Voting right

1. Principle

Article 434 – (1) Shareholders shall exercise their voting rights at the general assembly in proportion to the total nominal value of their shares. The provision of the fifth paragraph of Article 1527 is reserved.

(2) Each shareholder has at least one voting right even if he or she holds only one share. However, the number of votes to be granted to those holding more than one share may be limited by the articles of association.

(3) If the nominal values of the shares have been reduced during the restoration of the financial situation of the company, the voting right granted on the basis of the nominal value of the shares before their reduction may be preserved.

(4) The Ministry of Customs and Trade may regulate cumulative voting in joint stock companies that are not publicly held by a communiqué.

2. Commencement of the voting right

Article 435 – (1) The voting right shall arise upon payment of the minimum amount of the share determined by law or by the articles of association.

3. Deprivation of the right to vote

Article 436 – (1) A shareholder may not vote in deliberations concerning a matter or transaction of a personal nature, or a case before any judicial body or arbitrator, between the company and himself or herself, his or her spouse, descendants and ascendants, or partnerships of persons of which they are partners, or capital companies under their control.

(2) Members of the board of directors of the company and persons with signing authority entrusted with management may not exercise the voting rights arising from their own shares in resolutions relating to the release of the members of the board of directors from liability.

IV – Right to information and inspection

Article 437 – (1) The financial statements, the consolidated financial statements, the annual activity report of the board of directors, the audit reports and the proposal of the board of directors for the distribution of profit shall be made available for the inspection of the shareholders at the head office and branches of the company at least fifteen days before the meeting of the general assembly. Of these, the financial statements and the consolidated statements shall be kept open for the information of the shareholders at the head office and the branches for a period of one year. Every shareholder may request a copy of the income statement and the balance sheet, the cost being borne by the company.

(2) At the general assembly, a shareholder may request information from the board of directors on the affairs of the company, and from the auditors on the manner in which the audit was carried out and on its results. The obligation to provide information also covers the affiliated companies of the company within the framework of Article 200. The information to be given must be diligent and truthful in terms of the principles of accountability and honesty. If information has been given to any of the shareholders, by reason of that capacity, on a matter outside the general assembly, the same information shall be given, upon the request of another shareholder, with the same scope and detail, even if it is not related to the agenda. In this case, the board of directors may not rely on the third paragraph of this Article.

(3) The provision of information may be refused only on the ground that, if the requested information were given, company secrets would be disclosed or other company interests requiring protection could be endangered.

(4) In order for the parts of the commercial books and correspondence of the company concerning the shareholder’s question to be inspected, the express permission of the general assembly or a resolution of the board of directors to this effect is required. If permission has been obtained, the inspection may also be carried out through an expert.

(5) A shareholder whose requests for information or inspection have been left unanswered, unjustly rejected or postponed, and who has not been able to obtain information within the meaning of this paragraph, may apply to the commercial court of first instance of the place where the head office of the company is located within ten days following the rejection and, in other cases, after a reasonable period. The application shall be examined in accordance with the simple trial procedure. The decision of the court may also include an instruction that the information be given outside the general assembly and the form thereof. The decision of the court is final.

(6) The right to information and inspection may not be abolished or restricted by the articles of association or by a resolution of one of the organs of the company.

V – Right to request a special audit

1. Acceptance by the general assembly

Article 438 – (1) Every shareholder may, where this is necessary for the exercise of shareholder rights and if the right to information or inspection has previously been exercised, request the general assembly, even if this is not on the agenda, that specific events be clarified by means of a special audit.

(2) If the general assembly approves the request, the company or each shareholder may, within thirty days, request the commercial court of first instance at the place where the head office of the company is located to appoint a special auditor.

2. Rejection by the general assembly

Article 439 – (1) Where the general assembly rejects the request for a special audit, shareholders representing at least one tenth of the capital or, in publicly held joint stock companies, one twentieth thereof, or shareholders whose shares have a total nominal value of at least one million Turkish Liras, may, within three months, request the commercial court of first instance of the place where the head office of the company is located to appoint a special auditor.

(2) A special auditor shall be appointed if the petitioners demonstrate convincingly that the founders or organs of the company have caused damage to the company or to the shareholders by violating the law or the articles of association.

3. Appointment

Article 440 – (1) The court shall render its decision after hearing the company and the persons who made the request.

(2) If the court finds the request justified, it shall assign one or more independent experts, determining the subject matter of the examination within the framework of the request. The decision of the court is final.

4. Duty

Article 441 – (1) The special audit must be carried out within a period that serves its purpose and without unnecessarily disrupting the affairs of the company.

(2) The board of directors shall permit the examination of the books of the company, its writings including correspondence, and its assets, in particular cash, negotiable instruments and goods.

(3) Founders, organs, proxies, employees, curators and liquidators are obliged to provide the special auditor with information on material facts. In the event of a dispute, the court shall decide. The decision of the court is final.

(4) The special auditor shall obtain the opinion of the company on the results of the special audit.

(5) The special auditor is obliged to maintain confidentiality.

5. Report

Article 442 – (1) The special auditor shall give the court a detailed report on the result of the examination, while also protecting the secrets of the company.

(2) The court shall serve the report on the company and shall decide on the request of the company that the report not be submitted to the persons who made the request on the ground that its disclosure would harm the secrets of the company or other interests of the company worthy of protection.

(3) The court shall give the company and the persons who made the request the opportunity to communicate their assessments of the disclosed report and to ask additional questions.

6. Processing and disclosure

Article 443 – (1) The board of directors shall submit the report and the assessments relating to it to the first general assembly.

(2) Every shareholder may, within a period of one year following the general assembly meeting, request the company to give him or her a copy of the report and of the opinion of the board of directors.

7. Costs

Article 444 – (1) If the court has accepted the appointment of a special auditor, it shall specify the advance and the costs to be paid by the company. Where special circumstances and conditions so justify, the costs may be imposed partly or wholly on the persons who made the request.

(2) If the general assembly has decided on the appointment of the special auditor, the costs shall be borne by the company.

G) Annulment of resolutions of the general assembly

I – Grounds for annulment

Article 445 – (1) The persons specified in Article 446 may, within three months of the date of the resolution, bring an action for annulment before the commercial court of first instance at the place where the head office of the company is located against resolutions of the general assembly that are contrary to the provisions of the law or of the articles of association and in particular to the rule of good faith.

II – Persons entitled to bring an action for annulment

Article 446 – (1) a) Shareholders who were present at the meeting, voted against the resolution and had their dissent recorded in the minutes,

b) Shareholders who, whether or not they were present at the meeting and whether or not they voted against, assert that the convening was not made in accordance with the procedure, that the agenda was not properly announced, that persons not entitled to attend the general assembly or their representatives attended the meeting and voted, that they were unjustly not permitted to attend the general assembly and to vote, and that the irregularities listed above were influential in the adoption of the resolution of the general assembly,

c) The board of directors,

d) Each of the members of the board of directors, if the execution of the resolutions would give rise to his or her personal liability,

may bring an action for annulment.

H) Nullity

Article 447 – (1) Resolutions of the general assembly, in particular those:

a) Which restrict or abolish the shareholder’s inalienable rights to attend the general assembly, to a minimum vote, to bring actions and arising from the law,

b) Which restrict the shareholder’s rights to information, inspection and audit beyond the extent permitted by law,

c) Which disrupt the fundamental structure of the joint stock company or which are contrary to the provisions on the preservation of capital,

are null and void.

I) Miscellaneous provisions

I – Announcement, security and legal remedy

Article 448 – (1) The board of directors shall duly announce that an action for annulment or nullity has been brought and the date of the hearing, and shall place this on the website of the company.

(2) In an action for annulment, the hearing may not commence before the expiry of the three-month preclusive period. If more than one action for annulment is brought, the actions shall be joined and heard together.

(3) The court may, upon the request of the company, decide that the claimants provide security against its probable damages. The nature and amount of the security shall be determined by the court.

II – Suspension of the execution of the resolution

Article 449 – (1) Where an action for annulment or nullity is brought against a resolution of the general assembly, the court may, after obtaining the opinion of the members of the board of directors, decide on the suspension of the execution of the resolution that is the subject of the action.

III – Effect of the judgment

Article 450 – (1) The court judgment concerning the annulment or nullity of the resolution of the general assembly shall, after it has become final, have effect in respect of all shareholders. The board of directors is obliged to have a copy of this judgment registered in the trade registry and placed on the company’s website without delay.

IV – Liability of persons bringing an action for annulment or nullity in bad faith

Article 451 – (1) Where an action for annulment or nullity is brought in bad faith against a resolution of the general assembly, the plaintiffs shall be jointly and severally liable for the losses suffered by the company for this reason.

CHAPTER FIVE

Amendment of the Articles of Association

SECTION ONE

General

A) Principle

Article 452 – (1) Unless there is a provision to the contrary in the articles of association, the general assembly may, by complying with the conditions provided for in the law, amend all provisions of the articles of association; acquired and inalienable rights are reserved.

B) Procedure

I – Permission of the Ministry of Customs and Trade and resolution of the general assembly

Article 453 – (1) Where the general assembly is convened for the amendment of the articles of association, the draft amendment, for which, in companies where the permission of the Ministry of Customs and Trade is required to be obtained pursuant to Article 333, such permission has been obtained, and which, in other companies, has been resolved upon by the board of directors, must be announced together with the existing provisions to be amended, in the manner specified in the first sentence of the first

paragraph of Article 414. The quorums provided for in Article 421 shall apply to the resolution of the general assembly.

II – Special assembly of holders of privileged shares

Article 454 – (1) If the resolution of the general assembly concerning the amendment of the articles of association or the granting of authority to the board of directors to increase the capital, or the resolution of the board of directors concerning the increase of capital, is of a nature that would infringe the rights of the holders of privileged shares, such resolution may not be implemented unless it is approved by a resolution to be adopted, in accordance with the following provisions, at a special meeting to be held by the said shareholders.

(2) The board of directors shall convene the special assembly at the latest within one month from the date on which the resolution of the general assembly was announced. Otherwise, each holder of privileged shares may, within fifteen days starting from the last day of the period for convening by the board of directors, request the commercial court of first instance of the place where the company’s head office is located to convene this assembly.

(3) The special assembly shall meet with a majority of sixty per cent of the capital representing the privileged shares and shall adopt resolutions by a majority of the shares represented at the meeting. If it is concluded that the rights of the holders of privileged shares have been infringed, the resolution shall be set out in reasoned minutes. Delivery of the minutes to the company’s board of directors within ten days is mandatory. Together with the minutes, a list containing the signatures, in a number constituting at least the quorum, of those who voted against the approval of the resolution of the general assembly, as well as a joint address for service, valid for the action that may be brought pursuant to the provision of the eighth paragraph of this Article, shall also be submitted to the board of directors. The minutes, together with the information submitted with them, shall be registered and announced in the Turkish Trade Registry Gazette. Where the conditions in this provision are not complied with, the resolution of the special assembly shall be deemed not to have been adopted.

(4) If, at the general assembly, the holders or representatives of the privileged shares have voted in favour of the amendment of the articles of association in compliance with the meeting and decision quorums provided for in the third paragraph, no separate special meeting shall be held.

(5) If, despite the call, the special assembly cannot be convened within the time limit, the resolution of the general assembly shall be deemed to have been approved.

(6) At the meeting of the special assembly, a representative of the Ministry shall also be present, within the framework of the third paragraph of Article 407, and shall sign the minutes.

(7) The board of directors may, within one month from the date of the resolution, bring an action against the resolution of non-approval of the special assembly, on the ground that the said resolution of the general assembly does not infringe the rights of the shareholders, for the annulment of that resolution and the registration of the resolution of the general assembly, before the commercial court of first instance of the place where the company’s head office is located.

(8) The action for annulment shall be directed against those who voted against the approval of the resolution of the general assembly.

III – Registration

Article 455 – (1) The resolution of the general assembly concerning the amendment of the articles of association shall be registered by the board of directors in the trade registry of the place where the company’s head office and branches are located; in addition, matters subject to announcement shall be caused to be announced; the registered and announced resolution shall be placed on the company’s website. The resolution of amendment shall not have effect against third parties before registration.

SECTION TWO

Special Amendments

A) Increase of capital

I – Common provisions

1. General

Article 456 – (1) Except for an increase made from internal resources, the capital may not be increased as long as the cash contributions for the shares have not been paid in full. The non-payment of amounts not regarded as significant in proportion to the capital shall not prevent the capital increase.

(2) The increase shall be resolved upon, in the share capital system, by the general assembly in accordance with Article 459 and, in the registered capital system, by the board of directors pursuant to Article 460. If the amended form of the relevant provisions of the articles of association, for which permission has been obtained where required, has been accepted in amended form at the general assembly, its approval by the Ministry of Customs and Trade is mandatory.

(3) Where the increase cannot be registered within three months from the date of the resolution of the general assembly or the board of directors, the resolution of the general assembly or the board of directors and, if obtained, the permission shall become invalid, and the second paragraph of Article 345 shall apply.

(4) Articles 353 and 354 and the first paragraph of Article 355 shall apply by analogy to all types of capital increase.

(5) Subject to the special provisions below, Article 455 shall apply to the registration of the resolution on the increase of capital.

2. Declaration of the board of directors

Article 457 – (1) A declaration shall be signed by the board of directors according to the type of capital increase. The declaration shall be prepared in accordance with the principle of providing information in a clear, complete, accurate and honest manner.

(2) The declaration shall contain:

a) Documented and reasoned explanations as to the following: if cash capital is contributed, that the increased portion has been fully subscribed and that the amount required to be paid under the law or the articles of association has been paid; if capital in kind is contributed or an asset is taken over, that the consideration to be given for them is appropriate (…)⁶⁴ the capital in kind taken over, the type of the asset, the method of valuation, its accuracy and justification; if a set-off of a debt is concerned, the existence, validity and set-off eligibility of that debt; the freely disposable nature of the fund or reserve fund converted into capital; that the approvals of the necessary bodies and institutions have been obtained; that the legal and administrative requirements have been fulfilled; if pre-emptive rights have been restricted or removed, the reasons, amount and ratio thereof; to whom, why and at what price the unexercised pre-emptive rights have been given.

b) In a capital increase from internal resources, a guarantee shall be given as to the resources from which it has been covered, the genuineness of these resources and their existence within the company’s assets.

c) The conformity with the law of the conditional capital increase and of its implementation shall be stated.

d) Information shall be given, by way of comparison with their equivalents, on the fees paid and benefits provided to (…)⁶⁵ service providers and other persons.

3. Audit report

Article 458 – (Repealed: 26/6/2012-6335/43 art.)

II – Increase by way of capital subscription

1. In the share capital system

Article 459 – (1) All of the shares representing the increased capital shall be subscribed either in the amended articles of association or in subscription undertakings.

(2) The subscription undertaking shall be made unconditionally, without reservation and in writing, within the framework of Article 461 concerning the acquisition of new shares. The subscription undertaking shall, specifying the capital increase that gave rise to the giving of the undertaking, contain the number, nominal value, type and group of the subscribed shares, the amount paid in advance, the period for which the subscriber is bound by the undertaking and, if any, the issue premium, as well as the signature of the subscriber.

(3) In this type of capital increase, Article 341 shall apply by analogy to the subscription of cash capital, Articles 342 and 343 to the contribution of capital in kind, Articles 344 and 345 to the payment of contributions, Article 346 to shares to be offered to the public, and Article 347 to shares to be issued.

2. In the registered capital system

Article 460 – (1) Where, in a joint stock company not open to the public, the authority to increase the capital up to the registered capital ceiling determined in the articles of association is granted to the board of directors by the initial or amended articles of association, this board may carry out the capital increase within the framework of the provisions of this Law and within the limits of authority provided for in the articles of association. This authority may be granted for a maximum of five years.

(2) In order for the capital to be increased, the board of directors shall announce, in the manner provided for in the articles of association, and publish on the website, the forms of the provisions of the articles of association relating to the capital for which, where required pursuant to Article 333, the permission of the Ministry of Customs and Trade has been obtained, its resolution concerning the increase of capital, the restrictions relating to privileged shares and pre-emptive rights, the records relating to the premium and the rules concerning its application. In this resolution, the board of directors shall specify the amount of the increased capital, the nominal values, number and types of the new shares to be issued, whether they are issued at a premium and whether they are privileged, whether the pre-emptive right has been restricted, and the conditions and period for its exercise, and shall provide information on these matters and on other matters required pursuant to the principle of public disclosure.

(3) The provisions of Article 459 shall apply by analogy with regard to the subscription of the new shares to be issued, the minimum cash amount required to be paid, the contribution of capital in kind and other matters.

(4) In order for the board of directors to be able to issue privileged shares or shares above their nominal value and to restrict the rights of shareholders to acquire new shares, it is mandatory that it has been authorised by the articles of association.

(5) Shareholders and members of the board of directors may, in the presence of the grounds provided for in Article 445, bring an action for annulment against the resolutions of the board of directors within one month from the date of announcement of the resolution. Articles 448 to 451 shall apply by analogy to this action.

(6) After the capital increase has been carried out in accordance with the above provisions, the new form of the capital article of the articles of association showing the issued capital shall be caused to be registered by the board of directors.

(7) The provisions of the Capital Markets Law relating to publicly held joint stock companies are reserved.

3. Pre-emptive right

Article 461 – (1) Each shareholder has the right to acquire the newly issued shares in proportion of his or her existing shares to the capital.

(2) The pre-emptive right of the shareholder may be restricted or removed by the resolution of the general assembly concerning the increase of capital only where there are just grounds and with the affirmative vote of at least sixty per cent of the share capital. In particular, a public offering, the takeover of enterprises, parts of enterprises or participations, and the participation of employees in the company shall be accepted as just grounds. By the restriction and removal of the pre-emptive right, no one may be benefited or caused to suffer a loss in a manner that cannot be considered justified. Except for the condition relating to the quorum, this provision shall also apply to the resolution of the board of directors in the registered capital system. The board of directors shall explain, by a report, the grounds for the restriction or removal of the pre-emptive right, the reasons for the issue of the new shares at a premium or without a premium, and how the premium has been calculated. This report shall also be registered and announced.

(3) The board of directors shall determine, by a resolution, the principles for the exercise of the right to acquire new shares and shall grant the shareholders a period of at least fifteen days in this resolution. The resolution shall be registered and announced in the (…)⁶⁶ gazette referred to in Article 35. In addition, it shall be placed on the company’s website.

(4) The pre-emptive right is transferable.

(5) The company may not prevent the shareholders to whom it has granted pre-emptive rights from exercising these rights by asserting that the transfer of registered shares has been restricted by the articles of association.

III – Capital increase from internal resources

Article 462 – (1) The capital may be increased from internal resources by converting into capital the reserve funds set aside by the articles of association or by a resolution of the general assembly and not allocated to a specific purpose, the freely usable portions of the legal reserve funds, and the funds that the legislation permits to be included in the balance sheet and added to the capital.

(2) The genuine existence within the company of the amount covering the increased portion of the capital from internal resources shall be verified by the approved annual balance sheet and by a clear and written declaration to be given by the board of directors. Where more than six months have passed since the balance sheet date, it is mandatory that a new balance sheet be drawn up and approved by the board of directors.⁶⁷

(3) Where there are funds in the balance sheet that the legislation permits to be added to the capital, the capital may not be increased by way of subscription of capital without these funds being converted into capital. The capital may be increased both by the conversion of these funds into capital and, at the same time and in the same proportion, by way of subscription of capital. The increase shall become final upon the registration of the resolution of the general assembly or the board of directors and of the amended form of the relevant articles of the articles of association. Upon registration, the shareholders existing at that moment shall automatically acquire the bonus shares in proportion of their existing shares to the capital. The right to bonus shares may not be removed or restricted; this right may not be waived.

IV – Conditional capital increase

1. Principle

Article 463 – (1) The general assembly may resolve on a conditional increase of capital by granting, in the articles of association, to persons who are creditors of the company or of group companies by reason of newly issued bonds or similar debt instruments, or to employees, the right to acquire new shares by exercising conversion or option rights.

(2) The capital shall increase automatically at the moment when and to the extent that the conversion or option right is exercised and the capital debt is fulfilled by way of set-off or payment.

2. Limits

Article 464 – (1) The total nominal value of the conditionally increased capital may not exceed half of the capital.

(2) The payment made must be at least equal to the nominal value.

3. Basis in the articles of association

Article 465 – (1) The articles of association;

a) The nominal value of the conditional capital increase,

b) The number, nominal values and types of the shares,

c) The groups that may benefit from the conversion or option right,

d) The fact that the pre-emptive rights of the existing shareholders have been removed, and the extent thereof,

e) The privileges to be granted to certain groups of shares,

f) The restrictions concerning the transfer of new registered shares,

shall contain.

(2) If bonds or similar debt instruments containing conversion and option rights attached to bonds and similar debt instruments are not first offered to the shareholders, the articles of association, in addition;

a) The conditions for the exercise of the conversion or option rights,

b) The principles concerning the calculation of the issue price,

shall also set out.

(3) Conversion and option rights granted before the registration of the provision of the articles of association concerning the conditional capital increase are null and void.

4. Protection of shareholders

Article 466 – (1) Where, in a conditional capital increase, instruments containing conversion and option rights attached to bonds and similar debt instruments are issued, they shall first be offered to the shareholders in proportion to their existing shares.

(2) This right to be the addressee of the offer may be removed or restricted in the presence of just grounds.

(3) No one may be benefited or caused to suffer a loss, in a manner that cannot be considered justified, by reason of the removal or restriction of the pre-emptive rights and the rights to be the addressee of the offer required for the conditional capital increase.

5. Protection of persons holding conversion or option rights

Article 467 – (1) Creditors or employees holding conversion or option rights who have been granted the right to acquire registered shares may not be prevented from exercising the said rights on the ground that the transfers of such shares have been restricted; unless this matter has been reserved in the articles of association and in the prospectus.

(2) Conversion or option rights may not be caused to suffer a loss by making a capital increase, granting new conversion or option rights or by any other means; unless the conversion price has been reduced or appropriate compensation has been provided to the right holders, or the rights of the shareholders have likewise been caused to suffer a loss.

6. Implementation of the capital increase

a) Exercise of rights, capital subscription

Article 468 – (1) Conversion and option rights shall be exercised by a written declaration referring to the provision of the articles of association concerning the conditional capital increase; where the legislation requires the publication of an issue prospectus, reference shall also be made to it.

(2) Performance of the subscription shall be effected through a deposit bank or participation bank by way of payment of money or set-off.

(3) Shareholder rights shall arise upon the performance of the capital subscription.

b) Verification of conformity

Article 469 – (Repealed: 26/6/2012-6335/43 art.)

c) Bringing the articles of association into conformity

Article 470 – (1) (Amended: 26/6/2012-6335/23 art.) The board of directors shall determine, in the capital increase declaration, the number, nominal value and types of the newly issued shares, the privileges granted to certain groups, or the state of the capital at the end of the accounting period. The board of directors shall adapt the articles of association to the existing situation.

(2) (Repealed: 26/6/2012-6335/23 art.)

d) Registration in the trade registry

Article 471 – (1) The board of directors shall, at the latest within three months from the close of the accounting period, have the amendment to the articles of association registered in the trade registry; it shall deposit the declaration of the board of directors concerning the capital increase (…)⁶⁸ with the registry.⁶⁹

7. Removal from the articles of association

Article 472 – (Amended: 26/6/2012-6335/24 art.)

(1) Upon the termination of the conversion and option rights, the board of directors shall remove the provision concerning the conditional capital increase from the articles of association. The provision shall also be deleted in the registry.

B) Reduction of the share capital

I – Resolution

Article 473 – (1) If a joint stock company, in reducing its capital, does not issue new shares, the contributions for which are to be paid in full, to replace the reduced portion, the general assembly shall resolve on the amendment of the articles of association as required. In the announcements of the call, the letters and the website notification concerning the general assembly meeting, the reasons for resorting to the reduction of capital, the purpose of the reduction and the manner in which the reduction is to be made shall be explained in detail and in accordance with the principles of accountability. In addition, the board of directors shall submit to the general assembly a report containing these matters; the report approved by the general assembly shall be registered and announced.

(2) (…)⁷⁰ the reduction of capital may not be resolved upon unless it has been established that, notwithstanding the reduction of capital, there exist in the company assets in an amount sufficient to satisfy the rights of the company’s creditors in full.

(3) The first sentence of the third paragraph of Article 421 shall apply to the resolution of the general assembly. The resolution shall indicate (…) the manner in which the reduction of capital is to be made.

(4) The book profit that will arise according to the records by reason of the reduction of the share capital may be used only for the cancellation of shares.

(5) The capital may in no way be reduced below the minimum amount determined by Article 332.

(6) This Article and Articles 474 and 475 shall apply by analogy to the reduction of the issued capital in the registered capital system.

II – Call to creditors

Article 474 – (1) Where the general assembly resolves on the reduction of the share capital, the board of directors shall, in addition to placing this resolution on the company’s website, announce it three times, at intervals of seven days, in the gazette referred to in Article 35 and at the same time in the manner provided for in the articles of association. In the announcement, it shall state that the creditors may, within two months from the third announcement in the Turkish Trade Registry Gazette, declare their claims and request that they be paid or secured. Letters of call shall additionally be sent to the creditors known to the company.

(2) If the capital is to be reduced for the purpose of covering a deficit arising in the balance sheet as a result of losses, and in proportion to such deficits, the board of directors may dispense with calling the creditors and with paying or securing their rights.

III – Implementation of the resolutions

Article 475 – (1) The capital may be reduced only after the expiry of the period granted to the creditors and after the declared claims have been paid or secured; otherwise, the creditors may, within two years from the announcement of the registration of the capital reduction transaction, bring an action for the annulment of the reduction of capital before the commercial court of first instance of the place where the company’s head office is located. Recourse to the courts is also available in the event of insufficiency of the security.

(2) In cases where, for the implementation of the reduction resolution, it is necessary to reduce the number of share certificates by way of exchange or stamping or in any other manner, share certificates which are not returned despite a warning given for this purpose may be cancelled by the company. The notification shall state that certificates not returned to the company will be cancelled.

(3) If the number of share certificates returned by the shareholders to the company for the purpose of exchange is not sufficient for the exchange according to the resolution, these certificates shall be cancelled, the new certificates that should be given in return for them shall be sold, and the amount falling to their shares shall be kept by the company.

(4) Unless documents showing that the conditions set out in the above paragraphs and in Articles 473 and 474 have been complied with are submitted, the resolution concerning the reduction of the share capital and the fact that the capital has actually been reduced may not be registered in the trade registry.

CHAPTER SIX

Shares and the Obligation to Contribute Capital

SECTION ONE

Shares

A) General provisions

I – Minimum nominal value

Article 476 – (1) The nominal value of a share is at least one kuruş. This value may be increased only by one kuruş each and multiples thereof. The said nominal value may be increased up to one hundred times by the President.⁷¹

(2) Shares issued in breach of the first paragraph are invalid; however, the rights arising from the payment made for the share are reserved. Those who issue the said shares shall be jointly and severally liable towards the persons to whom they have caused loss. Article 560 shall apply with regard to the statute of limitations.

(3) For the purpose of improving the financial situation of a company in difficulty, the nominal value of the share may, where it exceeds one kuruş, be reduced down to one kuruş.

II – Indivisibility of shares

Article 477 – (1) A share is indivisible vis-à-vis the company. Where a share has more than one owner, they may exercise their rights vis-à-vis the company only through a joint representative. Where they do not appoint such a representative, a notification to be made by the company to one of the owners of the said share shall be valid in respect of all of them.

(2) The general assembly has the authority, provided that the amount of capital remains the same, to divide shares, by amending the articles of association and in compliance with the provision on minimum nominal value, into shares with smaller nominal values, or to consolidate shares into shares with higher nominal values. However, for the consolidation of shares, each shareholder must consent to this transaction. Article 476 of the Law is reserved.

B) Privileged shares

I – Definition

Article 478 – (1) A privilege may be granted to certain shares by the initial articles of association or by amending the articles of association.

(2) A privilege is a superior right granted to a share in rights such as dividend, liquidation share, pre-emptive right and voting right, or a new shareholder right not provided for in the law.

(3) The provision of Article 360 is reserved.

(4) (Added: 26/6/2012-6335/25 art.) In joint stock companies more than half of whose capital belongs, alone or together, to the State, special provincial administrations, municipalities and other public legal entities, trade unions, associations, foundations, cooperatives and their higher organisations, and in the participations in which these companies hold a capital share in the same proportion, no privilege regulated in this Law may be established for other shares, for shareholders forming a certain group, for certain groups of shares or for the minority, except for the privileges that may be established for the shares held by them. This provision shall not apply to joint stock companies whose shares are traded on the stock exchange, or to credit institutions and financial institutions defined in Article 3 of Law No. 5411.

II – Shares privileged in voting

Article 479 – (1) A privilege in voting may be granted by conferring a different number of voting rights on shares of equal nominal value.

(2) A maximum of fifteen voting rights may be granted to one share. This limitation shall not apply in cases required by institutionalisation or where a just ground is proven. In these two cases, the commercial court of first instance of the place where the company’s head office is located must examine the institutionalisation project or the just ground and, depending thereon, give a decision granting exemption from the limitation. Every change to be made in the project is subject to a court decision. In cases where it is understood that institutionalisation will not be achieved or where the just ground has ceased to exist, the decision granting exemption may be revoked by the court.

(3) The privilege in voting may not be used in the following resolutions:

a) Amendment of the articles of association.

b) (Repealed: 26/6/2012-6335/43 art.)

c) Release and the bringing of a liability action.

SECTION TWO

Obligation to Pay the Share Contribution and Consequences of Non-Performance

A) Principle

Article 480 – (1) Except for the exceptions provided for in the Law, no obligation other than the payment of the share contribution or of the premium exceeding the nominal value of the share may be imposed on the shareholder by the articles of association.

(2) In joint stock companies that have adopted the registered capital system, the board of directors may be granted the authority to issue shares at a premium by the articles of association.

(3) Shareholders may not reclaim what they have given to the company as capital; their rights concerning the liquidation share are reserved.

(4) In cases where transfers of shares are subject to the approval of the company, the shareholders may, by the articles of association, also be placed under the obligation to perform recurring non-monetary performances at certain times, in addition to the debt arising from the capital subscription. The nature and scope of these secondary obligations may be written on the reverse of the share certificates or interim certificates.

B) Call for payment

Article 481 – (1) Unless otherwise provided in the articles of association, the contributions for the shares shall be requested from the shareholders by the board of directors by way of announcement. The announcement shall clearly state the ratio or amount of the capital debt requested to be paid, the date of payment and where the payment is to be made.

(2) A contractual penalty may also be provided for in the articles of association in respect of secondary obligations.

C) Default

I – Consequences

Article 482 – (1) A shareholder who does not fulfil the obligation to contribute capital in due time is obliged to pay default interest without the need for a warning.

(2) In addition, the board of directors is authorised to deprive the defaulting shareholder of the rights arising from the subscription undertaking and from the partial payments made by him or her, to sell the share in question and to take another person in his or her place and, if share certificates have been given to him or her, to cancel them. If the cancelled share certificates cannot be seized, the decision of cancellation shall be announced in the gazette referred to in Article 35 and additionally in the manner provided for in the articles of association.

(3) By the articles of association, shareholders may be compelled to pay a contractual penalty in the event of default.

(4) The company’s rights to compensation are reserved.

II – Forfeiture procedure

Article 483 – (1) In order for the second and third paragraphs of Article 482 of the Law to be applied, a warning shall be given by the board of directors to the defaulting shareholder by a message to be published by way of announcement in the gazette referred to in Article 35 and in the manner provided for in the articles of association, and also on the company’s website. This warning shall state that the defaulting shareholder must pay the amount in default within one month, failing which he or she will be deprived of his or her rights relating to the shares concerned and the contractual penalty will be claimed.

(2) For holders of registered share certificates, this invitation and warning shall be made, instead of by announcement, by registered letter with acknowledgement of receipt and by a website message. The one-month period shall start from the date of receipt of the letter.

(3) The defaulting shareholder shall be liable to the company for the amount remaining unpaid from the payments of the new shareholder.

(4) The provision of Article 501 is reserved.

CHAPTER SEVEN

Securities

SECTION ONE

Share certificates

A) Common Provisions

I – Types

1. Conditions

Article 484 – (1) Share certificates shall be bearer or registered.

(2) Bearer share certificates may not be issued for shares whose contributions have not been paid in full. Those issued in breach of this provision are invalid. The rights to compensation of persons acting in good faith are reserved.

2. Conversion

Article 485 – (1) Unless otherwise provided in the articles of association, the type of the share may be changed by way of conversion. The conversion shall be made by amending the articles of association. In cases where conversion is provided for by law, the board of directors shall adopt the necessary resolution and implement it without delay, and shall immediately initiate the process for this to be reflected in the articles of association.

(2) In order for registered share certificates to be converted into bearer share certificates, the contributions for the shares must have been paid in full.

II – Printing of share certificates

Article 486 – (1) Shares issued before the registration of the company and of the capital increase are invalid; however, the obligations arising from the subscription undertaking shall remain valid.

(2) If the shares are bearer shares, the board of directors shall have the share certificates printed and distribute them to the shareholders within three months from the date of payment of the entire share contribution. The resolution of the board of directors concerning the printing of bearer share certificates shall be registered and announced, and shall additionally be placed on the company’s website. (Added sentence: 27/12/2020-7262/31 art.) The holders of bearer shares and the information relating to the shares they hold shall be notified to the Central Registry Agency before the certificates are distributed to the shareholders. Until the share certificates are printed, interim certificates may be issued. The provisions relating to registered share certificates shall apply by analogy to interim certificates.

(3) If the minority so requests, registered share certificates shall be printed and distributed to all holders of registered share certificates.

(4) Any person who issues share certificates before registration shall be liable for the losses arising therefrom.

III – Form of share certificates

Article 487 – (1) Share certificates must state the trade name of the company, the amount of capital, the date of incorporation, the amount of capital on that date, the series of the share certificate issued, the date of its registration, the type and nominal value of the certificate and how many shares it comprises, and must be signed by at least two of those authorised to sign on behalf of the company. In closely held companies, the signature in printed form must be perforated or other security measures preventing forgery must be applied.

(2) Registered share certificates must additionally state the name and surname or trade name of their holders, their domicile and the amount of the share certificate contribution that has been paid. These certificates shall be entered in the company’s share ledger.

IV – Worn share certificates

Article 488 – (1) If a share certificate or interim certificate has become worn or damaged to such an extent that its circulation is not possible, or if its content or distinguishing features and characteristics cannot be understood in a manner leaving no room for doubt, its holder has the right, provided that he or she pays the costs in advance, to request a new certificate or interim certificate from the company.

B) Transfer of bearer share certificates

Article 489 – (Amended: 27/12/2020-7262/32 art.)

(1) The transfer of bearer share certificates shall have effect in respect of the company and third parties only upon a notification to be made to the Central Registry Agency by the transferee of the share through the transfer of possession. In the absence of a notification to the Central Registry Agency, the holders of bearer share certificates may not exercise their rights attached to the share arising from this Law until the required notification is made.

(2) The date of the notification made to the Central Registry Agency shall be taken as the basis for asserting the rights attached to the bearer share certificate against the company and third parties.

(3) The records kept by the Central Registry Agency concerning bearer share certificates shall be shared with the authorities empowered pursuant to the relevant laws.

(4) The procedures and principles concerning the notification of bearer share certificates to the Central Registry Agency and their recording, as well as the fees to be charged in this context, shall be determined by a communiqué issued by the Ministry of Trade.

C) Principle in the transfer of registered shares and share certificates

Article 490 – (1) Unless otherwise provided in the Law or in the articles of association, registered shares may be transferred without being subject to any restriction.

(2) Transfer by legal transaction may be effected by the transfer of possession of the endorsed registered share certificate to the transferee.

D) Restriction of transfer

I – Legal restriction

Article 491 – (1) Registered shares whose contributions have not been paid in full may be transferred only with the approval of the company; unless the transfer takes place by way of inheritance, partition of the inheritance, the provisions on the matrimonial property regime between spouses, or compulsory enforcement.

(2) The company may refuse to give approval only if the solvency of the transferee is doubtful and the security requested by the company has not been provided.

II – Restriction by the articles of association

1. Principles

Article 492 – (1) The articles of association may provide that registered shares may be transferred only with the approval of the company.

(2) This restriction shall also apply when a usufruct is established.

(3) If the company has entered into liquidation, the restrictions concerning transferability shall lapse.

2. Registered shares not listed on the stock exchange

a) Grounds for refusal

Article 493 – (1) The company may refuse the request for approval by asserting a significant ground provided for in the articles of association, or by offering the transferor to acquire his or her shares, at their real value at the time of the application, for its own account or for the account of other shareholders or third parties.

(2) The provisions of the articles of association concerning the composition of the circle of shareholders constitute a significant ground if they justify the refusal of approval with regard to the company’s field of activity or the economic independence of the enterprise.

(3) Furthermore, if the transferee does not expressly declare that he or she has acquired the shares in his or her own name and for his or her own account, the company may refuse the entry of the transfer in the share ledger.

(4) If the shares have been acquired by way of inheritance, partition of the inheritance, the provisions on the matrimonial property regime between spouses or compulsory enforcement, the company may refuse to give approval to the person acquiring the shares only if it offers to take over his or her shares at their real value.

(5) The transferee may request the commercial court of first instance of the place where the company’s head office is located to determine the real value of his or her shares; in this case, the court shall take as a basis the value on the date closest to the date of the company’s decision. The costs of the valuation shall be borne by the company.

(6) If the transferee does not reject this price within one month from the date on which he or she learns of the real value, he or she shall be deemed to have accepted the company’s offer to take over.

(7) The articles of association may not render the conditions of transferability more onerous.

b) Effects

Article 494 – (1) As long as the approval required for the transfer has not been given, the ownership of the shares and all rights attached to the shares shall remain with the transferor.

(2) In the event that the shares are acquired by way of inheritance, partition of the inheritance, the provisions on the matrimonial property regime between spouses or compulsory enforcement, their ownership and the property rights arising therefrom shall pass to the transferee immediately; the rights to attend the general assembly and the voting rights, however, shall pass to the transferee only together with the approval of the company.

(3) If the company has not rejected the request for approval at the latest within three months from the date of its receipt, or if the refusal is unjustified, approval shall be deemed to have been given.

3. Registered shares listed on the stock exchange

a) Grounds for refusal

Article 495 – (1) The company may refuse to recognise as a shareholder a person who acquires registered shares listed on the stock exchange only if the articles of association, with regard to the registered shares that may be acquired, provide for an upper limit of acquisition, based on the capital and expressed as a percentage, up to which the acquirer will be recognised as a shareholder, and this upper limit has been exceeded.

(2) Furthermore, if, despite being requested to do so, the transferee does not expressly declare that he or she has acquired the shares in his or her own name and for his or her own account, the company may refuse the entry of the shares in the share ledger.

(3) In cases where registered shares listed on the stock exchange are acquired by way of inheritance, partition of the inheritance, the provisions on the matrimonial property regime between spouses or compulsory enforcement, the acquisition of the status of shareholder by the transferee may not be refused.

b) Duty of notification

Article 496 – (1) In the event that registered shares listed on the stock exchange are sold on the stock exchange, the Central Registry Agency shall, in accordance with the regulations of the Capital Markets Board, notify the company of the identity of the transferor and the number of shares sold, or shall provide the company with technical access to this information.

c) Passing of rights

Article 497 – (1) Where registered shares listed on the stock exchange are acquired on the stock exchange, the rights arising from the shares shall pass to the transferee together with the transfer of the shares. In the event that registered shares listed on the stock exchange are acquired outside the stock exchange, the said rights shall pass to the transferee upon the transferee’s application to the company for the recognition of the status of shareholder by the company.

(2) Until recognised by the company, the transferee may not exercise the right to attend the general assembly and the voting right arising from the shares, or the other rights attached to the voting right. In the exercise of all other shareholder rights, in particular the pre-emptive right, the acquirer is not subject to any restriction.

(3) Transferees who have not yet been recognised by the company shall, after the passing of the rights, be entered in the share ledger as shareholders without voting rights. The said shares may not be represented at the general assembly.

(4) If the refusal is unlawful, the company shall recognise the voting right and the rights attached to it as from the date on which the court judgment becomes final. Unless the company proves that no fault can be attributed to it, it is obliged to compensate the loss suffered by the transferee by reason of the refusal.

d) Period for refusal

Article 498 – (1) If the company does not reject the request of the transferee for recognition as a shareholder within twenty days from the date of receipt of the request, the transferee shall be deemed to have been recognised as a shareholder.

III – Share ledger

1. Entry

Article 499 – (1) The company shall enter in the share ledger the holders of uncertificated shares and of registered share certificates, as well as the holders of usufruct rights, with their names, surnames, trade names and addresses.

(2) As long as it is not proven that the share has been duly transferred or that a usufruct has been established over it, the transferee and the holder of the usufruct may not be entered in the share ledger.

(3) The company shall indicate on the share certificate that the entry has been made.

(4) In relations with the company, only the person registered in the share ledger shall be accepted as shareholder and holder of the usufruct.

(5) The provisions of the Capital Markets Law and other relevant regulations concerning registered shares monitored in book-entry form by the Central Registry Agency are reserved.

2. Deletion of the entry

Article 500 – (1) The company may, after obtaining the opinions of the persons concerned, delete an entry made in the share ledger as a result of a false declaration by the acquirer. Written information concerning the deletion shall be given to the said persons without delay.

3. Registered shares whose contributions have not been paid in full

Article 501 – (1) A person who acquires a registered share whose contribution has not been paid in full shall, upon being entered in the share ledger, become obliged towards the company to pay the remaining share contribution.

(2) Where a person who made a subscription undertaking during the incorporation of the company or the increase of the share capital transfers his or her share to another person, the portion of the contribution that has not yet been paid may not be claimed from him or her; unless the company has become bankrupt within two years from the date of incorporation of the company or of the increase of the share capital and the person who acquired the share has been deprived of the rights arising from the share.

(3) If the person who transfers his or her share is not subject to the provision of the second paragraph, he or she shall be released from his or her debts upon the entry of the acquirer in the share ledger.

SECTION TWO

Jouissance Certificates

A) Issue

Article 502 – (1) The general assembly may, pursuant to the articles of association or by amending the articles of association, resolve on the issue of jouissance certificates in favour of the holders of shares whose value has been cancelled in accordance with the law, of creditors, or of persons connected with the company for a similar reason. Article 348 shall apply to these certificates.

(2) Jouissance certificates, including those issued for founders, may be made out to order or to bearer.

B) Effects

Article 503 – (1) Shareholder rights may not be granted to holders of jouissance certificates; however, these persons may be granted rights to participate in the net profit or in the amount remaining after liquidation, or to acquire newly issued shares.

SECTION THREE

Debt Instruments and Securities Containing Option and Conversion Rights

A) By resolution of the general assembly

Article 504 – (1) Bonds of all kinds, commercial papers, asset-backed securities, other debt instruments including those issued on a discount basis, instruments carrying option and conversion rights, and securities of all kinds may, unless otherwise provided in the laws, be issued only by a resolution of the general assembly. Unless there is a different regulation in the laws, the general assembly shall adopt this resolution in accordance with the provisions of the third and fourth paragraphs of Article 421. The articles of association may provide for a different quorum. The resolution of the general assembly must contain all the necessary terms and conditions relating to the security to be issued. The board of directors shall implement the resolution of the general assembly. Securities subject to this provision may be made out to bearer or to order and may have a nominal value. The nominal value shall be determined by the general assembly and, if it has been so authorised, by the board of directors. It is mandatory that the consideration for debt instruments be in cash and be paid in full at the time of delivery.

B) By resolution of the board of directors

Article 505 – (1) Unless otherwise provided in the law, the general assembly may delegate the authority to issue any security and to determine its terms and conditions (…)⁷² to the board of directors for a maximum of fifteen months. The provisions of the third and fourth paragraphs of Article 421 shall also apply to the authorisation resolution.

C) Limit

Article 506 – (1) The total amount of debt instruments subject to the provisions of Articles 504 and 505 may not exceed the sum of the capital and the reserve funds shown in the balance sheet; revaluation funds that the laws permit to be included in the balance sheet shall also be added to the total. Exceptions in the laws are reserved.

(2) The provisions of the Capital Markets Law and the relevant legislation are reserved.

CHAPTER EIGHT

Profit, Profit Share and Liquidation Share

A) Right to profit and liquidation share

I – General

Article 507 – (1) Each shareholder has the right to participate, in proportion to his or her share, in the net profit for the period which has been resolved to be distributed to the shareholders in accordance with the provisions of the law and the articles of association. In the event of the dissolution of the company, each shareholder shall participate, in proportion to his or her share, in the amount remaining after liquidation, unless there is another provision in the articles of association concerning the use of the assets of the dissolved company.

(2) The privilege rights and special benefits granted to certain types of shares in the articles of association are reserved.

(3) The provisions of the Capital Markets Law and the relevant legislation are reserved.

II – Method of calculation

Article 508 – (1) Unless there is a provision to the contrary in the articles of association, the dividend and the liquidation share shall be calculated in proportion to the payments made by the shareholder to the company for his or her capital share.

(2) The annual profit shall be determined according to the annual balance sheet.

B) Dividend, interest for the preparatory period and profit-sharing bonus

I – Dividend

Article 509 – (1) No interest may be paid on capital.

(2) Dividends may be distributed only from the net profit for the period and from free reserve funds.

(3) Dividend advances shall, in companies not subject to the Capital Markets Law, be regulated by a communiqué of the Ministry of Customs and Trade.

II – Interest for the preparatory period

Article 510 – (1) For the preparatory period until the enterprise fully commences its activities, it may be provided in the articles of association that a certain interest is to be paid to the shareholders, provided that this complies with the Turkish Accounting Standards, to be charged to the cost of investments qualifying as qualifying assets, and, limited to this period, the latest date until which the interest payments will continue shall be specified.

(2) If the enterprise is to be expanded by issuing new shares, the payment of interest to the new shareholders, to be charged to the cost of investments qualifying as qualifying assets, for a certain period and at the latest until the day on which the new investment is put into operation, may be accepted in the resolution concerning the increase of capital.

III – Profit-sharing bonuses

Article 511 – (1) Profit-sharing bonuses may be given to the members of the board of directors only from the net profit and only after the specified allocation for the legal reserve fund has been made and a dividend at the rate of five per cent of the paid-in capital, or at a higher rate provided for in the articles of association, has been distributed to the shareholders.

C) Right of restitution

I – In the case of bad faith

Article 512 – (1) Shareholders who have received dividends or interest for the preparatory period unjustly and in bad faith are obliged to return them. The same provision shall apply with regard to the profit-sharing bonuses of the members of the board of directors.

(2) The right of restitution shall become time-barred upon the expiry of five years from the date on which the money was received.

II – In the case of bankruptcy of the company

Article 513 – (1) In the event of the bankruptcy of the company, the members of the board of directors are obliged to return to the company’s creditors the monies which they received, within the last three years before the opening of the bankruptcy, as a profit-sharing bonus or under another name in return for their services, but which exceed appropriate remuneration and which would not have had to be paid had the balance sheet been drawn up prudently on the basis of an appropriate amount of remuneration.

(2) There is no obligation to return monies that cannot be reclaimed pursuant to the provisions on unjust enrichment.

(3) The court shall exercise its discretion, taking into account all the requirements of the situation.

CHAPTER NINE

Financial Statements of the Company, Reserve Funds

A) Financial statements of joint stock companies and annual activity report of the board of directors

I – Duty of preparation

Article 514 – (1) The board of directors shall prepare the financial statements for the preceding accounting period as provided for in the Turkish Accounting Standards, their annexes and the annual activity report of the board of directors within the first three months of the accounting period following the balance sheet date, and shall submit them to the general assembly.

II – Principle of true and fair view

Article 515 – (1) The financial statements of joint stock companies shall be drawn up in accordance with the Turkish Accounting Standards so as to reflect the company’s assets, debts and liabilities, equity and results of operations in a complete, understandable and comparable manner appropriate to the needs and to the nature of the enterprise; transparently and reliably; and so as to reflect the truth honestly, exactly and faithfully.

III – Annual activity report of the board of directors

Article 516 – (1) The annual activity report of the board of directors shall reflect the course of the company’s activities for that year and its financial situation in all respects in an accurate, complete, straightforward, true and honest manner. In this report, the financial situation shall be assessed according to the financial statements. The report shall also clearly indicate the development of the company and the risks it is likely to encounter. The assessment of the board of directors on these matters shall also be included in the report.

(2) The activity report of the board of directors must additionally contain the following matters:

a) Events of special significance that have occurred in the company after the end of the financial year.

b) The research and development activities of the company.

c) Financial benefits such as fees, premiums and bonuses paid to the members of the board of directors and to senior executives, allowances, travel, accommodation and representation expenses, benefits in kind and in cash, insurance and similar guarantees.

(3) The mandatory minimum content of the annual activity report of the board of directors, both in respect of joint stock companies and of groups of companies, shall be regulated in detail by a regulation of the Ministry of Customs and Trade.

B) Financial statements and annual activity report of a group of companies

I – Accounting standards to be applied

Article 517 – (1) The Turkish Accounting Standards shall apply in determining the enterprises obliged to prepare consolidated financial statements and the enterprises falling within the scope of consolidation, and in other related matters.

(2) Consolidated financial statements shall be drawn up in accordance with the principles and rules provided for in Article 515.

II – Annual activity report of the board of directors

Article 518 – (1) The annual activity report of the group shall be drawn up by the board of directors of the parent company in accordance with Article 516.

C) Reserve funds

I – Legal reserve fund

1. General legal reserve fund

Article 519 – (1) Five per cent of the annual profit shall be set aside for the general legal reserve fund until it reaches twenty per cent of the paid-in capital.

(2) Even after the limit in the first paragraph has been reached;

a) The portion of the premium obtained by reason of the issue of new shares which has not been used for issue costs, depreciation provisions and charitable payments,

b) The portion remaining from the amount paid for the contribution of share certificates cancelled by reason of forfeiture, after deduction of the issue costs of the new certificates to be issued in their place,

c) Ten per cent of the total amount to be distributed to persons who are to receive a share of the profit, after a dividend at the rate of five per cent has been paid to the shareholders,

shall be added to the general legal reserve fund.

(3) Where the general legal reserve fund does not exceed half of the capital or of the issued capital, it may be used only for covering losses, for continuing the enterprise at times when business is not going well, or for taking measures suitable for preventing unemployment and mitigating its consequences.

(4) The provisions of subparagraph (c) of the second paragraph and of the third paragraph shall not apply to holding companies whose principal purpose consists in participating in other enterprises.

(5) The provisions concerning the reserve funds of joint stock companies subject to special laws are reserved.

2. Reserve fund set aside for the company’s own share certificates acquired by it and revaluation funds

Article 520 – (1) The company shall set aside, for its own shares acquired by it, a reserve fund in an amount corresponding to their acquisition value. These reserve funds may be released in an amount corresponding to their acquisition value where the said shares are transferred or cancelled.

(2) The revaluation fund and the other funds shown on the liabilities side pursuant to the relevant legislation may be released where they are converted into capital and where the revalued assets are depreciated or transferred.

II – Reserve fund set aside at the company’s discretion

1. General

Article 521 – (1) A provision may be included in the articles of association to the effect that an amount exceeding five per cent of the annual profit shall be set aside for the reserve fund and that the reserve fund may exceed twenty per cent of the paid-in capital. The setting aside of other reserve funds may also be provided for by the articles of association, and the ways and conditions of their expenditure in accordance with their allocated purpose may be determined.

2. Assistance fund in favour of employees and workers

Article 522 – (1) A reserve fund may be set aside in the articles of association for the purpose of establishing assistance institutions for the company’s executives, employees and workers or of maintaining them, or for the purpose of being given to public legal entities pursuing this purpose.

(2) It is mandatory to establish a foundation or a cooperative by separating from the company the reserve funds and other assets allocated to the purpose of assistance. It may also be provided in the deed of foundation that the assets of the foundation shall consist of a claim against the company.

(3) If, in addition to the reserve fund allocated by the company to this purpose, contributions have been collected from executives, employees and workers, then, at the end of the employment relationship, where they are unable to benefit from the allocation made in accordance with the deed of foundation, at least the amounts paid by them shall be returned to the employees and workers, together with statutory interest from the date of payment.

III – Relationship between dividend and reserve funds

Article 523 – (1) The dividend to be distributed to the shareholders may not be determined unless the legal reserve funds and the optional reserve funds provided for in the articles of association have been set aside.

(2) The general assembly may;

a) If necessary for the replacement of assets,

b) If justified, taking into account the interests of all shareholders, with regard to the continuous development of the company and the distribution of dividends that are as stable as possible,

also resolve on the setting aside of reserve funds other than those provided for in the Law and in the articles of association.

(3) Even if there is no provision in the articles of association, the general assembly may set aside reserve funds from the balance sheet profit for the purpose of establishing assistance funds and other assistance organisations for the company’s workers or of maintaining them, or for serving other assistance and charitable purposes.

D) Miscellaneous provisions

I – Announcement

Article 524 – (Repealed: 26/6/2012-6335/43 art.)

II – Branches in Türkiye of foreign companies

Article 525 – (Repealed: 26/6/2012-6335/43 art.)

III – Summary financial statements

Article 526 – (Repealed: 26/6/2012-6335/43 art.)

IV – Duty of confidentiality

Article 527 – (1) Without prejudice to the provision of Article 404, persons who examine the books and documents submitted for their examination by reason of their duties are prohibited from disclosing the business and trade secrets they have obtained or learnt from the information given. Otherwise, they shall compensate the company’s material and non-material losses.

(2) The provisions of criminal legislation concerning the reporting of offences are reserved.

E) Special provisions

Article 528 – (Amended: 26/6/2012-6335/26 art.)

(1) In cases where there is no provision in the Turkish Accounting Standards and in the administrative regulations determined by the Public Oversight, Accounting and Auditing Standards Authority concerning the financial statements and consolidated financial statements of banks and other credit institutions, financial companies such as financial leasing and factoring companies, insurance and reinsurance companies, and all institutions within the scope of the Capital Markets Law, the provisions contained in the special laws of the institutions, boards and organisations established to regulate and supervise the said fields shall apply.

(2) In cases where there is no provision in the Turkish Accounting Standards, in the administrative regulations concerning financial statements determined by the Public Oversight, Accounting and Auditing Standards Authority and in the special laws, the provisions of this Law shall apply.

(3) The special provisions concerning the financial statements and consolidated financial statements of cooperatives are reserved.

CHAPTER TEN

Dissolution and Liquidation

A) Dissolution

I – Grounds for dissolution

1. General

Article 529 – (1) A joint stock company shall;

a) Upon the expiry of the term provided for in the articles of association, unless it has become one of indefinite duration by actually continuing its business despite the expiry of the term,

b) Upon the achievement of its field of activity or upon its achievement becoming impossible,

c) Upon the occurrence of any ground for dissolution provided for in the articles of association,

d) By a resolution of the general assembly adopted in accordance with the third and fourth paragraphs of Article 421,

e) Upon a decision on its bankruptcy being given,

f) In other cases provided for in the laws,

be dissolved.

2. Special cases

a) Lack of bodies

Article 530 – (1) If one of the bodies of the company required by law has not existed for a long time, or if the general assembly cannot be convened, the commercial court of first instance of the place where the company’s head office is located shall, upon the request of the shareholders, the company’s creditors or the Ministry of Customs and Trade, and after also hearing the board of directors, set a period for the company to bring its situation into conformity with the law. If the situation is not remedied within this period, the court shall decide on the dissolution of the company.

(2) When the action is brought, the court may, upon the request of one of the parties, take the necessary measures.

b) Dissolution for just grounds

Article 531 – (1) In the presence of just grounds, the holders of shares representing at least one tenth of the capital and, in publicly held companies, one twentieth thereof, may request the commercial court of first instance of the place where the company’s head office is located to decide on the dissolution of the company. Instead of dissolution, the court may decide that the real value of the shares of the plaintiff shareholders as at the date closest to the date of the decision be paid to them and that the plaintiff shareholders be excluded from the company, or may decide on another acceptable solution appropriate to the situation.

II – Effects

1. Registration and announcement

Article 532 – (1) If the dissolution has arisen from a ground other than bankruptcy or a court decision, it shall be caused to be registered in the trade registry and announced by the board of directors.

2. Consequences

Article 533 – (1) The dissolved company shall enter into liquidation; the exceptions in the Law are reserved.

(2) The company in liquidation shall, including in its relations with the shareholders, retain its legal personality until the end of the liquidation, and shall use its trade name with the addition of the words “in liquidation”. In this case, the powers of its bodies are limited to the purpose of liquidation.

III – Liquidation in the case of bankruptcy

Article 534 – (1) In the case of bankruptcy, liquidation shall be carried out by the bankruptcy administration in accordance with the provisions of the Enforcement and Bankruptcy Law. The bodies of the company shall retain their powers of representation only in respect of matters for which the company is not represented by the bankruptcy administration.

IV – Position of the bodies of the company

Article 535 – (1) When the company enters into liquidation, the duties and powers of the bodies shall be confined to transactions which are necessary for carrying out the liquidation but which, by their nature, cannot be performed by the liquidators.

(2) The general assembly shall be convened by the liquidators to decide on matters which are requirements of the liquidation business.

B) Liquidation

I – Liquidators

1. Appointment

Article 536 – (1) Unless separate liquidators are appointed by the articles of association or by a resolution of the general assembly, the liquidation shall be carried out by the board of directors. Liquidators may be chosen from among the shareholders or third parties. Unless otherwise provided in the articles of association or in the appointment resolution, those entrusted with the liquidation are entitled to ordinary remuneration.

(2) The board of directors shall cause the liquidators to be registered in the trade registry and announced. This provision shall also apply where the liquidation business is carried out by the board of directors.

(3) In cases where the court has decided on the dissolution of the company, the liquidator shall be appointed by the court.

(4) It is mandatory that at least one of the liquidators authorised to represent be a Turkish citizen and have his or her domicile in Türkiye.

2. Removal from office

Article 537 – (1) The liquidators appointed by the articles of association or by a resolution of the general assembly, and the members of the board of directors performing this duty, may at any time be removed from office by the general assembly, and new ones may be appointed in their place.

(2) Upon the request of one of the shareholders and in the presence of just grounds, the court may also remove from office the persons entrusted with the liquidation and appoint new ones in their place. Liquidators appointed in this way shall be registered and announced on the basis of the court decision.

(3) If none of the liquidators authorised to represent the company is a Turkish citizen and none of them has a domicile in Türkiye, the court shall, upon the request of one of the shareholders or creditors or of the Ministry of Customs and Trade, appoint as liquidator a person who satisfies the said condition.

3. Power to sell assets

Article 538 – (1) Unless the general assembly has resolved otherwise, the liquidators may also sell the company’s assets by private negotiation.

(2) A resolution of the general assembly is required for the sale en bloc of a significant amount of assets. The third and fourth paragraphs of Article 421 shall apply with regard to this resolution.

4. Restriction and extension of powers

Article 539 – (1) The powers granted to the liquidators by the Law may not be delegated; however, for the performance of certain acts of implementation, one of the liquidators may grant power of representation to another or to a third person.

(2) Transactions carried out by the liquidators with third parties outside the purpose of liquidation shall bind the company; unless it is proven that the third party knew that the transaction was outside the purpose of liquidation or could not, in the circumstances, have been unaware of it. The mere registration and announcement of the liquidation is not sufficient evidence for proving this matter.

(3) If there is more than one liquidator, then, unless otherwise provided in the resolution of the general assembly or in the articles of association, for the company to be bound it is necessary that two liquidators authorised to sign sign under the trade name of the company. The liquidators shall represent the company in liquidation before the courts and in external relations in matters relating to the liquidation.

(4) The company shall also be liable for a tortious act committed by a liquidator in the performance of his or her duties.

II – Liquidation business

1. Initial inventory and balance sheet

Article 540 – (1) As soon as they take up their duties, the liquidators shall examine the situation of the company at the commencement of the liquidation; if necessary, by consulting experts for the valuation of the company’s property, they shall draw up an inventory and a balance sheet showing the situation of the company’s assets and its financial situation, and shall submit them to the approval of the general assembly.

(2) After the approval of the inventory and the balance sheet, the liquidators shall take possession of all the property of the company listed in the inventory, as well as its documents and books.

2. Calling and protection of creditors

Article 541 – (1) Persons who are shown by the company’s books or other documents to be creditors and whose domiciles are known shall be informed by registered letter, and the other creditors by three announcements to be made at intervals of one week each in the Turkish Trade Registry Gazette and on the company’s website and at the same time in the manner provided for in the articles of association, that the company has been dissolved, and shall be called upon to declare their claims to the liquidators.

(2) If known creditors do not make a declaration, the amount of their claims shall be deposited with a bank to be determined by the Ministry of Customs and Trade.

(3) Money in an amount sufficient to cover the company’s debts that have not yet fallen due or that are in dispute shall be deposited with a notary; unless such debts have been adequately secured or the distribution of the company’s assets among the shareholders has been made conditional upon the payment of these debts.

(4) Liquidators who act in breach of the provisions set out in the above paragraphs shall be liable, pursuant to Article 553, for the monies they have unjustly paid.

3. Other liquidation tasks

Article 542 – (1) The liquidators:

a) Are obliged to complete the ongoing transactions of the company, where necessary to collect the unpaid portions of the share prices, to convert the assets into money and, if it has been established, according to the initial liquidation balance sheet and the situation ascertained as a result of the call made to the creditors, that the company’s debts do not exceed the company’s assets, to pay these debts.

b) May not carry out any new transaction not required by the liquidation.

c) Where the company’s debts exceed the company’s assets, shall immediately notify the situation to the commercial court of first instance of the place where the company’s head office is located; the court shall decide on the opening of bankruptcy.

d) Where the liquidation lasts for a long time, shall prepare the financial statements relating to the liquidation as at the end of each year and, at the end of the liquidation, the final balance sheet, and submit them to the general assembly.

e) Shall take the measures required, as an orderly manager conscious of his or her duty, for the protection of all the assets and rights of the company, and shall complete the liquidation in the shortest possible time.

f) Shall keep the books required for the orderly conduct and security of the liquidation transactions.

g) Shall deposit with a bank, in the name of the company, the monies obtained during the liquidation, other than the money necessary for the ongoing expenditure of the company.

h) Shall immediately pay debts that have not yet fallen due, discounting them at the rate applied by the Central Bank of the Republic of Türkiye to short-term loans. The creditors are obliged to accept this payment. Receivables which, by law, cannot be discounted are excepted from this provision.

i) Shall provide the shareholders with information on the status of the liquidation work and, if they so request, with a signed document on this matter.

4. Distribution upon liquidation

Article 543 – (1) The assets remaining after the debts of the company in liquidation have been paid and the share prices have been returned shall, unless otherwise provided in the articles of association, be distributed among the shareholders in proportion to the capital they have paid and their privileged rights. Where there is a privilege in the liquidation share, the provision in the articles of association shall apply.

(2) The remaining assets may not be distributed until three months have elapsed from the date of the third call made to the creditors. However, if, according to the circumstances, there is no danger for the creditors, the court may permit distribution even before the three months have elapsed.⁷³⁷⁴

(3) Unless there is a provision to the contrary in the articles of association or the general assembly resolution, the distribution shall be made in money.

5. Retention of books

Article 544 – (1) At the end of the liquidation, the books and documents, including those relating to the liquidation, shall be retained in accordance with Article 82.

III – Deletion of the trade name from the registry

Article 545 – (1) Upon the termination of the liquidation, the deletion of the company’s trade name from the registry shall be requested from the trade registry directorate by the liquidators. Upon the request, the deletion shall be registered and announced.

(2) (Added paragraph: 15/7/2016-6728/69 art.) In companies liquidated in accordance with the provisions of this Code, the provisions of Article 44 and Article 337/a of Law No. 2004 shall not apply.

IV – Other provisions to be applied

Article 546 – (1) The resolution of disputes between the shareholders and the liquidator or liquidators is subject to the simple trial procedure. The court shall, if it deems necessary, hear the liquidators and the shareholders concerned and render its decision within thirty days.

(2) The provision of Article 553 shall apply to the liability of the liquidators.

(3) General assembly resolutions relating to the liquidation shall be adopted in accordance with Article 418.

C) Supplementary liquidation

Article 547 – (1) If, after the closure of the liquidation, it becomes apparent that supplementary liquidation transactions must be carried out, the last liquidators, the members of the board of directors, the shareholders or the creditors may request from the commercial court of first instance of the place where the company’s head office is located the re-registration of the company until these supplementary transactions have been concluded.

(2) If the court is satisfied that the request is justified, it shall decide on the re-registration of the company for supplementary liquidation and, appointing the last liquidators or one or more new persons as liquidators to carry out these transactions, shall have this registered and announced.

D) Reversal of liquidation

Article 548 – (1) If the company has been dissolved by the expiry of its term or by a resolution of the general assembly, the general assembly may resolve that the company shall continue, provided that the distribution of the company’s assets among the shareholders has not commenced. The resolution to continue must be adopted by the votes of at least sixty per cent of the capital. This quorum may be increased and other measures may be provided for by the articles of association. The liquidator shall have the general assembly resolution on the reversal of liquidation registered and announced.

(2) Although the company has been dissolved by the opening of bankruptcy, if the bankruptcy has been lifted or the bankruptcy has ended through the implementation of a concordat, the company shall continue.

(3) The liquidator shall have the decision that the bankruptcy has been lifted registered in the trade registry. A document showing that the distribution of the share prices and liquidation shares among the shareholders has not commenced shall also be attached to the request for registration.

CHAPTER ELEVEN

Civil Liability

A) Cases of liability

I – Documents and declarations contrary to law

Article 549 – (1) Those who prepared the documents or made the declarations, and, where they are at fault, those who participated therein, are liable for damage arising from the documents, prospectuses, undertakings, declarations and guarantees relating to transactions such as the incorporation of the company, the increase and reduction of its capital, merger, demerger, change of legal form and the issue of securities being incorrect, fraudulent, forged or untrue, from the truth having been concealed, and from other violations of law.

II – False declarations concerning capital and knowledge of insolvency

Article 550 – (1) Those who, while the capital has not been fully subscribed or its consideration has not been paid in accordance with the provisions of the law or the articles of association, represent it as having been subscribed or paid, and, provided that they are at fault, the company’s officers, shall be deemed to have assumed these shares and shall jointly and severally pay the consideration for the shares and the damage, together with interest.

(2) Those who know that the persons subscribing to the capital lack the ability to pay and who approve this are liable for the damage arising from the non-payment of the debt in question.

III – Irregularity in valuation

Article 551 – (1) Those who, in the valuation of capital in kind or of the enterprise and assets to be taken over, assess a price higher than comparable ones, misrepresent the nature or condition of the enterprise or asset, or commit irregularities in any other manner, are liable for the damage arising therefrom.

IV – Raising money from the public

Article 552 – (Amended: 26/6/2012-6335/27 art.)

(1) Without prejudice to the provisions of the Capital Markets Law, it is prohibited to raise money by making a call to the public by any means for the purpose, or with the promise, of incorporating a company or increasing the capital of a company.

V – Liability of founders, members of the board of directors, executives and liquidators

Article 553 – (1) Founders, members of the board of directors, executives and liquidators who, through their fault, breach their obligations arising from the law and the articles of association are liable (…)⁷⁵ for the damage they cause to the company, to the shareholders and to the company’s creditors.⁷⁶

(2) Organs or persons who, on the basis of the law, delegate to others a duty or authority arising from the law or the articles of association shall not be liable for the acts and decisions of the persons to whom these duties and authorities are delegated, unless it is proven that they did not exercise reasonable care in the selection of those persons.

(3) No one may be held liable for violations of the law or the articles of association or for irregularities that are beyond his or her control; this non-liability may not be invalidated by invoking the duty of supervision and care.

VI – Liability of the auditor⁷⁷

Article 554 – (Amended: 26/6/2012-6335/29 art.)

(1) The auditor and special auditors who audit the year-end and consolidated financial statements, reports and accounts of the company and of the group of companies are liable, where they act with fault in the performance of their statutory duties, for the damage they cause to the company as well as to the shareholders and the company’s creditors.

B) Damage to the company

I – In general

Article 555 – (1) Compensation for the damage suffered by the company may be claimed by the company and by each shareholder. The shareholders may only claim that the compensation be paid to the company.

(2) Where the legal and factual grounds justify the action brought by the shareholder, the court shall, in cases where the costs of the proceedings and attorney’s fees cannot be imposed on the defendant, apportion these costs between the plaintiff shareholder and the company in accordance with equity.

II – In case of bankruptcy

Article 556 – (1) In the event of the bankruptcy of the company that has suffered damage, the company’s creditors also have the right to claim that the compensation be paid to the company. However, the claims of the shareholders and of the company’s creditors shall first be asserted by the bankruptcy administration.

(2) If the bankruptcy administration does not bring the action provided for in the first paragraph, any shareholder or creditor of the company may bring the said action. The proceeds obtained shall, in accordance with the provisions of the Enforcement and Bankruptcy Law, be allocated first to the payment of the receivables of the creditors who brought the action; the balance shall be paid to the plaintiff shareholders in proportion to their capital shares; the surplus shall be transferred to the bankruptcy estate.

(3) The provision of Article 245 of the Enforcement and Bankruptcy Law concerning the assignment of the company’s claims is reserved.

III – Joint and several liability and recourse

Article 557 – (1) Where several persons are obliged to compensate the same damage, each of them shall be jointly and severally liable with the others for such damage to the extent that the damage can be personally attributed to him or her according to his or her fault and the requirements of the circumstances.

(2) The plaintiff may sue several liable persons together for the entire damage and may request the judge to determine, in the same action, the compensation debt of each defendant.

(3) Recourse among several liable persons shall be determined by the judge, taking into account all the requirements of the circumstances.

IV – Release

1. Effect of the release

Article 558 – (1) A release resolution may not be revoked by a general assembly resolution. The provision of Article 445 is reserved.

(2) The resolution of the company’s general assembly on release from liability shall, with regard to the disclosed material facts covered by the release, extinguish the right of action of the company and of the shareholders who voted in favour of the release and of those who acquired shares with knowledge of the release resolution. The rights of action of the other shareholders shall lapse upon the expiry of six months from the date of the release.

2. Release in incorporation and capital increase

Article 559 – (1) The liabilities of the founders, members of the board of directors and auditors arising from the incorporation of the company and from capital increases may not be extinguished by way of settlement and release until four years have elapsed from the date of registration of the company. Even after the expiry of this period, settlement and release shall become valid only with the approval of the general assembly. Nevertheless, if shareholders representing one tenth of the share capital, or one twentieth in publicly held companies, are against the approval of the settlement and release, the settlement and release shall not be approved by the general assembly.

V – Statute of limitations

Article 560 – (1) The right to claim compensation from the liable persons shall become time-barred upon the expiry of two years from the date on which the plaintiff learned of the damage and of the liable person and, in any event, five years from the day on which the act causing the damage occurred. However, if this act requires a penalty and is subject to a longer prosecution limitation under the Turkish Penal Code, this limitation period shall also apply to the action for compensation.

VI – Competent court

Article 561 – (1) Actions against the liable persons may be brought before the commercial court of first instance of the place where the company’s head office is located.

CHAPTER TWELVE

Criminal Liability

A) Offences and penalties⁷⁸⁷⁹

Article 562 – (Amended: 26/6/2012-6335/30 art.)

(1) Those who:

a) Fail to fulfil the obligations in the second or third sentence of the first paragraph of Article 64,

b) Fail to provide copies of documents pursuant to the second paragraph of Article 64,

c) Fail to have the necessary certifications made pursuant to the third paragraph of Article 64,

d) Fail to keep their books in accordance with Article 65,

e) Draw up an inventory contrary to the procedure in Article 66,

f) Fail to produce documents in accordance with Article 86,

of this Code shall be punished with an administrative fine of four thousand (88,997) Turkish Lira.

(2) Those who act contrary to Article 88 shall be punished with an administrative fine of four thousand (88,997) Turkish Lira.

(3) Those who act contrary to the first and fourth paragraphs of Article 199 shall be punished with a judicial fine of not less than two hundred days.

(4) Those who, despite being requested by those authorised to audit pursuant to the first paragraph of Article 210, fail to provide or provide incompletely the books, records and documents which are required to be kept or retained under the provisions of this Code, and the information relating thereto, irrespective of whether they belong to the natural or legal person subject to the audit, or who prevent these audit staff from performing their duties, shall, unless their acts constitute another offence requiring a heavier penalty, be punished with a judicial fine of not less than three hundred days.

(5) Those who:

a) (Repealed: 15/7/2016-6728/73 art.)

b) Lend to shareholders contrary to Article 358,

c) Violate the provisions of the first or second sentence of the second paragraph of Article 395,

of this Code shall be punished with a judicial fine of not less than three hundred days.

(6) Where the commercial books do not exist or contain no entries, or are not retained in accordance with this Code, the persons responsible shall be punished with a judicial fine of not less than three hundred days.

(7) Those who act contrary to Article 527 shall be punished in accordance with the provisions of Article 239 of the Turkish Penal Code.

(8) Those who forge the documents specified in Article 549 and those who intentionally make untrue entries in the commercial books shall be punished with imprisonment from one year to three years.

(9) Those who act contrary to Article 550 shall be punished with imprisonment from three months to two years or with a judicial fine.

(10) Those who act contrary to Article 551 shall be punished with a judicial fine of not less than ninety days.

(11) Those who act contrary to Article 552 shall be punished with imprisonment from six months to two years.

(12) The members of the management organ of companies that do not establish the website provided for in Article 1524 shall be punished with a judicial fine of one hundred days to three hundred days, and the perpetrators listed in this paragraph who do not duly place on the website the content required to be placed on it pursuant to the same article shall be punished with a judicial fine of up to one hundred days.

(13) (Added: 27/12/2020-7262/33 art.) Those who:

a) Fail to make a notification pursuant to the second paragraph of Article 486 of this Code, twenty thousand (173,801) Turkish lira,

b) (Annulled subparagraph: by the decision of the Constitutional Court dated 18/1/2024, E: 2021/28, K: 2024/11.)

shall be punished with an administrative fine.

(14) Administrative fines under this Code shall, in cases where there is no provision to the contrary, be imposed by the highest local administrative authority.

(15) Where one of the misdemeanours defined in this Code is committed more than once before an administrative sanction decision is rendered, a single administrative fine shall be imposed on the natural or legal person concerned and the penalty to be imposed under the relevant provision shall be doubled. However, where a benefit is obtained or damage is caused through the commission of this misdemeanour, the amount of the administrative fine to be imposed may not be less than three times this benefit or damage.

B) Procedure for investigation and prosecution

Article 563 – (Repealed: 26/6/2012-6335/43 art.)

PART FIVE

Partnership Limited by Shares

A) Definition

Article 564 – (1) A partnership limited by shares is a company whose capital is divided into shares and in which one or more of the partners are liable towards the company’s creditors like a partner in a general partnership and the others like a shareholder in a joint stock company. If the capital, without being divided into shares, has been divided into portions solely for the purpose of showing the proportions in which several limited partners participate in the capital, the provisions on limited partnerships shall apply.

B) Provisions to be applied

Article 565 – (1) The legal relations of the general partners with one another, with the limited partners as a whole and with third parties, in particular their duties and powers relating to the management and representation of the company and their withdrawal from the company, are subject to the provisions on limited partnerships.

(2) Apart from the matters indicated in the first paragraph, the provisions on joint stock companies shall apply unless otherwise provided in the Code.

C) Incorporation

I – Articles of association

1. Form

Article 566 – (1) The articles of association shall be drawn up in writing and signed by all of the founders and general partners; the signatures must be certified by a notary or the articles of association must be signed in the presence of the trade registry director or his or her deputy. (Added sentence: 15/7/2016-6728/67 art.) No valuable paper fee shall be charged for the papers containing the articles of association at the incorporation of the company.⁸⁰

(2) Article 333 on obtaining permission shall not apply.

2. Content

Article 567 – (1) The articles of association must contain all the entries set out in Article 339, with the exception of subparagraph (f) of its second paragraph.

II – Founders

Article 568 – (1) All those who sign the articles of association and those who contribute capital other than money to the company are deemed founders.

(2) The founders may not be fewer than five persons. At least one of the founders must be a general partner. The amount of each of the shares held by the limited partners having the status of founder must be written in the articles of association.

III – Provisions to be applied

Article 569 – (1) The provisions on the incorporation of joint stock companies shall apply to the incorporation.

D) Management

I – Provisions to be applied

Article 570 – (1) The provisions on the duties and liabilities of the board of directors of joint stock companies are also applicable to the general partners who are managers.

II – Removal from office

Article 571 – (1) The general partners charged with managing and representing the company may be removed from office in the cases determined in the law, and in accordance with the conditions provided for, for the partners charged with the management and representation of a general partnership. Upon the registration of the removal decision, the personal liability of the removed partner for the debts of the company arising after that date shall end.

III – Prohibition of competition

Article 572 – (1) A general partner may not, without the permission of the other general partners and of the general assembly, carry out any business falling within the scope of the company’s field of activity, nor may he or she participate as a partner with unlimited liability in a company engaged in such trade.

(2) The provisions on general partnerships shall apply to a general partner who acts contrary to the provision of this article.

PART SIX

Limited Liability Company

CHAPTER ONE

Definition and Incorporation

A) Concept

Article 573 – (1) A limited liability company is incorporated under a trade name by one or more natural or legal persons; its share capital is fixed and consists of the sum of the capital shares.

(2) The partners are not liable for the debts of the company and are only obliged to pay the capital shares they have subscribed and to fulfil the additional payment and ancillary performance obligations provided for in the company agreement.

(3) A limited liability company may be incorporated for any economic purpose and field of activity not prohibited by law.

B) Number of partners

Article 574 – (1) The number of partners may not exceed fifty.

(2) If the number of partners falls to one, the situation shall be notified in writing to the managers within seven days from the date of the transaction giving rise to this result. The managers shall, by the end of the seventh day starting from the date of receipt of the notification, have registered and announced the fact that the company has a single partner and the name, domicile and citizenship of that partner; otherwise they shall be liable for the damage that arises. The same obligation also applies in cases where the company is incorporated with one partner.

(3) The company may not acquire a capital share in such a manner as would result in the company becoming a company of which it is itself the sole partner.

C) Company agreement

I – Form

Article 575 – (1) The company agreement must be made in writing and signed by the founders in the presence of the authorised personnel at the trade registry directorate. (Added sentence: 15/7/2016-6728/67 art.) No valuable paper fee shall be charged for the papers containing the company agreement at the incorporation of the company.⁸¹⁸²

II – Content

1. Mandatory entries

Article 576 – (1) The following entries must be expressly included in the company agreement:

a) The trade name of the company and the place where its head office is located.

b) The company’s field of activity, with its essential points specified and defined.

c) The nominal amount of the share capital, the number of capital shares, their nominal values, privileges, if any, and the groups of capital shares.

d) The names, surnames, titles and citizenships of the managers.

e) The form of the announcements to be made by the company.

2. Provisions that are binding provided that they are provided for in the company agreement

Article 577 – (1) The following entries are binding provisions if they are provided for in the company agreement:

a) Arrangements departing from the statutory provisions on the restriction of the transfer of capital shares.

b) The granting to the partners or to the company, in respect of capital shares, of rights of first offer, pre-emption, repurchase and purchase.

c) The provision for additional payment obligations, and their form and scope.

d) The provision for ancillary performance obligations, and their form and scope.

e) Provisions granting a right of veto to specified or specifiable partners or granting a casting vote to certain partners in the event of a tie in the votes cast on a general assembly resolution.

f) Contractual penalty provisions applicable in the event that obligations provided for in the law or in the company agreement are not fulfilled at all or not fulfilled on time.

g) Provisions on the prohibition of competition departing from the statutory regulation.

h) Provisions granting a special right concerning the convening of the general assembly.

ı) Provisions departing from the statutory regulation concerning the adoption of resolutions in the general assembly, the right to vote and the calculation of the right to vote.

i) Authorisation provisions concerning the entrusting of the management of the company to a third person.

j) Provisions departing from the law concerning the use of the balance sheet profit.

k) The granting of the right of withdrawal and the conditions for its exercise, and the type and amount of the severance payment to be paid in such cases.

l) Provisions indicating special grounds for the exclusion of a partner from the company.

m) Provisions concerning grounds for dissolution provided for other than those specified in the law.

3. Capital in kind, acquisitions in kind and special benefits

Article 578 – (1) The provisions on joint stock companies shall apply to capital in kind, the acquisition of assets or enterprises and special benefits.

4. Mandatory provisions

Article 579 – (1) The company agreement may deviate from the provisions of this Code on limited liability companies only if the law expressly permits this. Supplementary provisions of the company agreement whose inclusion is permitted by other laws shall have effect as being specific to that law.

D) Capital

I – Minimum amount

Article 580 – (1) The share capital of a limited liability company shall be at least ten thousand Turkish Lira. ⁸³

(2) The minimum amount written in this article may be increased by the President up to tenfold.⁸⁴

II – Capital in kind

Article 581 – (1) Asset items that are not encumbered by a limited real right, attachment or injunction, that can be valued in cash and that are transferable, including intellectual property rights as well as virtual environments and names, may be contributed as capital in kind. Service performances, personal labour, commercial reputation and receivables that have not fallen due may not constitute capital.

(2) The provision of Article 127 is reserved.

III – Prices of goods and founders’ benefits

Article 582 – (1) The prices of goods acquired by the founders on behalf of the company in connection with the company being incorporated, and the benefits granted to those who rendered services in the incorporation of the company, shall be written in the company agreement.

(2) The provision of Article 128 is reserved.

E) Capital shares

Article 583 – (1) In the company agreement, the nominal values of the capital shares may be determined as at least twenty-five Turkish Lira. This value may be fallen below for the purpose of improving the company’s situation.

(2) The nominal values of the capital shares may differ. However, the values of the capital shares must be twenty-five Turkish Lira or multiples thereof. The calculation, pursuant to Article 618, of the votes conferred by a capital share according to its nominal value does not constitute a division of the capital share. The same provision also applies to cases where a right or obligation is determined according to the nominal value.

(3) A partner may hold more than one capital share.

(4) Capital shares may be issued at the nominal value or at a price exceeding this value.

(5) The price of a capital share shall be paid, as provided for in the company agreement, in cash or in kind, or by way of set-off of a receivable, or, as in a capital increase, by way of conversion of freely disposable equity into share capital.

F) Dividend-right certificates

Article 584 – (1) The issue of dividend-right certificates may be provided for in the company agreement; in this respect, the provisions on joint stock companies shall apply by analogy.

G) Incorporation

I – Moment of incorporation

Article 585 – (Amended: 26/6/2012-6335/31 art.)

(1) The company is incorporated by the founders declaring their intention to incorporate a limited liability company in a company agreement drawn up in accordance with the law, in which they unconditionally undertake to pay the entire capital, and which they sign in the presence of the authorised personnel at the trade registry directorate. The provisions of this Code on joint stock companies shall apply by analogy to the payment of the capital share prices, the place of payment, the obligation of performance, the consequences of non-performance, and the transfer of shares whose prices have not been paid in full. (Added sentence: 15/2/2018-7099/25 art.) However, the requirement that at least twenty-five per cent of the nominal values of the shares subscribed in cash be paid before registration shall not apply in respect of limited liability companies. The provisions of the first paragraph of Article 588 are reserved.⁸⁵⁸⁶

II – Registration

1. Request

Article 586 – (1) After the company agreement has been drawn up as provided for in Article 575, an application for registration shall be made to the trade registry of the place where the company’s head office is located.

(2) The application shall be signed by all of the managers. The following documents shall be attached to the application:

a) A certified copy of the company agreement.

b) (Repealed: 15/7/2016-6728/73 art.)

c) A document showing the persons authorised to represent the company, together with their domiciles, and the election of the auditor.

(3) The petition shall contain the following entries:

a) The names and surnames or trade names, domiciles and citizenships of all the partners.

b) The capital share assumed by each partner and the total amount paid by each partner.

c) The names and surnames or trade names of the managers, whether they are partners or third persons.

d) The manner in which the company shall be represented.

2. Registration and announcement

Article 587 – (1) The entire company agreement shall be registered in the trade registry of the place where the company’s head office is located and announced in the Turkish Trade Registry Gazette within thirty days following the date on which the founders’ signatures were signed in the presence of the authorised personnel at the trade registry directorate. The provision of the first paragraph of Article 36 shall not apply to the registered and announced company agreement, except for the following:⁸⁷⁸⁸

a) The date of the company agreement.

b) The trade name and head office of the company.

c) The company’s field of activity, with its essential points specified and defined; if there is a provision on this matter in the company agreement, the term of the company.

d) The nominal value of the share capital.

e) The name, surname and domicile of each natural person partner, the trade names and head offices of the legal person partners, and the capital shares assumed by each partner.

f) The subject of the capital in kind and the capital shares to be given in return for such capital; in the case of the acquisition of an asset, the subject of the relevant contract, the counterparty to the contract and the counter-performance owed by the company; the content and value of special benefits.

g) If provided for, the number of dividend-right certificates and the content of the rights conferred on them.

h) The names, surnames or trade names and domiciles of the managers and of the other persons authorised to represent the company.

ı) The manner in which the power of representation is exercised.

i) The domicile or head office of the auditor and, if any, its branch registered in the trade registry (…)⁸⁹

j) Privileges, additional obligations or ancillary performance obligations provided for in the company agreement, and rights of first offer, pre-emption, repurchase and purchase relating to capital shares.

k) The form and type of the announcements to be made by the company and, if there is a provision on this matter in the company agreement, the manner in which the managers shall make notifications to the partners.

III – Legal personality

Article 588 – (1) The company acquires legal personality upon registration in the trade registry.

(2) If they are not accepted by the company, the incorporation expenses shall be borne by the founders. They have no right of recourse against the shareholders.

(3) Those who carry out transactions in the name of the company before registration are personally and jointly and severally liable for those transactions.

(4) Provided that it is expressly stated that such undertakings were made in the name of the company to be incorporated in the future and that they are accepted by the company within the period of three months following the registration of the company in the trade registry, only the company shall be liable for them.

CHAPTER TWO

Amendment of the Company Agreement

A) In general

Article 589 – (1) Unless otherwise provided in the company agreement, the company agreement may be amended by a resolution of the partners representing two thirds of the share capital. The provision of Article 621 is reserved.

(2) Every amendment made to the company agreement shall be registered and announced.

B) Special amendments

I – Increase of the share capital

1. Principle

Article 590 – (1) The share capital may be increased provided that the provisions on the incorporation of the company and, in particular, the rules on the contribution of capital in kind and on the acquisition of an enterprise and of assets are complied with.

2. Pre-emptive right

Article 591 – (1) Unless otherwise provided in the company agreement or in the increase resolution, each partner has the right to participate in the increase of the share capital in proportion to his or her capital share.

(2) By the resolution of the general assembly on the capital increase, the pre-emptive right of the partners to acquire new shares may be restricted or removed only where there are just grounds and with the quorum provided for in subparagraph (e) of the first paragraph of Article 621. In particular, the acquisition of enterprises, parts of enterprises or participations and the participation of employees in the company may be accepted as just grounds. No one may be unjustifiably benefited or caused to suffer a loss by means of the restriction or removal of the pre-emptive right.

(3) A period of at least fifteen days shall be granted for the exercise of the pre-emptive right.

II – Reduction of the share capital

Article 592 – (1) The provisions on the reduction of the share capital of joint stock companies shall apply to limited liability companies by analogy. The share capital may be reduced for the purpose of remedying an over-indebted balance sheet only if the additional payment obligations provided for in the company agreement have been paid in full.

CHAPTER THREE

Rights and Obligations of the Partners

A) Capital share as the subject of transactions

I – In general

Article 593 – (1) Except for the cases provided for in the second paragraph of Article 612 concerning the acquisition of a capital share by the company, a capital share, including transfers between partners, may be transferred and shall pass by way of inheritance only in accordance with the following provisions.

(2) Capital share certificates shall be issued in the form of instruments of evidence or as registered certificates. The additional payment and ancillary performance obligations, a prohibition of competition that has been aggravated or arranged so as to cover all partners, and the rights of first offer, pre-emption, repurchase and purchase provided for in the company agreement must be expressly stated in these certificates.

II – Share register

Article 594 – (1) The company shall keep a share register containing the capital shares. The names and addresses of the partners, the number of capital shares held by each partner, the transfers and transmissions of capital shares, their nominal values and groups, and the usufruct and pledge rights over the capital shares and the names and addresses of their holders shall be written in this register.

(2) The partners may inspect the share register.

III – Cases of transmission of the capital share

1. Transfer

Article 595 – (1) The transfer of a capital share and transactions giving rise to an obligation to transfer shall be made in writing and the signatures of the parties shall be certified by a notary. In addition, the transfer contract shall also specify the additional payment and ancillary performance obligations; if the prohibition of competition has been aggravated or extended so as to cover all partners, this fact; and the conditions relating to the rights of first offer, pre-emption, repurchase and purchase and to the contractual penalty.

(2) Unless otherwise provided in the company agreement, the approval of the partners’ general assembly is required for the transfer of a capital share. The transfer becomes valid with this approval.

(3) Unless otherwise regulated in the company agreement, the partners’ general assembly may refuse approval without stating reasons.

(4) The transfer of a capital share may be prohibited by the company agreement.

(5) If the company agreement has prohibited the transfer or the general assembly has refused to give approval, the partner’s right to withdraw from the company for just cause is reserved.

(6) Where additional payment or ancillary performance obligations are provided for in the company agreement, the general assembly may refuse approval, even if there is no provision in the company agreement, if the security requested from the transferee, because his or her solvency is considered doubtful, has not been provided.

(7) If the general assembly does not refuse within three months from the application, it shall be deemed to have given approval.

2. Inheritance, matrimonial property regime and enforcement

Article 596 – (1) In cases where a capital share passes by way of inheritance, provisions on the matrimonial property regime or enforcement, all rights and obligations shall pass to the person acquiring the capital share without the need for the approval of the general assembly.

(2) The company may, within three months from learning of the acquisition, refuse to approve the person to whom the capital share has passed. For this purpose, the company must offer to the person to whom the share has passed to take over the shares at their real value for its own account, for the account of a partner or for the account of a third person designated by it.

(3) The refusal decision has retroactive effect, being valid from the day on which the transfer took place. The refusal does not affect the validity of the general assembly resolutions adopted during the period until the decision on this matter is rendered.

(4) If the company has not expressly and in writing refused the transmission of the capital share within three months, it shall be deemed to have given its approval.

3. Determination of real value

Article 597 – (1) In cases where the real value is provided for in the law or the company agreement as the price of the capital share, if the parties have not been able to agree, this value shall be determined, upon the request of one of the parties, by the commercial court of first instance of the place where the company’s head office is located.

(2) The court shall apportion the costs of the proceedings and of the valuation at its own discretion. The court’s decision is final.

4. Registration

Article 598 – (1) For the registration of transmissions of capital shares, an application shall be made to the trade registry by the managers of the company.

(2) If the application is not made within thirty days, the departing partner may apply to the trade registry for his or her name to be deleted in respect of these shares. Thereupon, the registry director shall grant the company a period for notifying the name of the acquirer.

(3) The reliance of a person acting in good faith who relies on the registry entry shall be protected.

IV – Capital share belonging to more than one partner, various rights over this share

1. Co-ownership in shares

Article 599 – (1) Where a capital share belongs to more than one partner, the co-owners are jointly and severally liable towards the company for the additional payment and ancillary performance obligations provided for in the company agreement.

(2) The co-owners may exercise their rights arising from the capital share only through a common representative whom they shall appoint.

2. Usufruct and right of pledge

Article 600 – (1) The provisions on the transmission of a capital share shall apply to the establishment of a usufruct over a capital share.

(2) The establishment of a right of pledge over a capital share may be made subject to the approval of the general assembly by the company agreement. In this case, the provisions on transmission shall apply. The general assembly may refrain from giving approval to the establishment of a right of pledge only where there are just grounds.

(3) Where there is a usufruct over a capital share, the share shall be represented by the usufructuary; in this case, the person holding the usufruct shall be liable for compensation if he or she does not safeguard the interests of the holder of the capital share in an equitable manner.

B) Prohibition of repayment

Article 601 – (1) Except in the case of a reduction of the share capital, the price of the capital share may not be repaid to the partners, nor may the partners be released from this debt.

C) Liability of the partners

Article 602 – (1) The company is liable for its debts and obligations only with its assets.

D) Additional payment and ancillary performance obligations

I – Additional payment obligation

1. Rule

Article 603 – (1) The partners may, by the company agreement, also be made liable for additional payments apart from the price of the capital share. The fulfilment of this obligation may be requested from the partners:

a) Where the total of the company’s share capital and statutory reserves cannot cover the company’s loss,

b) Where it is not possible for the company to continue its business properly without these additional means,

c) Where another situation defined in the company agreement and giving rise to a need for equity has occurred,

only in these cases.

(2) The additional payment obligation becomes due upon the opening of bankruptcy.

(3) The additional payment obligation may be provided for in the company agreement only as a specific amount based on the capital share. This amount may not exceed twice the nominal value of the capital share.

(4) Each partner is obliged to fulfil only the additional payment attributable to his or her own capital share.

(5) If the conditions have been met, the additional payments shall be requested by the managers.

(6) The reduction or removal of the additional payment obligation is possible only if the total of the share capital and the statutory reserves fully covers the losses. The provisions on the reduction of the share capital shall apply by analogy to the reduction or removal of the additional payment obligation.

2. Continuation of the obligation

Article 604 – (1) If the company has gone bankrupt within two years from the date on which the partner’s departure from the company was registered, this former partner shall also be requested to fulfil the additional payment obligation.

(2) If the additional payment obligation has not been fulfilled by the successor, the partner’s liability shall continue to the extent that it could have been asserted against the partner on the date on which the obligation arose.

3. Repayment

Article 605 – (1) For a fulfilled additional payment obligation to be repaid in part or in full, it is required that the amount relating to the additional payment can be covered from freely disposable reserves and funds (…)⁹⁰.

II – Ancillary performance obligation

Article 606 – (1) Ancillary performance obligations that may serve the realisation of the company’s field of activity may be provided for by the company agreement.

(2) The subject, scope, conditions and other important points of the ancillary performance obligations attached to a capital share shall be specified in the company agreement. Matters requiring detail may be left to regulation by the general assembly.

(3) Obligations of performance in cash and in kind which do not have a consideration expressly specified in the company agreement or an appropriate consideration and which serve to meet a need for equity are subject to the provisions on the additional payment obligation.

III – Subsequent provision

Article 607 – (1) General assembly resolutions amending the company agreement and providing for additional or ancillary performance obligations or increasing existing obligations may be adopted only with the approval of all the partners concerned.

E) Dividend and other related provisions

I – Dividend and reserves

Article 608 – (1) Dividends may be distributed only from the net profit for the period and from reserves set aside for this purpose. A decision to distribute dividends may be taken only if the statutory reserves required to be set aside under the law and the company agreement, and the reserves provided for in the company agreement, have been set aside.

(2) Unless otherwise provided by the company agreement, the dividend shall be calculated in proportion to the nominal value of the capital share; in addition, the amount of the additional payment obligations fulfilled shall also be added to the nominal value in the calculation of the dividend.

(3) The general assembly of the company may decide on the setting aside of reserves not provided for in the law or the company agreement, or in amounts exceeding those provided for:

a) If this is necessary to cover losses,

b) If the need to make investments for the development of the company has been seriously demonstrated, the interests of all the partners justify the setting aside of such a reserve, and these matters are expressly specified in the company agreement,

only in these cases.

II – Prohibition of interest and interest for the preparatory period

Article 609 – (1) No interest may be paid on the share capital and on additional payments. The payment of interest for the preparatory period may be provided for by the company agreement. In this case, the provisions on joint stock companies shall apply.

III – Financial statements and reserves

Article 610 – (1) The provisions of Articles 514 to 527 on joint stock companies shall also apply to limited liability companies.

IV – Repayment of unjustly received dividends

Article 611 – (1) A partner and a manager who have unjustly received profit are obliged to repay it.

(2) Where they are in good faith, the obligation of the partner or manager to repay unjustly received profit may not exceed the amount necessary to pay the rights of the company’s creditors.

(3) The company’s right to recover unjustly received profit shall become time-barred after five years from the date on which the money was received, or after two years where there is good faith.

F) Acquisition by the company of its own capital shares

Article 612 – (1) The company may acquire its own capital shares only if it has freely disposable equity in the amount necessary to acquire them and if the total nominal value of the shares it will acquire does not exceed ten per cent of the share capital.

(2) In the case of the acquisition of capital shares by reason of withdrawal or exclusion from the company provided for in the company agreement or ordered by a court decision, the upper limit in the first paragraph shall apply as twenty per cent. Capital shares acquired in an amount exceeding ten per cent of the company’s share capital shall be disposed of within two years or redeemed by way of capital reduction.

(3) The company shall set aside a reserve equal to the amount it has paid for its own capital shares.

(4) The voting rights and the other rights attached thereto arising from the company’s own capital shares acquired by it shall be suspended for as long as the shares are held by the company.

(5) The additional and ancillary payment obligations attached to the company’s own capital shares acquired by it may not be claimed for as long as the said shares are held by the company.

(6) The provisions concerning the restriction on the company’s acquisition of its own shares shall also apply where the company’s capital shares are acquired by subsidiaries in which the company holds the majority.

G) Duty of loyalty and prohibition of competition

Article 613 – (1) The partners are obliged to protect the company’s secrets. This obligation may not be removed by the company agreement or by a general assembly resolution.

(2) The partners may not engage in conduct that may harm the interests of the company. In particular, they may not carry out transactions that provide them with a special benefit and that harm the purpose of the company. It may be provided by the company agreement that the partners are obliged to refrain from transactions and conduct competing with the company.

(3) The provisions of Article 626 providing for a prohibition of competition in respect of managers are reserved.

(4) Where all of the remaining partners give their approval in writing, the partners may engage in activities contrary to the duty of loyalty or the prohibition of competition. The articles of association may provide for an approval resolution of the partners’ general assembly instead of the approval in the first sentence.

H) Right to information and inspection

Article 614 – (1) Each partner may request the managers to provide information on all the business and accounts of the company and may carry out inspections on specific matters.

(2) If there is a danger that the partner will use the information obtained in a manner detrimental to the company, the managers may prevent the obtaining of information and the inspection to the necessary extent; the general assembly shall decide on this matter upon the partner’s application.

(3) If the general assembly unjustly prevents the obtaining of information and the inspection, the court shall decide on this matter upon the partner’s request. The court’s decision is final.

I) Loans replacing equity

Article 615 – (Repealed: 26/6/2012-6335/43 art.)

CHAPTER FOUR

Organs of the Company

A) General assembly

I – Powers

Article 616 – (1) The non-transferable powers of the general assembly are as follows:

a) The amendment of the company agreement.

b) The appointment and removal from office of the managers.

c) The appointment and removal from office of the group auditor and (…)⁹¹ the auditors.

d) The approval of the group year-end financial statements and the annual activity report.

e) The approval of the year-end financial statements and the annual activity report, the taking of decisions on dividends and the determination of profit shares.

f) The determination of the remuneration of the managers and their release.

g) The approval of transfers of capital shares.

h) The making of a request to the court for the exclusion of a partner from the company.⁹²

ı) The authorisation of the manager regarding the acquisition by the company of its own shares, or the approval of such an acquisition.

i) The dissolution of the company.

j) The taking of decisions on matters for which the general assembly is authorised by the law or the company agreement, or which the managers submit to the general assembly.

(2) The following are non-transferable powers of the general assembly if they are provided for in the company agreement:

a) The approval of the activities of the managers and of the cases where the approval of the general assembly is required under the company agreement.

b) The taking of decisions on the exercise of the rights of first offer, pre-emption, repurchase and purchase.

c) The giving of approval for the establishment of a right of pledge over capital shares.

d) The issuing of internal regulations on ancillary performance obligations.

e) Where the company agreement does not deem the approval of the partners sufficient pursuant to the fourth paragraph of Article 613, the granting of the permission required for the approval of the managers and partners engaging in activities incompatible with the duty of loyalty or the prohibition of competition towards the company.

f) The exclusion of a partner from the company on grounds provided for in the company agreement.

(3) In single-partner limited liability companies, this partner has all the powers of the general assembly. For the resolutions to be adopted by the single partner in the capacity of general assembly to become valid, they must be in writing.

II – Meeting of the general assembly

1. Convocation

Article 617 – (1) The general assembly shall be convened by the managers. The ordinary general assembly meeting shall be held each year within three months from the end of the financial year. The general assembly shall be convened for an extraordinary meeting in accordance with the company agreement and as required.

(2) The general assembly shall be convened at least fifteen days before the day of the meeting. The company agreement may extend this period or shorten it to as little as ten days.

(3) The provisions on joint stock companies regarding the convocation of meetings, the right of the minority to call a meeting and to make proposals, the agenda, proposals, the general assembly without convocation, preparatory measures, the minutes and unauthorised participation shall apply by analogy, except for those relating to the Ministry representative. Each partner may have himself or herself represented at the general assembly by a person who may or may not be a partner.

(4) Unless any partner requests an oral discussion, general assembly resolutions may also be adopted by obtaining the written approval of the other partners to a proposal of one of the partners relating to an agenda item. It is a condition for the validity of the resolution that the same proposal be submitted for the approval of all partners.

2. Voting right and its calculation

Article 618 – (1) The voting right of the partners shall be calculated according to the nominal value of their capital shares. Unless a higher amount is provided for in the company agreement, every twenty-five Turkish Lira confers one vote. However, the voting rights of partners holding more than one share may be restricted by the company agreement. A partner has at least one vote. If expressly regulated in the company agreement, votes may also be cast in writing.

(2) The company agreement may also determine the voting right, independently of the nominal value, in such a way that one vote corresponds to each capital share. In this case, the nominal value of the smallest capital share may not be less than one tenth of the total nominal value of the other capital shares.

(3) The provision of the company agreement determining the voting right according to the number of capital shares shall not apply in the following cases:

a) The election of auditors.

b) The election of a special auditor for the audit of the management of the company or of certain parts thereof.

c) The taking of a decision on the bringing of a liability action.

3. Disqualification from voting

Article 619 – (1) Those who have participated in the management of the company in any manner may not vote on resolutions concerning the release of the managers.

(2) In resolutions concerning the acquisition by the company of its own capital share, the partner transferring the capital share may not vote.

(3) In resolutions approving a partner’s engaging in activities contrary to the duty of loyalty or the prohibition of competition, the partner concerned may not vote.

III – Adoption of resolutions

1. Ordinary adoption of resolutions

Article 620 – (1) Unless otherwise provided in the law or the company agreement, all general assembly resolutions, including election resolutions, shall be adopted by an absolute majority of the votes represented at the meeting.

2. Important resolutions

Article 621 – (1) The following general assembly resolutions may be adopted where at least two thirds of the votes represented and an absolute majority of the entire share capital having voting rights are present together:

a) The change of the company’s field of activity.

b) The provision for capital shares with voting privileges.

c) The restriction, prohibition or facilitation of the transfer of capital shares.

d) The increase of the share capital.

e) The restriction or removal of the pre-emptive right.

f) The change of the company’s head office.

g) The giving of approval by the general assembly for the managers and partners to engage in activities contrary to the duty of loyalty or the prohibition of competition.

h) The making of an application to the court for the exclusion of a partner from the company for just cause, and the exclusion of a partner from the company on a ground provided for in the company agreement.⁹³

ı) The dissolution of the company.

(2) Where the law requires an increased quorum for the adoption of certain resolutions, provisions of the company agreement that would increase this quorum even further may be adopted only by the majority to be provided for in the company agreement.

(3) (Added: 12/7/2013-6495/52 art.) An amendment of the agreement whereby grounds for the exclusion of a partner from the company may subsequently be included in the company agreement is possible by a unanimous resolution, at the general assembly meeting, of all the partners representing the company’s capital.

IV- Nullity and annulment of general assembly resolutions

Article 622 – (1) The provisions of this Code on the nullity and annulment of general assembly resolutions of joint stock companies shall also apply to limited liability companies by analogy.

B) Management and representation

I – Managers

1. In general

Article 623 – (1) The management and representation of the company shall be regulated by the company agreement. By the company agreement, the management and representation may be entrusted to one or more partners bearing the title of manager, to all the partners or to third persons. At least one partner must have the right to manage and the power to represent the company.

(2) Where one of the managers of the company is a legal person, that person shall designate a natural person who will perform this duty on behalf of the legal person.

(3) The managers are authorised to take decisions on all matters relating to management that have not been left to the general assembly by law or by the company agreement, and to execute these decisions.

2. Plurality of managers

Article 624 – (1) Where the company has more than one manager, one of them shall be appointed by the general assembly as chairperson of the board of managers, irrespective of whether he or she is a partner of the company.

(2) The manager who is chairperson or, where there is a single manager, that person, is authorised, as with respect to the convening of the general assembly and the conduct of general assembly meetings, also to make all declarations and announcements, unless the general assembly takes a decision to the contrary or a different arrangement is provided for in the company agreement.

(3) Where there is more than one manager, they shall take decisions by majority. In the event of a tie, the chairperson’s vote shall prevail. The company agreement may provide for a different arrangement concerning the taking of decisions by the managers.

II – Duties, powers and obligations

1. Non-transferable and inalienable duties

Article 625 – (1) The managers are charged with and authorised in respect of all matters for which the laws and the company agreement do not assign duties and powers to the general assembly. The managers may not delegate and may not waive the following duties and powers:

a) The ultimate management and direction of the company and the giving of the necessary instructions.

b) The determination of the company’s management organisation within the framework of the law and the company agreement.

c) The establishment of the accounting, financial control and financial planning, where necessary for the management of the company.

d) The supervision of whether the persons to whom certain parts of the management of the company have been delegated act in accordance with the laws, the company agreement, internal regulations and instructions.

e) The establishment of the committee for the early detection and management of risks, except in small limited liability companies.

f) The preparation of the company’s financial statements, the annual activity report and, where necessary, the group financial statements and annual activity report.

g) The preparation of the general assembly meeting and the execution of general assembly resolutions.

h) The notification of the situation to the court where the company is over-indebted.

(2) It may be provided in the company agreement that the manager or managers must submit:

a) Certain decisions they take, and

b) Individual issues,

to the approval of the general assembly. The approval of the general assembly does not remove or limit the liability of the managers. The provisions of Articles 51 and 52 of the Turkish Code of Obligations are reserved.

2. Duty of care and loyalty, prohibition of competition

Article 626 – (1) The managers and the persons charged with management are obliged to perform their duties with all due care and to safeguard the interests of the company within the framework of the rule of good faith. The provisions of Articles 202 to 205 are reserved.

(2) Unless otherwise provided in the company agreement or unless all the other partners have given permission in writing, the managers may not engage in any activity constituting competition with the company. The company agreement may provide for an approval resolution of the partners’ general assembly instead of the approval of the partners.

(3) The managers are also subject to the duty of loyalty provided for the partners.

3. Equal treatment

Article 627 – (1) The managers shall treat the partners equally under equal conditions.

III – Domicile of the managers

Article 628 – (Repealed: 26/6/2012-6335/43 art.)

IV – Scope and restriction of the power of representation

Article 629 – (1) The relevant provisions of this Code on joint stock companies shall apply by analogy to the scope of the managers’ power of representation, the restriction of that power, the designation of those authorised to sign, the form of signature and their registration and announcement.

(2) In single-partner limited liability companies, whether or not the company is represented by the single partner at the time the contract is concluded, the validity of a contract concluded between this partner and the company is subject to the contract being made in writing. This requirement does not apply to contracts relating to daily, insignificant and ordinary transactions under market conditions.

(3) (Added: 10/9/2014 – 6552/132 art.) Article 367 and the seventh paragraph of Article 371 shall also apply by analogy to limited liability companies with regard to the appointment by the managers of persons bound to the company by a service contract as commercial representatives with limited authority or as other merchant’s assistants.

V – Removal from office, withdrawal and restriction of the management and representation powers

Article 630 – (1) The general assembly may remove the manager or managers from office and may restrict their right of management and power of representation.

(2) Each partner may, where there are just grounds, request the court to remove or restrict the right of management and powers of representation of the executives.

(3) A serious breach by the executive of the duty of care and loyalty and of the obligations arising from other laws and from the company agreement, or the loss of the ability required for the good management of the company, shall be accepted as just grounds.

(4) The compensation rights of the executive removed from office are reserved.

VI – Procurists and commercial representatives

Article 631 – (1) Unless otherwise regulated in the company agreement, procurists and commercial representatives may be appointed only by a resolution of the general assembly; their powers may be restricted by the general assembly.

(2) The manager or the majority of the managers may at any time remove from office a procurist or commercial representative who does not fall within the scope of Article 623. If this person was appointed by a resolution of the general assembly, the general assembly shall be convened without delay for the removal from office and the restriction of his or her powers.

VII – Liability for tort

Article 632 – (1) The company is liable for a tort committed by the person authorised with the management and representation of the company in the course of performing his or her duties relating to the company.

C) Loss of capital and over-indebtedness

I – Duty of notification

Article 633 – (1) In cases of loss of the share capital or of over-indebtedness, the relevant provisions on joint stock companies shall apply by analogy. The provisions on the additional payment obligation are reserved.

II- Notification of bankruptcy and request for concordat⁹⁴

Article 634 – (Amended: 28/2/2018-7101/63 art.)

(1) The provisions on joint stock companies shall apply to the notification of bankruptcy and the request for concordat.

D) Auditor

Article 635 – (1) The provisions on joint stock companies relating to the auditor (…)⁹⁵ audit and special audit, other than the fifth and sixth paragraphs of Article 397, shall also apply to limited liability companies.⁹⁶

CHAPTER FIVE

Dissolution and Departure

A) Grounds for dissolution and consequences of dissolution

Article 636 – (1) A limited liability company is dissolved in the following cases:

a) Upon the occurrence of one of the grounds for dissolution provided for in the company agreement.

b) By a resolution of the general assembly.

c) Upon the opening of bankruptcy.

d) In the other cases of dissolution provided for in the law.

(2) If one of the legally required organs of the company has been absent for a long time or the general assembly cannot meet, the commercial court of first instance of the place where the company’s head office is located shall, upon the request of one of the partners or of the company’s creditors for the dissolution of the company, hear the managers and set a period for the company to bring its situation into conformity with the Code and, if the situation is nevertheless not remedied, shall decide on the dissolution of the company.

(3) Where there are just grounds, each partner may request the court to dissolve the company. Instead of granting the request, the court may order that the real value of his or her share be paid to the plaintiff partner and that the plaintiff partner be excluded from the company, or may order another solution that is appropriate to the situation and acceptable.

(4) When an action for dissolution is brought, the court may, upon the request of one of the parties, take the necessary measures.

(5) The provisions on joint stock companies shall apply to the consequences of dissolution.

B) Registration and announcement

Article 637 – (1) If the dissolution results from a cause other than bankruptcy or a court decision, the manager or, where there is more than one manager, at least two managers shall have it registered in the trade registry and announced.

C) Withdrawal and exclusion

I – In general

Article 638 – (1) The company agreement may grant the partners the right to withdraw from the company and may make the exercise of this right subject to certain conditions.

(2) Each partner may, where there are just grounds, bring an action for a decision that he or she withdraws from the company. Upon request, the court may, for the duration of the action, decide to suspend some or all of the plaintiff’s rights and obligations arising from the partnership or decide on other measures for the purpose of securing the position of the plaintiff partner.

II – Joining the withdrawal

Article 639 – (1) Where one of the partners requests to withdraw on the basis of a provision in the company agreement or brings an action for withdrawal on just grounds, the manager or managers shall inform the other partners thereof without delay.

(2) Each of the other partners is entitled, within one month from the date on which the notice reaches him or her:

a) Where the just cause provided for in the company agreement is also valid in respect of him or her, to notify the managers that he or she will also join the withdrawal,

b) To join the action for withdrawal on just grounds by means of an action he or she will bring,

as of right.

(3) All withdrawing partners shall be treated equally in proportion to their capital shares.

(4) This provision shall not apply in the case of the exclusion of a partner from the company by reason of a provision in the company agreement or by reason of the existence of just cause.

III – Expulsion

Article 640 – (1) The company agreement may provide for grounds on which a partner may be expelled from the company by resolution of the general assembly.

(2) The partner may bring an action for annulment against the expulsion resolution within three months from the notification of the resolution to him through a notary.

(3) The expulsion of the partner from the company by court decision on the basis of just cause upon the request of the company is reserved.

IV – Severance payment

1. Claim and amount

Article 641 – (1) Where a partner withdraws from the company, he is entitled to claim a severance payment corresponding to the real value of his share capital holding.

(2) With respect to the right of withdrawal provided for in the company agreement, company agreements may regulate the severance payment differently.

2. Payment

Article 642 – (1) The severance payment, where:

a) The company disposes of usable equity,

b) The share capital holdings of the withdrawing person can be transferred,

c) The share capital has been reduced in accordance with the relevant provisions,

shall become due upon withdrawal.

(2) (Repealed: 26/6/2012-6335/43 art.)

(3) The unpaid portion of the severance payment of the withdrawing partner constitutes a claim against the company ranking after all creditors. This shall become due upon the determination of the amount of usable equity in the annual report.

D) Liquidation

Article 643 – (1) The provisions relating to joint stock companies shall apply to the liquidation procedure and to the powers of the company organs during liquidation:

E) Applicable provisions

Article 644 – (1) The provisions relating to joint stock companies whose article numbers are stated below shall also apply to limited liability companies.

a) Article 549 concerning the unlawfulness of documents and declarations; Article 550 concerning false statements about the capital and knowledge of insufficient payment; Article 551 concerning irregularity in valuation; Article 553 regulating the liability of founders, members of the board of directors, executives and liquidators; Articles 554 to 561 concerning the liability of auditors (…)⁹⁷.

b) (Amended: 26/6/2012-6335/32 art.) Article 353 concerning dissolution, Article 358 concerning the prohibition of borrowing from the company, the provisions of the first and second sentences of the second paragraph of Article 395 concerning borrowing from the company by relatives of the managers, and the third paragraph of Article 509 concerning advance dividends.

c) Article 391 concerning the nullity of resolutions of the board of directors and Article 392, to be applied by analogy to the managers’ rights to obtain information.

d) Those who act contrary to Articles 549 to 551, which also apply to limited liability companies, shall be punished with the penalties provided for in the eighth to tenth paragraphs of Article 562.

BOOK THREE

Negotiable Instruments

PART ONE

General Provisions

A) Definition of negotiable instruments

Article 645 – (1) Negotiable instruments are instruments such that the right they embody can neither be asserted nor transferred to others separately from the instrument.

B) Obligation arising from the instrument

Article 646 – (1) The debtor under a negotiable instrument is obliged to pay only against delivery of the instrument.

(2) Unless he is guilty of fraud or gross fault, the debtor shall be discharged from his debt by making payment at maturity to the person who, according to the nature of the instrument, appears to be the creditor.

C) Transfer of negotiable instruments

I – General form

Article 647 – (1) For the transfer of a negotiable instrument for the purpose of transferring ownership or creating a limited right in rem, the transfer of possession of the instrument is required in every case.

(2) In addition, an endorsement is required for instruments to order, and a written declaration of transfer for registered instruments. This declaration may be written on the negotiable instrument or on a separate sheet.

(3) Law or contract may provide that others, and in particular the debtor, must also participate in the transfer.

II – Endorsement

1. Form

Article 648 – (1) In all cases, endorsement shall be made in accordance with the provisions relating to the endorsement of a bill of exchange.

(2) Endorsement and the transfer of possession of the instrument are sufficient for the transfer.

2. Effects

Article 649 – (1) Unless the contrary appears from the content or nature of the instrument, the rights of the endorser in all transferable negotiable instruments pass to the endorsee upon endorsement and the transfer of possession.

D) Conversion of the type of instrument

Article 650 – (1) A registered instrument or an instrument to order may be converted into a bearer instrument only with the consent of all persons to whom it grants rights and on whom it imposes obligations. This consent must be written directly on the instrument.

(2) The same rule applies to the conversion of bearer instruments into registered instruments or instruments to order. In the latter case, if the consent of one of the persons holding rights or obligations is lacking, the conversion shall have effect only between the creditor who made the conversion and the person directly succeeding to his rights.

E) Cancellation decision

I – Conditions

Article 651 – (1) Where a negotiable instrument is lost, the court may decide on its cancellation.

(2) The person who was entitled under the instrument at the time the negotiable instrument was lost or the loss came to light may request that a decision be given cancelling the instrument.

II – Effects

Article 652 – (1) Upon the cancellation decision, the entitled person may assert his right without the instrument or may request that a new instrument be issued.

(2) Apart from this, the special provisions relating to the various types of negotiable instruments shall apply to the cancellation procedure and its effects.

F) Special provisions

Article 653 – (1) The special provisions relating to the various negotiable instruments are reserved.

PART TWO

Registered Instruments

A) Definition

Article 654 – (1) A negotiable instrument that is made out in the name of a specific person, does not contain a clause to his order and is not deemed by law to be an instrument to order is deemed a registered instrument.

B) How the creditor proves his right

I – As a rule

Article 655 – (1) The debtor is obliged to pay only to the persons who are holders of the instrument and are named in the instrument or who prove that they are the legal successors of such person.

(2) A debtor who makes payment without this being proved shall not be discharged from his debt vis-à-vis a third party who proves that he is the true owner of the instrument.

II – Incomplete registered instruments

Article 656 – (1) A debtor who, in a registered instrument, has reserved the right to pay the amount of the instrument to any holder shall be discharged from his debt as a result of payment made in good faith to the holder, even if he has not required proof of the status of creditor. However, he is not obliged to make payment to the holder. The provision of the second paragraph of Article 785 is reserved.

C) Cancellation decision

Article 657 – (1) Unless there are special provisions to the contrary, registered instruments shall be cancelled in accordance with the provisions relating to bearer instruments.

(2) The debtor may provide in the instrument for a simpler procedure for cancellation by reducing the number of announcements or shortening the periods, and may also reserve the right to make payment, with valid effect, without presentation of the instrument and without a cancellation decision, if the creditor gives him an officially drawn up or duly certified document showing the cancellation of the instrument and the payment of the debt.

PART THREE

Bearer Instruments

A) Definition

Article 658 – (1) Every negotiable instrument from whose text or form it appears that whoever is its holder is deemed to be the entitled person is deemed a bearer instrument or an instrument payable to bearer.

(2) Payment by a debtor who has been prohibited from making payment by court decision shall not be valid.

B) Defences of the debtor

I – In general

Article 659 – (1) Against a claim arising from a bearer instrument, the debtor may raise only defences relating to the invalidity of the instrument or appearing from the text of the instrument, and the defences he has personally against whoever is the creditor.

(2) Defences based on relationships existing directly between the debtor and one of the previous holders may be raised only if the holder knowingly acted to the detriment of the debtor when acquiring the instrument.

(3) A defence that the instrument was put into circulation without the consent of the debtor may not be raised.

II – Bearer interest coupons

Article 660 – (1) Against a claim arising from bearer interest coupons, the debtor may not raise the defence that the principal has been paid.

(2) Where the principal is paid, the debtor is entitled to withhold the amount of interest coupons which will fall due in the future and which have not been delivered to him together with the principal instrument, until the expiry of the limitation period applicable to those coupons; unless the cancellation of the undelivered coupons has been decided or security has been provided for their amount.

C) Cancellation decision

I – In general

1. Jurisdiction

Article 661 – (1) The cancellation of bearer instruments such as share certificates, bonds, dividend-right certificates, coupon sheets excluding individual coupons, and talons serving for the renewal of the principal coupon sheets shall be decided by the court upon the request of the entitled person.

(2) The competent court is the commercial court of first instance of the domicile of the debtor or, in respect of share certificates, of the place where the head office of the joint stock company is located.

(3) The court must find credible the petitioner’s assertions that he was in possession of the instrument and has lost it.

(4) If an instrument contains a coupon sheet or talon and the holder has lost only the coupon sheet or talon, the presentation of the principal part of the instrument is sufficient to prove that the request is justified.

2. Prohibition of payment

Article 662 – (1) Upon the request of the petitioner, the court shall prohibit the debtor under the instrument from paying its amount, warning him that, should he act otherwise, he will be obliged to pay twice.

(2) Where the cancellation of a coupon sheet is to be decided, the provisions relating to the cancellation of interest coupons shall apply to individual coupons maturing during the proceedings.

3. Summons by announcement, period for application

Article 663 – (1) If the court finds credible the petitioner’s explanations that he was in possession of the instrument and has lost it, it shall summon the unknown holder by announcement to present the instrument within a specified period and shall warn that, failing this, the cancellation of the instrument will be decided. The period must be set at not less than six months; this period begins to run from the day of the first announcement.

4. Form of announcement

Article 664 – (1) The announcement concerning the presentation of the instrument must be made three times in the gazette referred to in Article 35.

(2) If it deems necessary, the court may additionally decide that announcements be made in other forms it considers appropriate.

5. Effects

a) Where the instrument is presented

Article 665 – (1) If the instrument whose cancellation is requested is presented, the court shall set the petitioner a period within which to bring an action for the return of the instrument.

(2) If the petitioner does not bring an action within this period, the court shall return the instrument and lift the prohibition of payment.

b) Where the instrument is not presented

Article 666 – (1) The court shall decide on the cancellation of an instrument not presented within the specified period or may, if it deems necessary, take other measures as well.

(2) The decision on the cancellation of a bearer instrument shall be announced without delay in the gazette referred to in Article 35 and, if the court deems necessary, by other means as well.

(3) Upon the cancellation decision, the petitioner is entitled to request, at his own expense, the issue of a new instrument or the performance of the debt that has fallen due.

II – Procedure for coupons

Article 667 – (1) In the event of loss of individual coupons, the court shall, upon the request of the entitled person, decide that the amount be deposited with the court at maturity or, if maturity has passed, without delay.

(2) If three years have elapsed without any entitled person coming forward and three years have passed since maturity, the amount shall be given to the petitioner by court decision.

III – Procedure for banknotes and similar papers

Article 668 – (1) No cancellation decision may be given in respect of banknotes and other bearer instruments which are issued in large quantities, are payable at sight, are used as a means of payment in place of money and bear specified amounts.

(2) The special provisions relating to bonds issued by the State are reserved.

D) Mortgage bond and annuity bond

Article 669 – (1) The special provisions relating to bearer mortgage bonds and annuity bonds are reserved.

PART FOUR

Bills and Notes (Kambiyo Senetleri)

A) Capacity to incur obligations

Article 670 – (1) A person who has the capacity to incur obligations by contract also has the capacity to incur obligations by bills and notes.

CHAPTER ONE

Bill of Exchange

SECTION ONE

Drawing and Form of the Bill of Exchange

A) Form

I – Elements

1. In general

Article 671 – (1) A bill of exchange:

a) The term “bill of exchange” in the text of the instrument or, if the instrument is drawn up in a language other than Turkish, the word used in that language as the equivalent of bill of exchange,

b) An unconditional and unqualified order to pay a determinate sum,

c) The name of the person who is to pay, “the drawee”,

d) The maturity,

e) The place of payment,

f) The name of the person to whom or to whose order payment is to be made,

g) The date and place of drawing,

h) The signature of the drawer,

contains the above.

2. Absence of elements

Article 672 – (1) An instrument which does not contain one of the elements set out in Article 671 shall not be deemed a bill of exchange, except in the cases set out in the second to fourth paragraphs.

(2) A bill of exchange in which the maturity is not indicated shall be deemed to be payable at sight.

(3) Unless otherwise specified, the place indicated beside the name of the drawee shall be deemed to be the place of payment and, at the same time, the domicile of the drawee.

(4) A bill of exchange in which the place of drawing is not indicated shall be deemed to have been drawn in the place indicated beside the name of the drawer.

II – Individual elements

1. Drawer being at the same time drawee or payee

Article 673 – (1) A bill of exchange may be drawn to the order of the drawer himself, and may also be drawn on the drawer himself or for the account of a third person.

2. Bill payable at a third person’s address and domiciled bill

Article 674 – (1) A bill of exchange may be drawn payable at the address of a third person, either in the place where the drawee has his domicile or in another place.

3. Interest clause

Article 675 – (1) In a bill of exchange payable at sight or at a fixed period after sight, the drawer may stipulate an interest clause. In other bills of exchange, such an interest clause shall be deemed not written.

(2) The rate of interest must be indicated in the bill of exchange; if it is not indicated, the interest clause shall be deemed not written.

(3) Unless another day is specified, interest runs from the date of drawing of the bill of exchange.

4. Indication of the amount of the bill in various ways

Article 676 – (1) If the amount of the bill of exchange is expressed both in words and in figures and there is a discrepancy between the two amounts, the amount expressed in words shall prevail.

(2) If the amount of the bill of exchange is expressed more than once, either only in words or only in figures, and there is a discrepancy between the amounts, the smallest amount shall be deemed valid.

B) Liability of the signatories

I – Presence of invalid signatures

Article 677 – (1) If a bill of exchange bears signatures of persons incapable of incurring obligations by bill of exchange, forged signatures, signatures of fictitious persons, or signatures which for any other reason do not bind the persons who signed or in whose names it was signed, the validity of the other signatures shall not be affected thereby.

II – Unauthorised signature

Article 678 – (1) A person who, without being authorised to represent, places his signature on a bill of exchange as the representative of a person is personally liable under that bill; if he pays this bill, he shall have the rights which the person he purported to represent might have had. The same rule applies to a representative who has exceeded his authority.

III – Liability of the drawer

Article 679 – (1) The drawer is liable for non-acceptance and non-payment of the bill of exchange. Although the drawer may stipulate that he shall not be liable in the event of non-acceptance, any clauses stating that he shall not be liable for non-payment shall be deemed not written.

IV – Blank bill of exchange

Article 680 – (1) If a bill of exchange which was incomplete when put into circulation has been completed contrary to the agreements made, the non-observance of such agreements may not be set up against the holder; unless the holder has acquired the bill of exchange in bad faith or gross fault can be imputed to him in acquiring it.

SECTION TWO

Endorsement

A) Transfer of the bill of exchange

Article 681 – (1) Every bill of exchange, even if not expressly drawn to order, may be transferred by endorsement and the transfer of possession.

(2) If the drawer has inserted in the bill of exchange the words “not to order” or an expression with the same meaning, the bill of exchange may be transferred only by way of assignment of a claim, and this transfer shall produce the legal effects of an assignment of a claim.

(3) The endorsement may be made in favour of the drawee, whether he has accepted the bill of exchange or not, the drawer, or any of those who have incurred obligations under the bill of exchange. These persons may endorse the bill of exchange further.

B) Endorsement

I – Being unqualified and unconditional

Article 682 – (1) The endorsement must be unqualified and unconditional. Any condition to which the endorsement is made subject shall be deemed not written.

(2) A partial endorsement is null and void.

(3) An endorsement to bearer has the effect of a blank endorsement.

II – Form of endorsement

Article 683 – (1) The endorsement must be written on the bill of exchange or on a sheet attached to the bill of exchange called an “allonge”, and must be signed by the endorser.

(2) The endorsement need not designate the person in whose favour it is made, and the endorsement may consist simply of the signature of the endorser. Endorsements of this kind are called “blank endorsements”. A blank endorsement must be written on the back of the bill of exchange or on the allonge.

III – Effects of endorsement

1. Transfer function

Article 684 – (1) All rights arising from the bill of exchange are transferred by endorsement and the transfer of possession.

(2) If the endorsement is a blank endorsement, the holder may:

a) Fill in the endorsement with his own name or with the name of another person,

b) Re-endorse the bill of exchange in blank or to another specified person,

c) Give the bill of exchange to another person without filling in the blank endorsement and without endorsing the bill of exchange again.

2. Guarantee function

Article 685 – (1) Unless otherwise stipulated, the endorser is liable for non-acceptance and non-payment of the bill of exchange.

(2) The endorser may prohibit any further endorsement of the bill of exchange; in this case, he shall not be liable to persons to whom the instrument is subsequently endorsed.

3. Entitlement of the holder

Article 686 – (1) The person in possession of a bill of exchange is deemed to be the lawful holder if his right is established by an uninterrupted series of successive endorsements, even if the last endorsement is a blank endorsement. Cancelled endorsements are deemed not written for this purpose. If a blank endorsement is followed by another endorsement, the person who signed the last endorsement is deemed to have acquired the bill of exchange by the blank endorsement.

(2) If the bill of exchange has in any manner left the hands of the holder, the new holder whose right is established in accordance with the provisions of the first paragraph is obliged to give up that bill of exchange only if he has acquired it in bad faith or was guilty of gross fault in acquiring it.

IV – Defences

Article 687 – (1) A person against whom recourse is sought on the basis of a bill of exchange may not raise against the holder seeking recourse defences based on relationships existing directly between himself and the drawer or one of the previous holders; unless the holder, in acquiring the bill of exchange, knowingly acted to the detriment of the debtor.

(2) The provisions relating to transfers made by way of assignment of a claim are reserved.

V – Types of endorsement

1. Endorsement for collection

Article 688 – (1) If the endorsement contains the words “value for collection”, “by procuration”, or a note indicating that the amount will be received on behalf of another, or a clause merely expressing appointment as representative, the holder may exercise all rights arising from the bill of exchange; but he may endorse that bill of exchange further only by an endorsement for collection.

(2) In this case, those liable under the bill of exchange may raise against the holder only those defences which they could raise against the endorser.

(3) The authority contained in an endorsement for collection does not terminate upon the death of the person who granted this authority, nor does it lapse upon his losing his capacity to exercise civil rights.

2. Endorsement by way of pledge

Article 689 – (1) If the endorsement contains the words “value in security”, “value in pledge”, or any other clause indicating a pledge, the holder may exercise all rights arising from the bill of exchange; but an endorsement made by him has only the effect of an endorsement for collection.

(2) Those liable under the bill of exchange may not raise against the holder defences based on relationships existing directly between themselves and the endorser; unless the holder, in acquiring the bill of exchange, knowingly acted to the detriment of the debtor.

3. Endorsement after maturity

Article 690 – (1) An endorsement made after maturity has the same effects as an endorsement made before maturity; however, an endorsement made after the protest for non-payment, or after the expiry of the period fixed for drawing up such protest, has only the effects of an assignment of a claim.

(2) Until the contrary is proved, an undated endorsement is deemed to have been made before the expiry of the period fixed for drawing up the protest.

SECTION THREE

Acceptance and Aval

A) Presentation for acceptance

I – Rule

Article 691 – (1) Until maturity, the bill of exchange may be presented for acceptance to the drawee at his domicile by the holder or by any person in possession of the bill of exchange.

II – Requirement and prohibition of presentation for acceptance

Article 692 – (1) The drawer may stipulate, with or without fixing a period, that the bill of exchange must be presented for acceptance.

(2) The drawer may write on the bill of exchange that he prohibits its presentation for acceptance, except in the case of bills of exchange payable at the domicile of a third person, or in a place other than the domicile of the drawee, or at a fixed period after sight.

(3) The drawer may also stipulate that the bill of exchange shall not be presented for acceptance before a specified date.

(4) Unless the drawer has prohibited presentation for acceptance, every endorser may stipulate, with or without fixing a period, that the bill of exchange must be presented for acceptance.

III – Bills of exchange payable at a fixed period after sight

Article 693 – (1) Bills of exchange payable at a fixed period after sight must be presented for acceptance within one year from the date of drawing.

(2) The drawer may shorten this period and may also stipulate a longer period.

(3) Endorsers may shorten the periods for presentation for acceptance.

IV – Second presentation for acceptance

Article 694 – (1) The drawee may request that the bill of exchange be presented to him a second time on the day following the day on which it was presented to him. The interested parties may claim that this request was not complied with only if this request has been entered in the protest.

(2) The holder is not obliged to leave with the drawee the bill of exchange presented for acceptance.

B) Acceptance

I – Form

1. In general

Article 695 – (1) The declaration of acceptance is written on the bill of exchange, is expressed by the word “accepted” or any other equivalent expression, and is signed by the drawee. The mere signature of the drawee on the face of the bill of exchange has the effect of acceptance.

(2) Where the bill of exchange is payable at a fixed period after sight, or where it must be presented for acceptance within a specified period by virtue of a special stipulation, the bill of exchange shall bear the date of the day on which the acceptance took place, unless the holder requests that the date of presentation be inserted. If no date is inserted, the holder, in order to preserve his rights of recourse against the endorsers and the drawer, is obliged to have this omission established by a protest drawn up in due time.

2. Limitation of acceptance

Article 696 – (1) Acceptance must be unconditional and unqualified; but the drawee may limit acceptance to part of the amount of the bill of exchange.

(2) If the declaration of acceptance otherwise departs from the content of the bill of exchange, the bill of exchange is deemed not accepted. Nevertheless, the acceptor is liable within the terms of his declaration of acceptance.

3. Bill payable at a third person’s address and domiciled bill

Article 697 – (1) If the drawer has declared in the bill of exchange a place other than the domicile of the drawee as the place of payment, without indicating a third person at whose address payment is to be made, the drawee may indicate a third person in the acceptance. Otherwise, the drawee is deemed to have undertaken to pay the bill of exchange himself at the place of payment.

(2) If the bill of exchange is stipulated to be payable at the address of the drawee himself, the drawee may indicate in the acceptance an address in the place of payment where payment is to be made.

II – Effects

1. In general

Article 698 – (1) By accepting the bill of exchange, the drawee undertakes to pay its amount at maturity.

(2) In the event of non-payment, the holder, even if he is the drawer, is entitled to claim directly from the acceptor everything that may be claimed under the bill of exchange pursuant to Articles 725 and 726.

2. Cancellation of the acceptance

Article 699 – (1) If the drawee has cancelled the acceptance on the bill of exchange before returning the bill of exchange, he is deemed to have refused acceptance. Until the contrary is proved, it is presumed that the acceptance was cancelled before the return of the bill of exchange.

(2) Nevertheless, if the drawee has notified the holder or a person whose signature appears on the bill of exchange in writing that he has accepted the bill of exchange, he shall be liable to them within the terms of the declaration of acceptance.

C) Aval

I – Givers of aval

Article 700 – (1) Payment of the amount of a bill of exchange may be secured wholly or partly by aval.

(2) This security may be given by a third person or also by a person whose signature appears on the bill of exchange.

II – Form

Article 701 – (1) The aval is written on the bill of exchange or on an allonge.

(2) The aval is expressed by the words “for aval” or any other equivalent expression and is signed by the giver of the aval.

(3) Every signature placed on the face of the bill of exchange, except the signatures of the drawee or the drawer, is deemed an aval.

(4) If it is not specified for whom it is given, the aval is deemed to have been given for the drawer.

III – Effects

Article 702 – (1) The giver of an aval is liable in the same manner as the person for whom he has undertaken the obligation.

(2) The undertaking of the giver of the aval is valid even if the obligation he has secured is null and void for any reason other than a defect of form.

(3) If the giver of an aval pays the amount of the bill of exchange, he acquires the rights arising from the bill of exchange against the person for whom he has undertaken the obligation under the bill of exchange and against the persons who are liable to that person under the bill of exchange.

SECTION FOUR

Payment

A) Maturity

I – Determination of maturity

1. In general

Article 703 – (1) A bill of exchange may be drawn payable:

a) At sight,

b) At a fixed period after sight,

c) At a fixed period after the date of drawing,

d) On a fixed day,

as set out above.

(2) Bills of exchange whose maturity is written otherwise or which indicate successive maturities are null and void.

2. Bill of exchange payable at sight

Article 704 – (1) A bill of exchange drawn payable at sight is payable on presentation. Such a bill of exchange must be presented for payment within one year from the date of drawing. The drawer may shorten this period and may also fix a longer period. The periods for presentation may be shortened by the endorsers.

(2) The drawer may stipulate that a bill of exchange payable at sight shall not be presented for payment before a specified date. In that case, the period for presentation begins from that date.

3. Bill of exchange payable at a fixed period after sight

Article 705 – (1) The maturity of a bill of exchange payable at a fixed period after sight is determined by the date written in the acceptance or by the date of the protest.

(2) If no date is indicated in the acceptance and no protest has been drawn up, the bill of exchange is deemed, as regards the acceptor, to have been accepted on the last day of the period fixed for presentation for acceptance.

II – Computation of periods

1. In general

Article 706 – (1) The maturity of a bill of exchange drawn payable one or more months after the date of drawing or after sight falls on the corresponding day of the month in which payment is to be made. If there is no corresponding day, maturity falls on the last day of that month.

(2) Where a bill of exchange is drawn payable one and a half months, or several months and a half month, after the date of drawing or after sight, whole months shall be computed first.

(3) If the beginning, middle or end of a month is indicated as the maturity, the first, fifteenth and last days of the month, respectively, are understood.

(4) The expressions “eight days” or “fifteen days” are understood not as one or two weeks but as an actual period of eight or fifteen days.

(5) The expression “half a month” denotes a period of fifteen days.

2. Conflict of calendars

Article 707 – (1) Where there is a difference of calendar between the place of drawing and the place of payment of a bill of exchange payable on a fixed day, the maturity is deemed to have been determined according to the calendar of the place of payment.

(2) If a bill of exchange drawn between two places having different calendars is payable at a fixed period after the date of drawing, maturity is computed by converting the date of drawing into the corresponding day of the calendar of the place of payment.

(3) The provisions of the first and second paragraphs shall also apply to the computation of the periods for presentation of bills of exchange.

(4) The provisions of this article shall not apply if it appears from a clause in the bill of exchange or from the content of the bill of exchange that a different intention was intended.

B) Payment

I – Presentation

Article 708 – (1) The holder of a bill of exchange payable on a fixed day or at a fixed period after the date of drawing or after sight must present the bill of exchange for payment on the day of payment or within the two business days following it.

(2) The presentation of the bill of exchange to a clearing house is equivalent to presentation for payment.

II – Right to demand a receipt

Article 709 – (1) In paying the bill of exchange, the drawee may require that the bill of exchange be delivered to him with a discharge note written on it by the holder.

(2) The holder may not refuse partial payment.

(3) In the case of partial payment, the drawee may require that this payment be noted on the bill of exchange and that a receipt be given to him.

III – Payment before maturity and at maturity

Article 710 – (1) The holder of a bill of exchange is not obliged to accept payment before maturity.

(2) A drawee who pays before maturity does so at his own risk.

(3) Unless he is guilty of fraud or gross fault, a person who pays a bill of exchange at maturity is discharged from his debt. Although the payer is obliged to verify whether there is a regular series of endorsements, he is not obliged to verify the validity of the signatures of the endorsers.

IV – Payment in foreign currency

Article 711 – (1) Where it is stipulated that the bill of exchange is to be paid in a currency which is not current at the place of payment, its amount may be paid in the currency of that country according to its value on the day of maturity. If the debtor is in default of payment, the holder may, at his option, request that the amount of the bill of exchange be paid converted into the currency of the country at the rate of exchange either on the day of maturity or on the day of payment.

(2) The value of the currency that is not legal tender is determined according to the commercial usages of the place of payment. Nevertheless, the drawer may stipulate that the amount to be paid be computed according to a specified rate of exchange written in the bill of exchange.

(3) If the drawer has stipulated that payment be made in a specified currency (payment in kind), the provisions of the first and second paragraphs shall not apply.

(4) Where the amount of the bill of exchange is expressed in a currency which has the same name but a different value in the countries of drawing and payment, the currency of the place of payment is deemed to be meant.

V – Deposit

Article 712 – (1) Where a bill of exchange is not presented for payment within the period provided for in Article 708, the debtor may deposit the amount of the bill of exchange with a bank at the expense and risk of the holder.

SECTION FIVE

Rights of Recourse in Cases of Non-Acceptance and Non-Payment

A) Right of recourse

I – In general

Article 713 – (1) If the bill of exchange has not been paid at maturity, the holder may exercise recourse against the endorsers, the drawer and the other persons who have undertaken obligations by reason of the bill of exchange.

(2) The holder has the same right of recourse even before maturity if:

a) Acceptance has been refused wholly or partly,

b) The drawee, whether he has accepted the bill of exchange or not, has become bankrupt or, even if not established by a judgment, has merely suspended his payments, or any enforcement proceedings against him have proved fruitless, or

c) The drawer of a bill of exchange whose presentation for acceptance is prohibited has become bankrupt,

as set out above.

II – Protest

1. Periods and conditions

Article 714 – (1) Non-acceptance or non-payment must be established by an official document called a protest for non-acceptance or a protest for non-payment.

(2) The protest for non-acceptance must be drawn up within the period fixed for presentation for acceptance. If, in the case indicated in the first paragraph of Article 694, the first presentation of the bill of exchange took place on the last day of the period, the protest may also be drawn up on the following day.

(3) The protest for non-payment of a bill of exchange containing a stipulation that it is payable on a fixed day or at a fixed period after the date of drawing or after sight must be drawn up within the two business days following the day of payment. The protest for non-payment of a bill of exchange payable at sight is drawn up within the periods indicated in the second paragraph for the protest for non-acceptance.

(4) If a protest for non-acceptance has been drawn up, it is neither necessary to present the bill of exchange for payment nor to draw up a protest for non-payment.

(5) If the drawee, whether he has accepted the bill of exchange or not, has suspended his payments or any enforcement proceedings against him have proved fruitless, the holder may exercise his rights of recourse only after presentation of the bill of exchange to the drawee for payment and after the protest has been drawn up.

(6) If the drawee, whether he has accepted the bill of exchange or not, or the drawer of a bill of exchange whose presentation for acceptance is prohibited, has become bankrupt, the production of the bankruptcy judgment is sufficient for the exercise of the right of recourse.

2. Form

a) Drawing up by a notary

Article 715 – (1) The protest must be drawn up by a notary in the form and manner specified in Article 716.

b) Contents

Article 716 – (1) The protest contains:

a) The names or trade names of the person drawing up the protest and of the person against whom the protest is drawn up,

b) A note that the person against whom the protest is drawn up, although invited to perform his undertaking arising from the bill of exchange, has not performed his undertaking, could not be found, or that his place of business or residence could not be determined,

c) A note of the place and day on which the said invitation was made or the attempted invitation proved unsuccessful, and

d) The signature of the notary who drew up the protest,

as set out above.

(2) Partial payment shall be stated in the protest.

(3) If the drawee to whom a bill of exchange has been presented for acceptance has requested that it be presented again on the following day, this shall also be entered in the protest.

c) Protest document

Article 717 – (1) The protest is drawn up as a separate document and attached to the bill of exchange.

(2) If the protest has been drawn up upon presentation of several parts of the same bill of exchange or of the original of the bill of exchange and a copy, it is sufficient to attach the protest to one of these parts or to the original instrument.

(3) It shall be noted on the other parts or on the copy that the protest has been attached to one of the remaining parts or to the original of the bill of exchange.

d) In the case of partial acceptance

Article 718 – (1) Where acceptance has been confined to part of the amount of the bill of exchange and a protest is drawn up for this reason, a copy of the bill of exchange shall be made and the protest written on this copy.

e) Protest drawn up against more than one person

Article 719 – (1) If performance relating to the bill of exchange must be requested from more than one obligor, a single protest document shall be drawn up.

3. Obligation of safekeeping

Article 720 – (1) The notary who draws up the protest is obliged to keep a copy of the bill of exchange together with the protest document.

4. Defective protest

Article 721 – (1) A protest signed by the notary is valid even if it has not been drawn up in accordance with the law or the entries in it are incorrect.

(2) The disciplinary provisions concerning the notary are reserved.

5. Cases in which drawing up a protest is not required

Article 722 – (1) The drawer, an endorser or a giver of an aval may, by writing on the instrument and signing the clauses “without expenses” or “without protest” or any other equivalent expression, release the holder from the obligation to have a protest for non-acceptance or non-payment drawn up in order to exercise the right of recourse.

(2) This clause does not release the holder from the obligations to present the bill of exchange in due time and to give the required notices. The burden of proving that the periods have not been observed lies on the person who asserts it against the holder.

(3) If this clause has been written by the drawer, it is effective in respect of all those who have incurred obligations under the bill of exchange; if it has been written by an endorser or a giver of an aval, it applies only to him. If, despite the clause written by the drawer, the holder nevertheless has a protest drawn up, the expenses shall be borne by him.

(4) Where the clause has been inserted by an endorser or a giver of an aval, all those who have incurred obligations under the bill of exchange are obliged to reimburse the expenses entailed by a protest drawn up despite this clause.

III – Obligation to give notice

Article 723 – (1) The holder is obliged to give notice of non-acceptance or non-payment to his own endorser and to the drawer within the four business days following the day of protest or, if the bill of exchange contains the clause “without expenses”, the day of presentation.

(2) Each endorser shall notify his own endorser of the notice he has received within the two business days following the day on which he received it, also indicating the names and addresses of the persons who gave the previous notices. This sequence shall be followed until the drawer is reached. The periods begin to run from the date of receipt of the preceding notice.

(3) Where notice is given pursuant to the second paragraph to a person whose signature appears on the bill of exchange, the same notice must also be given within the same period to the giver of an aval for that person.

(4) If an endorser has not written his address at all or has written it illegibly, it is sufficient for the notice to be given to the endorser preceding him.

(5) The person who is to give notice may do so through a notary or simply by returning the bill of exchange.

(6) The person obliged to give notice is obliged to prove that he has done so within the specified period.

(7) A person who does not send the notice within the periods indicated in the first and second paragraphs does not lose his right of recourse but is liable for the damage arising from his negligence. However, the obligation to compensate for such damage is limited to the amount of the bill of exchange.

IV – Joint and several liability

Article 724 – (1) The persons who have drawn, accepted or endorsed a bill of exchange or given an aval on that bill of exchange are liable to the holder as joint and several debtors.

(2) The holder may exercise recourse against each of them, against some of them or against all of them together, without being bound by the order in which they incurred their obligations.

(3) Every person who has incurred an obligation under the bill of exchange and has paid the bill of exchange may exercise the same right.

(4) By exercising recourse against only one of the debtors, the holder does not lose his rights against the other debtors or against those who come after the debtor against whom he first exercised recourse.

V – Scope of the right of recourse

1. Right of the holder

Article 725 – (1) By way of recourse, the holder may claim:

a) The amount of the bill of exchange which has not been accepted or paid and, if stipulated, the accrued interest,

b) Interest running from maturity,

c) The expenses of the protest and of the notices served by the holder, and other expenses, and

d) A commission fee not exceeding three per thousand of the amount of the bill of exchange,

as set out above.

(2) If the right of recourse is exercised before maturity, a discount shall be made from the amount of the bill of exchange. This discount shall be computed according to the official discount rate applicable at the domicile of the holder on the date of recourse.

2. Right of the person who has paid

Article 726 – (1) A person who has paid the amount of the bill of exchange may claim from the debtors preceding him:

a) The entire amount he has paid,

b) Interest on this amount from the date of payment,

c) The expenses he has incurred, and

d) A commission fee not exceeding two per thousand of the amount of the bill of exchange,

as set out above.

VI – Receipt

1. In general

Article 727 – (1) A debtor against whom recourse is or may be exercised is entitled, upon paying the amount subject to recourse, to request that the bill of exchange and the protest document be delivered to him together with a receipt to be filled in separately.

(2) Every endorser who has paid the bill of exchange may cancel his own endorsement and the endorsements of the debtors coming after him.

2. In the case of partial acceptance

Article 728 – (1) Where the right of recourse is exercised after partial acceptance of the bill of exchange, the person who pays the unaccepted part of the amount of the bill of exchange may request that the payment be noted on the bill of exchange and that a receipt be given to him in this respect. In addition, the holder is obliged to give him a certified copy each of the bill of exchange and of the protest so that he may subsequently exercise his rights of recourse against the others.

VII – Redraft

Article 729 – (1) Unless otherwise stipulated in the bill of exchange, every person having a right of recourse may exercise recourse by means of a new bill of exchange, called a “redraft”, which he draws on one of the debtors preceding him and which is payable at sight at the domicile of that person.

(2) The redraft includes, in addition to the sums indicated in Articles 725 and 726, a commission fee.

(3) If the redraft is drawn by the holder, its amount is determined according to the current rate for a bill of exchange payable at sight drawn from the place where the bill of exchange is payable on the place of the domicile of the preceding debtor. If the redraft is drawn by an endorser, its amount is determined according to the current rate for a bill of exchange payable at sight drawn from the domicile of the person drawing the redraft on the place of the domicile of the preceding debtor.

VIII – Loss of the right of recourse

1. In general

Article 730 – (1) If the holder allows the periods specified for:

a) Presentation of a bill of exchange payable at sight or at a fixed period after sight,

b) Drawing up the protest for non-acceptance or non-payment,

c) Presentation of the bill of exchange for payment where it contains the clause “to be returned without expenses”,

to expire, he loses the rights he has against the endorsers, the drawer and the other debtors, with the exception of the acceptor.

(2) If the holder does not observe the period given by the drawer for presentation for acceptance, he loses his rights of recourse for non-acceptance and non-payment; unless it appears from the clause that the drawer intended only to exclude his liability for acceptance.

(3) If a period for presentation has been stipulated in an endorsement, only the endorser may rely on this period.

2. Force majeure

Article 731 – (1) If presentation of the bill of exchange or the drawing up of the protest within the periods specified by law could not be effected due to an insurmountable obstacle such as the legislation of a State or any force majeure, the periods specified for these acts shall be extended.

(2) The holder is obliged to notify the person preceding him of the force majeure without delay and to record this notice on the bill of exchange or on the allonge, adding the date, the place and his signature. Apart from this, the provisions of Article 723 shall apply.

(3) After the force majeure has ceased, the holder must present the bill of exchange for acceptance or payment without delay and, where necessary, have a protest drawn up.

(4) If the force majeure lasts for more than thirty days from maturity, the right of recourse may be exercised without the need for presentation of the bill of exchange or for drawing up a protest.

(5) For bills of exchange payable at sight or at a fixed period after sight, the thirty-day period runs from the date on which the holder notified his own endorser of the force majeure. This notice may also be given before the expiry of the period for presentation. For bills of exchange payable at a fixed period after sight, the thirty-day period is extended by the period indicated in the bill of exchange.

(6) Events that are purely personal to the holder or to the person whom he has charged with presenting the bill of exchange or drawing up the protest are not deemed force majeure.

B) Unjust enrichment

Article 732 – (1) Even if the obligations of the drawer or the acceptor arising from the bill of exchange have lapsed by reason of limitation or by reason of the neglect to perform the acts required for the preservation of the rights arising from the bill of exchange, they remain liable to the holder of the bill of exchange to the extent that they may have been enriched to his detriment.

(2) The claim arising from unjust enrichment may also be asserted against the drawee, against the person who is to pay a domiciled bill of exchange and, where the drawer has drawn the bill of exchange for the account of another person or commercial enterprise, against that person or commercial enterprise.

(3) No such claim may be asserted against an endorser whose obligation arising from the bill of exchange has lapsed.

(4) The limitation period is one year from the date following the date on which the bill of exchange became time-barred; the burden of proof lies on the person who claims that he has not been unjustly enriched.

C) Transfer of the provision for the bill of exchange

Article 733 – (1) Upon the opening of bankruptcy against the drawer, the drawer’s right of claim against the drawee, arising from a legal relationship other than the bill of exchange relationship, for the return of the provision for the bill of exchange or of other sums which the drawer has credited to the account of the drawee, passes to the holder of the bill of exchange.

(2) Where the drawer declares in the bill of exchange that he has transferred the rights he has by reason of the provision relationship, these rights belong to whoever is the holder of the bill of exchange.

(3) After the opening of bankruptcy has been announced or after the transfer has been notified to him, the drawee may make payment only to the holder who duly proves his right, and only against return of the bill of exchange.

D) Intervention

I – General provisions

Article 734 – (1) The drawer and each of the endorsers or givers of an aval may indicate a person who is to accept or pay the bill of exchange in case of need.

(2) Subject to the conditions set out below, the bill of exchange may be accepted or paid by a person who intervenes for any debtor against whom recourse may be exercised by reason of the bill of exchange.

(3) Any third person, including the drawee, or any person already liable under the bill of exchange, with the exception of the acceptor, may intervene and accept the bill of exchange or pay its amount.

(4) The person who accepts or pays by way of intervention is obliged to notify the debtor for whom he has intervened of the situation within two business days. If he does not observe this period, he is liable, up to an amount not exceeding the amount of the bill of exchange, for the damage arising from his failure to give notice.

II – Acceptance by intervention

1. Conditions, position of the holder

Article 735 – (1) Before maturity, in all cases in which the holder may exercise the right of recourse, the bill of exchange may be accepted by intervention; unless it is a bill of exchange whose presentation for acceptance has been prohibited.

(2) Where a person who is to accept or pay the bill of exchange in case of need at the place of payment is indicated in the bill of exchange, the holder may not exercise the right of recourse before maturity against the person who indicated that person and against the debtors coming after him, unless he has presented the bill of exchange to that person and, in the event of refusal of acceptance by intervention, has had the refusal established by a protest.

(3) In other cases of intervention, the holder may refuse acceptance by intervention; however, if he permits it, he may not exercise his rights of recourse before maturity against the person for whom acceptance by intervention was given and against the debtors coming after him.

2. Form

Article 736 – (1) Acceptance by intervention is written on the bill of exchange and signed by the intervening person. The declaration of acceptance shall indicate for whom the intervention was made; if this is not indicated, the acceptance is deemed to have been given for the drawer.

3. Liability of the acceptor by intervention

Article 737 – (1) The acceptor by intervention is liable to the holder and to the debtors coming after the person for whom he intervened in the same manner as the person for whom he intervened.

(2) Notwithstanding acceptance by intervention, the person for whom the acceptance was given and the debtors preceding him may, on condition that they pay the amount indicated in Article 725, request from the holder the delivery of the bill of exchange, of the protest document, if any, and of a receipt.

III – Payment by intervention

1. Conditions

Article 738 – (1) Payment by intervention may be made in all cases in which the holder may exercise his rights of recourse at maturity or before maturity.

(2) Payment by intervention covers the entire amount which the person for whom payment is made would be obliged to pay.

(3) This payment must be made at the latest on the day following the last day specified for drawing up the protest for non-payment.

2. Holder’s obligation of presentation

Article 739 – (1) If the bill of exchange has been accepted by intervention by persons whose domiciles are in the place of payment, or if persons whose domiciles are in the place of payment have been indicated to pay in case of need, the holder is obliged to present the bill of exchange to all these persons at the latest on the day following the day on which the period specified for drawing up the protest for non-payment expires and, in the event of refusal of payment by intervention, to have a protest drawn up where necessary.

(2) If the protest has not been drawn up in due time, the person who indicated the person to pay in case of need or for whom the bill of exchange was accepted by intervention, and the debtors coming after them, are released from liability.

3. Consequence of refusal

Article 740 – (1) A holder who refuses payment made to him by intervention loses his rights of recourse against the persons who would have been discharged from the debt had payment been made.

4. Receipt

Article 741 – (1) When the bill of exchange is paid by intervention, a note in the nature of a receipt shall be written on the bill of exchange, indicating the person for whom the payment was made. If it is not indicated for whom payment was made, the payment is deemed to have been made for the drawer.

(2) The bill of exchange and the protest, if any, must be delivered to the person who has made payment by intervention.

5. Transfer of rights, case of more than one intervener

Article 742 – (1) The person who makes payment by intervention acquires the rights arising from the bill of exchange against the person for whom he has paid and against the persons liable to that person under the bill of exchange. However, he may not endorse the bill of exchange again.

(2) The debtors coming after the person for whom payment has been made are discharged from the debt.

(3) If several offers of payment by intervention have been made, the one which will discharge the greatest number of debtors shall be preferred. A person who makes payment by intervention knowing that a better offer exists loses his right of recourse against those who would have been discharged from the debt had the best offer been preferred.

SECTION SIX

Parts and Copies of the Bill of Exchange

A) Parts of the bill of exchange

I – Right to request

Article 743 – (1) A bill of exchange may be drawn in more than one part, each identical with the others.

(2) These parts shall bear consecutive serial numbers. The numbers shall be written in the text. Otherwise, each of the parts shall be treated as a separate bill of exchange.

(3) The holder of a bill of exchange which does not contain a clause stating that it has been drawn as a sole part may request, at his own expense, that more than one part be delivered to him. Where the holder applies for this purpose to his own endorser, the holder’s endorser and the earlier endorsers are obliged to apply in turn to one another, and the first endorser to the drawer. In addition, the endorsers must rewrite their endorsements on the new parts.

II – Relationship between the parts

Article 744 – (1) Even if the bill of exchange does not contain a clause stating that payment made on one of its parts renders the other parts void, payment made on one of the parts extinguishes the rights arising from all the parts. However, the drawee remains liable on each part that contains his acceptance and has not been returned to him.

(2) An endorser who has transferred several parts to different persons, and the debtors coming after him, are liable on all the parts which bear their signatures and have not been returned.

III – Acceptance note

Article 745 – (1) A person who sends one of the parts for acceptance is obliged to write on the other parts the name of the person holding that part. The person holding the part sent for acceptance is obliged to deliver it to the lawful holder of another part.

(2) If he refuses delivery, the holder may exercise his right of recourse only if he has had the following matters established by a protest:

a) That the part sent for acceptance has not been delivered to him despite his request,

b) That acceptance or payment could not be obtained on the other part either,

as set out above.

B) Copies of the bill of exchange

I – Form and effects

Article 746 – (1) Every holder of a bill of exchange has the right to make copies of the bill of exchange.

(2) The copy must reproduce the original of the instrument exactly, together with the endorsements and all other entries appearing on the bill of exchange, and must indicate where it ends.

(3) The copy may be endorsed and may be the subject of an aval undertaking in the same manner and with the same effects as the original.

II – Delivery of the original instrument

Article 747 – (1) The copy must indicate in whose hands the original instrument is. The person holding the original instrument is obliged to deliver it to the lawful holder of the copy.

(2) In the event of refusal of delivery, the holder may exercise his rights of recourse against the endorsers of the copy and the persons who have given an aval on the copy only if he has had it established by a protest that the original instrument has not been delivered to him despite his request.

(3) If the original instrument contains, after the last endorsement written on the original before the copy was made, the clause “from here onwards only endorsements written on the copy are valid” or a similar clause, endorsements subsequently written on the original instrument are invalid.

SECTION SEVEN

Miscellaneous Provisions

A) Alterations to the text of the instrument

Article 748 – (1) Where the text of a bill of exchange has been altered, the persons who signed the bill of exchange after the alteration are liable according to the altered text, and those who signed before it according to the original text.

B) Limitation

I – Periods

Article 749 – (1) Claims arising from the bill of exchange to be asserted against the acceptor become time-barred upon the expiry of three years from the date of maturity.

(2) Claims of the holder to be asserted against the endorsers and the drawer become time-barred upon the expiry of one year from the date of a protest drawn up in due time or, if the instrument contains the clause “to be returned without expenses”, from the date of maturity.

(3) Claims of an endorser to be asserted against other endorsers and the drawer become time-barred upon the expiry of six months from the date on which the endorser paid the bill of exchange or on which the bill of exchange was asserted against him by way of action.

II – Interruption

1. Grounds

Article 750 – (1) Limitation is interrupted by the bringing of an action, the filing of a request for enforcement proceedings, the third-party notice of the action, or the lodging of the claim with the bankruptcy estate.

2. Effects

Article 751 – (1) An act interrupting limitation has effect only against the person in respect of whom it occurred.

(2) When limitation is interrupted, a new limitation period of the same duration begins to run.

C) Periods

1. Holidays

Article 752 – (1) Payment of a bill of exchange whose maturity falls on a Sunday or another official holiday may be demanded only on the first business day following the holiday. All other acts relating to the bill of exchange, in particular presentation for acceptance and protest, may likewise not be performed on a holiday but only on a business day.

(2) Where one of these acts must be performed within a period whose last day falls on a Sunday or another official holiday, this period is extended until the first business day following it. Intervening holidays are included in the computation of the period.

2. Computation of the period

Article 753 – (1) In computing the periods indicated in this Part of the Code or in the bill of exchange, the day on which they begin shall not be counted.

3. Days of grace

Article 754 – (1) No legal or judicial days of grace are valid for bills of exchange.

D) Place where acts relating to the bill of exchange are to be performed

Article 755 – (1) All acts to be performed with respect to a specific person, such as presenting the bill of exchange for acceptance or payment, drawing up a protest or requesting the delivery of a part of the bill of exchange, must be performed at the place of business of that person or, if he has no such place, at his residence.

(2) The location of the place of business or residence shall be carefully investigated. If no result is obtained from the information obtained from the police or the local postal administration, no further investigation is necessary.

E) Signatures

Article 756 – (1) Declarations on the bill of exchange must be signed by hand.

(2) Instead of a handwritten signature, no mechanical means of any kind, no mark made by hand or certified, and no official certificate may be used.

F) Cancellation

I – Preventive measures

Article 757 – (1) A person who has been dispossessed of a bill of exchange against his will may request the commercial court of first instance of the place of payment or of the domicile of the holder to prohibit the drawee from paying the bill of exchange.

(2) In its decision prohibiting payment, the court shall authorise the drawee to deposit the amount of the bill of exchange upon maturity and shall indicate the place of deposit.

II – Where the person who has obtained the bill of exchange is known

Article 758 – (1) Where the person who has obtained the bill of exchange is known, the court shall give the petitioner an appropriate period within which to bring an action for its return.

(2) If the petitioner does not bring the action within the period given, the court shall lift the prohibition of payment against the drawee.

III – Where the person who has obtained the bill of exchange is unknown

1. Obligations of the petitioner

Article 759 – (1) If the person who has obtained the bill of exchange is unknown, it may be requested that the cancellation of the bill of exchange be decided.

(2) The person requesting cancellation is obliged to provide the court with evidence showing credibly that the bill of exchange was lost while in his possession, and to produce a copy of the instrument or provide information on the essential content of the instrument.

2. Warning

a) Content

Article 760 – (1) If the court finds credible the petitioner’s explanations that the bill of exchange was lost while in his possession, it shall, by an announcement to be made, invite the person who has obtained the bill of exchange to produce the bill of exchange within a specified period and warn him that, failing this, it will decide on the cancellation of the bill of exchange.

b) Periods

Article 761 – (1) The period for producing the bill of exchange is not less than three months and not more than one year.

(2) In the case of bills of exchange that have fallen due, if limitation would occur before the expiry of three months, the court is not bound by the three-month period.

(3) The period runs, for bills of exchange that have fallen due, from the day of the first announcement and, for bills of exchange that have not fallen due, from maturity.

c) Announcement

Article 762 – (1) The announcement concerning the production of the bill of exchange shall be made three times in the gazette referred to in Article 35.

(2) In cases showing special features, the court may also resort to such other announcement measures as it deems appropriate.

IV – Action for return

Article 763 – (1) If the lost bill of exchange is submitted to the court, the court shall give the petitioner an appropriate period within which to bring an action for its return. If the petitioner does not bring an action within this period, the court shall return the bill of exchange to the person who submitted it and lift the prohibition of payment against the drawee.

V – Cancellation decision

Article 764 – (1) If the lost bill of exchange is not submitted to the court within the period given, its cancellation shall be decided.

(2) Notwithstanding the decision cancelling the bill of exchange, the petitioner may assert his claim arising from the bill of exchange against the acceptor.

VI – Security

Article 765 – (1) Before deciding on cancellation, the court may impose on the acceptor the obligation to deposit the amount of the bill of exchange and to pay it against adequate security.

(2) The security constitutes cover for the damage which a person who acquired the bill of exchange in good faith may suffer. Where the instrument is cancelled or the rights arising from the instrument are extinguished for another reason, the security shall be returned.

SECTION EIGHT

Conflict of Laws

A) Capacity

Article 766 – (1) The capacity required for a person to incur obligations by bill of exchange is determined according to the law of the State to which he is subject. If this law refers to the law of another country, that law shall apply.

(2) A person who lacks capacity under the law provided for in the first paragraph is validly bound, as he would be there, if he has signed in a country under whose law he is deemed to have capacity.

B) Form and periods

I – In general

Article 767 – (1) The form of obligations incurred by bill of exchange is subject to the law of the country in which these obligations were signed.

(2) If an obligation relating to a bill of exchange is not valid as to form under the law of the country in which it was incurred, but is found valid under the law of the country in which a subsequent obligation relating to the same bill of exchange was incurred, the formal invalidity of the first obligation does not affect the validity of the subsequent obligation.

(3) An obligation incurred by a Turk by bill of exchange in a foreign country is valid in Türkiye against another Turk if it complies with the form prescribed by Turkish law.

II – Acts relating to the exercise and preservation of rights

Article 768 – (1) The form of the protest and the periods specified for drawing up the protest, as well as the form of other acts necessary for the exercise or preservation of the rights arising from the bill of exchange, are determined according to the law of the country in which the protest must be drawn up or the act must be performed.

III – Right of recourse

Article 769 – (1) The periods to be observed for the exercise of rights of recourse are determined, for all debtors under the bill of exchange, according to the law in force at the place where the bill of exchange was drawn.

C) Effects of obligations

I – In general

Article 770 – (1) The consequences arising from the obligations of the acceptor of a bill of exchange are determined according to the law of the place of payment.

(2) The consequences arising from the obligations of the other debtors under the instrument are subject to the law of the country in which those obligations were signed.

II – Partial acceptance and payment

Article 771 – (1) Whether acceptance may be confined to part of the amount of the bill of exchange and whether the holder is obliged to accept partial payment is subject to the law of the place of payment.

III – Payment

Article 772 – (1) Payment at maturity, in particular the calculation of the day of maturity and of the date of payment, and the payment of bills of exchange whose amount is expressed in the currency of a foreign country, shall be determined according to the law of the country in which the bill of exchange is to be paid.

IV – Rights arising from unjust enrichment

Article 773 – (1) Claims arising from unjust enrichment against the drawee, against the third party who is to pay a domiciled bill of exchange, and against the person or commercial enterprise for whose account the drawer has drawn the bill of exchange shall be determined according to the law of the country in which the domiciles of these persons are located.

V – Passing of the funds (provision) to the holder

Article 774 – (1) Whether the holder of a bill of exchange acquires the claim which gave rise to the drawing of the instrument shall be determined by the law of the place where the instrument was drawn.

VI – Cancellation decision

Article 775 – (1) The measures to be taken in the event of the loss or theft of a bill of exchange shall be determined by the law of the place of payment.

CHAPTER TWO

Promissory Note or Instrument to Order

A) Elements

Article 776 – (1) A promissory note or instrument to order;

a) In the text of the instrument, the word “promissory note” or “instrument to order” and, if the instrument is written in a language other than Turkish, the word used in that language as the equivalent of promissory note or instrument to order,

b) An unconditional and unqualified promise to pay a specified sum,

c) The maturity,

d) The place of payment,

e) The name of the person to whom or to whose order payment is to be made,

f) The date and place of issue,

g) The signature of the issuer,

contains the above.

B) Absence of elements

Article 777 – (1) Without prejudice to the cases set out in the second to fourth paragraphs, an instrument which does not contain one of the elements indicated in Article 776 shall not be deemed a promissory note.

(2) A promissory note in which the maturity is not indicated shall be deemed a promissory note payable at sight.

(3) In the absence of a specific indication, the place where the instrument was issued shall be deemed to be the place of payment and at the same time the domicile of the issuer.

(4) A promissory note which does not indicate the place where it was issued shall be deemed to have been issued at the place written beside the name of the issuer.

C) Applicable provisions

Article 778 – (1) Insofar as they are not incompatible with the nature of the promissory note, the provisions of the following articles:

a) Articles 681 to 690 relating to the endorsement of bills of exchange,

b) Articles 703 to 707 concerning maturity,

c) Articles 708 to 712 concerning payment,

d) Articles 713 to 727 and 729 to 732 concerning rights of recourse in the event of non-payment,

e) Articles 734 and 738 to 742 relating to payment by intervention,

f) Articles 746 and 747 concerning copies,

g) Article 748 concerning alterations,

h) Articles 749 to 751 concerning the statute of limitations,

ı) Articles 757 to 765 concerning cancellation,

i) Articles 752 to 756 concerning holidays, the calculation of time limits, the prohibition of days of grace, the place where acts relating to the bill of exchange must be performed, and signature,

j) Articles 766 to 775 concerning conflict of laws,

shall also apply to promissory notes.

(2) Furthermore, the provisions of:

a) Articles 674 and 697 relating to a bill of exchange payable at the domicile of a third party or at a place other than the domicile of the drawee,

b) Article 675 concerning the interest clause,

c) Article 676 concerning various statements as to the sum to be paid,

d) Article 677 relating to the consequences of an invalid signature,

e) Articles 678 and 679 relating to the signature of a person acting without authority or exceeding his authority,

f) Article 680 concerning the blank bill of exchange,

shall also apply to promissory notes.

(3) Articles 700 to 702 relating to the aval shall also apply to promissory notes.

(4) In the case provided for in the fourth paragraph of Article 701, if the aval does not indicate for whose account it has been given, it shall be deemed to have been given for the account of the issuer of the promissory note.

D) Liability of the issuer

Article 779 – (1) The issuer of a promissory note is liable in the same manner as the acceptor of a bill of exchange.

(2) Promissory notes payable at a specified time after sight must be presented to the issuer within the periods set out in Article 693.

(3) The issuer confirms that the promissory note has been presented to him by indicating the day of presentation on the promissory note and affixing his signature. The period begins to run from the date of the presentation entry. If the issuer refuses to confirm, by indicating the day, that the promissory note has been presented to him, this shall be established by a protest. In this case, the period begins to run from the day of the protest.

CHAPTER THREE

Cheque

SECTION ONE

Drawing and Form of Cheques

A) Form

I – Elements

Article 780 – (1) A cheque;

a) In the text of the instrument, the word “cheque” and, if the instrument is written in a language other than Turkish, the word used in that language as the equivalent of “cheque”,

b) An unconditional and unqualified order to pay a specified sum,

c) The trade name of the person who is to pay, the “drawee”,

d) The place of payment,

e) The date and place of issue,

f) The signature of the drawer,

g) (Added: 15/7/2016-6728/70 art.) The serial number assigned by the bank,

h) (Added: 15/7/2016-6728/70 art.) The QR code,

contains the above.

(2) (Added paragraph: 15/7/2016-6728/70 art.) Cheque creditors may, by means of the QR code, access the data relating to the cheque account holder and to the drawers of the cheque in their possession. By means of the QR code, the following:

a) The name and surname or trade name of the cheque account holder,

b) Where the cheque account holder is a merchant, the names and surnames or trade names of its authorised representatives registered in the trade registry,

c) The total number of banks at which the cheque account holder has a cheque account,

d) The number and amount of the cheques of the cheque account holder not yet presented to the banks,

e) The number and amount of the cheques drawn and delivered to the banks,

f) The number and amount of the cheques paid upon presentation within the last five years,

g) The date of presentation of the first cheque presented,

h) The date of presentation of the last cheque presented,

ı) The date of presentation of the last cheque paid upon presentation,

i) The number and amounts of the cheques which, within the last five years, were subjected to the “dishonoured for lack of funds” procedure and are still unpaid,

j) The number and amount of the cheques which, within the last five years, were subjected to the “dishonoured for lack of funds” procedure and were subsequently paid,

k) The date of presentation of the last cheque which, within the last five years, was subjected to the “dishonoured for lack of funds” procedure,

l) Whether there is a prohibition on opening a cheque account in respect of the cheque account holder and, if so, the date of the prohibition decision,

m) Whether there is an interim-measure entry in respect of each cheque leaf,

n) If the cheque account holder is a merchant, whether his bankruptcy has been decided and, if so, the date of the decision,

shall be made available to third parties without the consent of the cheque account holder or of the endorser being sought.

(3) (Added paragraph: 15/7/2016-6728/70 art.) The QR code scanning and information-sharing system that will enable access to the data specified in the second paragraph shall be established by the Risk Centre of the Banks Association of Türkiye, established pursuant to the provision of additional Article 1 of Law No. 5411. The Risk Centre is authorised to share the data in the system with the company with which it carries out the exchange of information pursuant to the eleventh paragraph of additional Article 1 of Law No. 5411. Where this authority is exercised, the system may be set up at the company with which the information is shared.

(4) (Added paragraph: 15/7/2016-6728/70 art.) The definitions and contents of the MERSİS number and of the QR code to be included on the cheque, as well as the procedures and principles concerning the implementation of this article, shall be determined by a communiqué to be issued jointly by the Ministry of Customs and Trade and the Undersecretariat of Treasury.

II – Absence of elements

Article 781 – (1) An instrument which does not contain one of the elements indicated in Article 780 shall not be deemed a cheque, except in the cases set out in the second, third and fourth paragraphs.⁹⁸

(2) In the absence of a specific indication in the cheque, the place indicated beside the trade name of the drawee shall be deemed to be the place of payment. If more than one place is indicated beside the trade name of the drawee, the cheque shall be payable at the place first indicated. If there is no such indication and no other entry, the cheque shall be payable at the place where the head office of the drawee is located.

(3) A cheque in which the place of issue is not indicated shall be deemed to have been issued at the place written beside the name of the drawer.

(4) (Added: 15/7/2016-6728/71 art.) In cheques printed by a foreign bank, the absence of the serial number assigned by the bank specified in subparagraph (g), and/or of the QR code specified in subparagraph (h), of the first paragraph of Article 780 does not affect the validity of the instrument as a cheque.

B) Individual elements

I – Drawee

1. Capacity to be a drawee

Article 782 – (1) In cheques payable in Türkiye, the drawee may only be a bank.

(2) A cheque drawn on any other person shall have effect only as an order to pay (assignment).

2. Funds (provision)

Article 783 – (1) For a cheque to be drawn, it is required that the drawee holds funds allocated to the order of the drawer and that there exists an express or tacit agreement between the drawee and the drawer according to which the drawer is entitled to dispose of these funds by drawing cheques. However, non-compliance with these provisions does not affect the validity of the instrument as a cheque.

(2) Where the drawer holds available with the drawee funds covering only part of the cheque, the drawee is obliged to pay that amount.

(3) A person who draws a cheque for which there are wholly or partly no funds with the drawee is, in addition to being obliged to pay ten per cent of the amount of the cheque left uncovered, also obliged to compensate the loss suffered by the holder as a result.

II – Prohibition of acceptance

Article 784 – (1) A cheque may not be accepted. An acceptance entry written on a cheque shall be deemed not to have been written.

III – In whose favour it may be drawn

Article 785 – (1) A cheque may be drawn

a) To a specified person, with or without the clause “to order”,

b) To a specified person, with the clause “not to order” or a similar clause,

c) Or to bearer,

so as to be paid.

(2) A cheque drawn in favour of a specified person with the addition of the words “or bearer” or another similar expression shall be deemed a bearer cheque.

(3) A cheque which does not indicate in whose favour it has been drawn has the effect of a bearer cheque.

IV – Interest clause

Article 786 – (1) Any interest clause provided for in a cheque shall be deemed not to have been written.

V – Cheque payable at an address and domiciled cheque

Article 787 – (1) A cheque may be drawn payable at the domicile of the drawee or at another place with a third party. However, this third party must be a bank.

SECTION TWO

Transfer

A) Transferability

Article 788 – (1) A cheque made payable to a specified person, whether or not expressly with the clause “to order”, may be transferred by endorsement and by transfer of possession.

(2) A cheque made payable to a specified person with the clause “not to order” or a similar clause may be transferred only by assignment of the claim. This transfer produces the legal consequences of an assignment of the claim.

(3) Endorsement may also be made in favour of the drawer or of any of the persons liable under the cheque. These persons may endorse the cheque again.

B) Endorsement

I – In general

Article 789 – (1) The endorsement must be unconditional and unqualified. If the endorsement has been made subject to conditions, these shall be deemed not to have been written.

(2) A partial endorsement and an endorsement by the drawee are null and void.

(3) An endorsement to bearer has the effect of a blank endorsement.

(4) An endorsement in favour of the drawee has effect only as a receipt; unless the drawee has more than one branch and the endorsement has been written in favour of a branch other than the branch on which the cheque is drawn.

II – Duty to prove entitlement

Article 790 – (1) A person in possession of an endorsable cheque shall be deemed to be the lawful holder if his right is established by an uninterrupted and interconnected series of endorsements, even if the last endorsement is a blank endorsement. Endorsements that have been struck out shall be deemed not to have been written. If a blank endorsement is followed by another endorsement, the person who signed this last endorsement shall be deemed to have acquired the cheque by the blank endorsement.

III – Endorsement on a bearer cheque

Article 791 – (1) An endorsement made on a bearer cheque, although it renders the endorser liable in accordance with the provisions on the right of recourse, does not change the nature of the instrument so as to turn it into a cheque to order.

C) Cheque that has left the holder’s possession

Article 792 – (1) Where a cheque has, in any manner whatsoever, left the possession of the holder, whether it is a bearer cheque or a cheque transferable by endorsement and the holder establishes his right in accordance with Article 790, the new holder into whose hands the cheque has come is obliged to return that cheque only if he acquired the cheque in bad faith or was guilty of gross fault in acquiring it.

D) Endorsement after protest and after expiry of the period for presentation

Article 793 – (1) An endorsement made after the drawing up of a protest or of an equivalent determination, or after the expiry of the period for presentation, produces only the consequences of an assignment of the claim.

(2) It shall be presumed, until the contrary is proved, that an undated endorsement was made before the protest or the equivalent determination or before the expiry of the period for presentation.

SECTION THREE

Payment and Non-Payment

A) Payment

I – Aval

Article 794 – (1) Payment of the amount written on a cheque may be guaranteed, in whole or in part, by an aval.

(2) This guarantee may be given by a third party, other than the drawee, or also by a person whose signature appears on the cheque.

II – Maturity

Article 795 – (1) A cheque is payable at sight. Any entry to the contrary shall be deemed not to have been written.

(2) A cheque presented for payment before the day indicated as the day of issue is payable on the day of presentation.

III – Presentation for payment

1. In general

Article 796 – (1) A cheque must be presented to the drawee within ten days if it is payable at the place where it was issued, and within one month if it is payable at a place other than the place where it was issued.

(2) A cheque issued in a country other than the country in which it is payable must be presented to the drawee within one month if the place of issue and the place of payment are on the same continent, and within three months if they are on different continents. In this respect, cheques issued in a European country and payable in a country bordering the Mediterranean, and likewise cheques issued in a country bordering the Mediterranean and payable in a European country, shall be deemed to have been issued and made payable on the same continent.

(3) The periods set out in the first and second paragraphs begin on the day following the date of issue written on the cheque.

2. Difference of calendar

Article 797 – (1) Where a cheque is drawn between two places having different calendars, the day of issue shall be converted into the corresponding day of the calendar of the place of payment.

3. Clearing house

Article 798 – (1) Presentation of a cheque to a clearing house is equivalent to presentation for payment.

IV – Revocation of the cheque

1. In general

Article 799 – (1) Revocation of a cheque takes effect only after the expiry of the period for presentation.

(2) If the cheque has not been revoked, the drawee may pay the cheque even after the expiry of the period for presentation.

2. Special cases

Article 800 – (1) The death of the drawer, his loss of capacity to exercise civil rights or his bankruptcy after the cheque has been put into circulation does not affect the validity of the cheque.

V – Examination of endorsements

Article 801 – (1) The drawee who pays an endorsable cheque, although obliged to examine whether there is a regular series of endorsements, is not bound to verify the validity of the signatures of the endorsers.

VI – Cheque payable in foreign currency

Article 802 – (1) If a cheque is made payable in a currency which is not current at the place of payment, its amount may be paid in the currency of that country according to the value of the cheque on the day of presentation. If it is not paid despite having been presented, the holder may, at his option, demand that the amount of the cheque be paid in the currency of the country according to the current rate on either the day of presentation or the day of payment.

(2) The value of the foreign currency shall be determined according to the commercial usages of the place of payment. Nevertheless, the drawer may stipulate that the amount to be paid shall be calculated according to a specified rate written on the cheque.

(3) If the drawer has stipulated that payment shall be made in a specified currency (payment in kind), the provisions of the first and second paragraphs shall not apply.

(4) Where the amount of the cheque is expressed in a currency which has the same name but a different value in the countries of issue and of payment, the currency of the place of payment shall be deemed to be meant.

VII – Crossed cheque

1. Form and conditions

Article 803 – (1) The drawer or the holder of a cheque may cross it with the effects set out in Article 804.

(2) A cheque is crossed by drawing two parallel lines on its face. The cheque may be crossed generally or specially.

(3) If no expression has been placed between the two lines, or the word “bank” or a similar expression has been placed there, the cheque is crossed generally.

(4) If the trade name of a specified bank has been written between the two lines, the cheque is crossed specially.

(5) A general crossing may be converted into a special crossing; a special crossing may not be converted into a general crossing.

(6) The deletion of the crossing or of the trade name of the bank named shall be deemed null and void.

2. Effects

Article 804 – (1) A generally crossed cheque may be paid by the drawee only to a bank or to a customer of the drawee.

(2) A specially crossed cheque may be paid by the drawee only to the bank whose trade name is indicated or, if that bank is the drawee, to its customer. The bank whose trade name is indicated may entrust the collection of the amount to another bank.

(3) A bank may acquire a crossed cheque only from its customers or from another bank. Likewise, it may not collect it for the account of persons other than those mentioned.

(4) If a cheque bears more than one special crossing, the drawee may pay the cheque only if it has not been crossed more than twice and one of the crossings has been made for the purpose of enabling the cheque to be collected through a clearing house.

(5) A drawee or bank acting contrary to the first to fourth paragraphs is liable for the resulting loss, up to an amount not exceeding the amount of the cheque.

VIII – Cheque drawn for credit to an account

1. In general

Article 805 – (1) The drawer or the holder of a cheque may prevent the cheque from being paid in cash by writing on its face the clause “to be credited to account” or a similar expression. In this case, the cheque may be paid by the drawee only by book entry, by means of crediting an account, clearing or account transfer. These entries are equivalent to payment.

(2) The striking out of the clause “to be credited to account” is invalid.

(3) A drawee acting contrary to the first and second paragraphs is liable for the loss, up to an amount not exceeding the amount of the cheque.

2. Rights of the holder

a) In the event of bankruptcy

Article 806 – (1) The holder of a cheque drawn for credit to an account may, if the drawee has gone bankrupt or has suspended its payments, even if this has not been established by a court judgment, or if any enforcement proceedings brought against it have proved fruitless, demand from the drawee payment of the amount of the cheque in cash, and may also exercise the right of recourse in the event of non-payment.

b) In the event of not being credited to account

Article 807 – (1) The holder of a cheque drawn for credit to an account may exercise his rights of recourse if he proves that the drawee has refused to credit the amount of the cheque to the account as an unconditional and unqualified claim, or that the clearing house of the place of payment has declared that this cheque is not capable of being set off against the debts of the holder.

B) Non-payment

I – Rights of recourse of the holder

Article 808 – (1) If the fact that a cheque presented in due time has not been paid, and the non-payment, is established:

a) By an official document, a “protest”,

b) By a dated declaration written on the cheque by the drawee, also indicating the day of presentation,

c) By a dated declaration of a clearing house establishing that the cheque, although delivered in due time, has not been paid,

the holder may exercise his rights of recourse against the endorsers, the drawer and the other cheque obligors.

II – Protest

Article 809 – (1) The protest or the equivalent determination must be made before the expiry of the period for presentation.

(2) If presentation is made on the last day of the period, the protest or the equivalent determination may also be made on the following business day.

III – Scope of the right of recourse

Article 810 – (1) By way of recourse, the holder

a) The unpaid amount of the cheque,

b) Interest on this amount from the day of presentation,

c) The expenses of the protest or of the equivalent determination and of the notices sent, and other expenses, and

d) A commission not exceeding three per thousand of the amount of the cheque,

may demand.

IV – Force majeure

Article 811 – (1) If the presentation of a cheque, or the drawing up of a protest or the making of an equivalent determination, within the periods fixed by law could not be carried out because of an insurmountable obstacle, such as the legislation of a State or any other case of force majeure, the periods fixed for these acts shall be extended.

(2) The holder is obliged to give notice of the force majeure without delay to his own endorser and to record this notice on the cheque or on the allonge, writing the place and date beneath it and signing it. The provisions of Article 723 shall also apply here.

(3) After the force majeure has ceased, the holder is obliged to present the cheque for payment without delay and, where necessary, to have a protest or an equivalent determination made.

(4) If the force majeure, provided that it occurred before the expiry of the period for presentation, continues for more than fifteen days from the day on which the holder gave notice of it to the obligor preceding him, the right of recourse may be exercised without any need for presentation of the cheque, the drawing up of a protest or the making of an equivalent determination.

(5) Facts which are purely personal to the holder or to the person whom he has entrusted with presenting the cheque, drawing up the protest or having an equivalent determination made shall not be deemed to constitute force majeure.

SECTION FOUR

Miscellaneous Provisions

A) Forged or falsified cheque

Article 812 – (1) The loss arising from the payment of a forged or falsified cheque shall be borne by the drawee; unless it is possible to attribute a fault to the person indicated as the drawer in the instrument, such as failing to keep safely the cheque book given to him.

B) Drawing of a cheque in more than one part

Article 813 – (1) With the exception of bearer cheques, every cheque which is issued in one country and payable in another country or in an overseas part of the same country, and conversely, every cheque issued in an overseas part of a country and payable in that country, or issued and payable in the same overseas part or in various overseas parts of the same country, may be drawn in several identical parts. These parts shall be indicated by consecutive serial numbers in the text of the instrument. Otherwise, each part shall be deemed a separate cheque.

C) Statute of limitations⁹⁹

Article 814 – (1) The rights of recourse of the holder against the endorsers, the drawer and the other cheque obligors are time-barred on the expiry of three years from the end of the period for presentation.

(2) The rights of recourse of one cheque obligor against another are time-barred on the expiry of three years from the date on which that cheque obligor paid the cheque or on which the cheque was asserted against him by way of action.

D) Definition of bank

Article 815 – (1) The term “bank” used in this Part means the institutions subject to the Banking Law. However, in respect of cheques whose place of payment is outside Türkiye, which institutions are to be understood by the term “bank” shall be determined according to the law of the place of payment.

E) Time limits

I – Holidays

Article 816 – (1) The presentation and protest of a cheque may only be made on a business day.

(2) If the last day of the period fixed by law for the performance of acts relating to a cheque, and in particular of presentation and of protest or an equivalent determination, falls on a Sunday or another holiday, this period shall be extended so as to include the first business day following it. Intervening holidays are included in the calculation of the period.

II – Calculation of time limits

Article 817 – (1) In calculating the time limits indicated in this Part of the Code, the day on which they begin shall not be counted.

F) Applicable provisions

Article 818 – (1) The following provisions relating to bills of exchange shall also apply to cheques:

a) Article 673 concerning bills of exchange drawn by the drawer to his own order, on himself and for the account of a third party.

b) Article 676 relating to discrepancies between the amounts indicated in the bill of exchange.

c) Articles 677 to 680 relating to the signature of persons not capable of incurring obligations, unauthorised signature, the liability of the drawer and the blank bill of exchange.

d) Articles 683 to 685 concerning endorsement.

e) Article 687 relating to defences relating to the bill of exchange.

f) Article 688 concerning the rights arising from an endorsement by way of agency (procuration).

g) Articles 701 and 702 concerning the form and effects of the aval.

h) Article 709 concerning the right to demand a receipt and partial payment.

ı) Articles 715 to 717 and 719 to 721 relating to protest.

i) Article 722 concerning the clause “without protest”.

j) Article 723 concerning notice.

k) Article 724 concerning the joint and several liability of the obligors under a bill of exchange.

l) Articles 726 and 727 concerning the right of recourse in the event of payment of the bill of exchange and the right to demand delivery of the bill of exchange, the protest and the receipt.

m) Article 732 concerning the rights arising from unjust enrichment.

n) Article 733 concerning the transfer of the funds (provision) for the bill of exchange.

o) Article 744 relating to the relationship between the parts of a bill of exchange.

ö) Article 748 concerning alterations.

p) Articles 750 and 751 concerning the interruption of the statute of limitations.

r) Articles 754 to 756 concerning the inadmissibility of days of grace, the place where acts relating to the bill of exchange must be performed, and handwritten signature.

s) Articles 757 to 763 concerning cancellation, and the first paragraph of Article 764.

ş) Articles 766, 768 and 769 concerning conflicts of laws relating to capacity, the protection of rights relating to bills of exchange and promissory notes, and the acts necessary for the exercise of the right of recourse.

(2) In applying the provisions of the first and third paragraphs of Article 722, the first paragraph of Article 723 and Article 727 to cheques, the making of a determination pursuant to subparagraphs (b) and (c) of the first paragraph of Article 808 instead of a protest shall also be valid.

SECTION FIVE

Conflict of Laws

A) Capacity to be a drawee

Article 819 – (1) The law of the country in which the cheque is payable determines the persons on whom a cheque may be drawn. If, under this law, the cheque is deemed invalid by reason of the person of the drawee, the obligations arising from the signatures affixed to the cheque are valid in countries whose law does not provide for invalidity on such a ground.

B) Form and time limits

Article 820 – (1) The form of obligations relating to a cheque shall be determined according to the law of the country in which these obligations were signed. Nevertheless, compliance with the form prescribed by the law of the place of payment is sufficient.

(2) The second and third paragraphs of Article 767 shall also apply.

C) Effects of obligations

I – Law of the place of issue

Article 821 – (1) The effects of obligations arising from a cheque shall be determined according to the law of the country in which these obligations were incurred.

II – Law of the place of payment

Article 822 – (1) The following matters shall be determined according to the law of the country in which the cheque is payable:

a) Whether the cheque must necessarily be payable at sight or whether it may also be drawn payable at a specified time after sight, and what consequences follow from writing on the cheque a date later than the actual day of issue.

b) The period for presentation.

c) Whether the cheque may be accepted, confirmed, certified or visaed, and what consequences these entries produce.

d) Whether the holder may demand partial payment and whether he is obliged to accept such a payment.

e) Whether the cheque may be crossed or may contain the clause “to be credited to account” or an equivalent expression, and what consequences this crossing or this clause or the expression equivalent to it produce.

f) Whether the holder has special rights over the funds (provision) for the cheque and what the nature of these rights is.

g) Whether the drawer may revoke the cheque or may object to its payment.

h) The measures to be taken in the event of loss or theft of the cheque.

i) Whether a protest or an equivalent determination is necessary for the preservation of the rights of recourse against the endorsers, the drawer and the other cheque obligors.

III – Law of the domicile

Article 823 – (1) Claims arising from unjust enrichment against the drawee and against the third party who is to pay a domiciled cheque shall be determined according to the law of the country in which the domiciles of these persons are located.

PART FIVE

Instruments Resembling Bills of Exchange and Other Instruments to Order

A) Instrument to order

I – Definition

Article 824 – (1) Negotiable instruments which are made out to order, or which are deemed to be so by law, are instruments to order.

II – Defences of the debtor

Article 825 – (1) Against a claim arising from an instrument to order, the debtor may raise only defences relating to the invalidity of the instrument or which emerge from the text of the instrument, as well as the defences which he personally has against whoever the creditor is.

(2) Defences based on relationships existing directly between the debtor and one of the previous holders or the issuer of the instrument may be raised only if the holder, in acquiring the instrument, knowingly acted to the detriment of the debtor.

B) Instruments resembling bills of exchange

I – Orders to pay to order

1. In general

Article 826 – (1) Orders to pay which, although not designated as a bill of exchange in the text of the instrument, are expressly made out to order and in other respects also contain the elements required in a bill of exchange have the effect of a bill of exchange.

2. Absence of an obligation of acceptance

Article 827 – (1) An order to pay to order may not be presented for acceptance.

(2) If it is nevertheless presented and acceptance is refused, the holder has no right of recourse on this ground.

3. Effects of acceptance

Article 828 – (1) The voluntary acceptance of an order to pay to order by the person on whom it is drawn has the effect of acceptance of a bill of exchange. Nevertheless, the holder may not exercise the right of recourse before maturity if the person on whom it is drawn has gone bankrupt or has suspended his payments, even if this has not been established by a court judgment, or if the proceedings brought against him have proved fruitless.

(2) Likewise, in the event of the bankruptcy of the person issuing the order to pay, the holder may not exercise the right of recourse before maturity.

4. Provisions not applicable in enforcement

Article 829 – (1) The provisions of the Enforcement and Bankruptcy Law relating to proceedings based on cheques, bills of exchange and, among instruments to order, promissory notes, may not be applied to orders to pay to order.

II – Promises to pay to order

Article 830 – (1) Promises to pay which, although not designated as a promissory note in the text of the instrument, are expressly made out to order and also contain the other elements required in a promissory note have the effect of a promissory note. However, the provisions relating to payment by intervention shall not apply to promises to pay made out to order.

(2) The provisions of the Enforcement and Bankruptcy Law relating to proceedings based on cheques, bills of exchange and, among instruments to order, promissory notes, shall not apply to promises to pay made out to order.

C) Other endorsable instruments

Article 831 – (1) Instruments by which the signatory undertakes to make cash payments specified as to place, time and amount, and to deliver a specified quantity of fungible things, may be transferred by endorsement if they are expressly made out to order.

(2) In respect of these instruments and of endorsable instruments such as warehouse receipts, warrants and bills of lading, the provisions relating to bills of exchange shall apply as regards the form of the endorsement, the entitlement of the holder and the obligation of the person in possession of the instrument to return it. As regards cancellation, the provisions relating to bills of exchange shall apply to instruments to order other than warrants and warehouse receipts.

(3) The provisions on recourse in bills of exchange and similar instruments shall not apply to the instruments set out in the first paragraph, unless there is an express provision in the law.

PART SIX

Warehouse Receipt and Warrant

A) Public warehouses

I – In general

Article 832 – (1) Warehouses established for the purpose of accepting, under a contract of deposit, free or uncleared goods and grain in return for the issue of a warehouse receipt and a warrant, and of enabling depositors to sell or pledge the deposited goods and grain by means of these instruments, are called “public warehouses”. The transactions of public warehouses are subject to the provisions of this Part.

(2) Public warehouses shall be established with the permission of the Ministry of Customs and Trade. (Repealed second sentence: 26/6/2012-6335/43 art.) (…)

(3) The procedures and principles for the establishment of public warehouses, the kinds of goods and grain to be accepted into them, the conditions required for public warehouses to be deemed authorised to accept goods not yet cleared through customs, and customs supervision shall be regulated in their special law.

II – Exceptions

Article 833 – (1) The provisions relating to public warehouses shall not apply to other institutions and premises opened solely for the purpose of accepting goods and grain under a contract of deposit without issuing the instruments set out in Article 832. In this respect, the provisions of the Turkish Code of Obligations on the contract of deposit shall apply.

(2) Instruments issued in return for things deposited which do not comply with the formal requirements required by law, and instruments which comply with these formal requirements but are issued by institutions which have not obtained permission, are not negotiable instruments but have the effect of receipts of delivery or of documents of proof.

B) Warehouse receipt and warrant

I – Form

1. Warehouse receipt

Article 834 – (1) The warehouse receipt issued in return for goods and grain deposited in public warehouses must contain the following entries:

a) The name, occupation and domicile of the depositor.

b) The trade name and head office of the public warehouse at which the deposit was made.

c) The kind and quantity of the deposited goods, and the matters which must be stated in order for their quality and value to be known.

d) Whether the duties, fees and taxes to which the deposited goods must be subject have been paid, and whether they have been insured.

e) The charges and expenses paid or to be paid.

f) An expression indicating in whose name or to whose order the instrument is to be issued.

g) The signature of the owner of the public warehouse.

2. Warrant

Article 835 – (1) The warrant must also contain exactly the entries set out in Article 834 and must be attached to the warehouse receipt.

3. Register

Article 836 – (1) The document consisting of the warehouse receipt and the warrant must have been detached from a counterfoil book, and the book must be kept among the documents of the public warehouse.

4. Partial instrument

Article 837 – (1) The holder of the warehouse receipt and the warrant may, at his own expense, request that the previously deposited goods be divided into lots and that a separate instrument be issued for each lot. In this case, the old instrument shall be returned and cancelled.

II – Endorsement

1. In general

Article 838 – (1) The warehouse receipt and the warrant may be transferred, separately or together, by delivery and endorsement, even if they are not made out to order. The endorsement shall also bear the date of the day on which it is made.

(2) The warrant and the warehouse receipt may also be transferred together by blank endorsement. Such an endorsement transfers the rights of the endorser to the holder if both instruments are delivered.

2. Effects

Article 839 – (1) Subject to delivery of the instrument, the endorsement produces the following effects:

a) The endorsement of the warehouse receipt and the warrant together transfers ownership of the deposited goods.

b) The endorsement of the warrant alone confers on the person to whom the warrant is transferred a right of pledge over the deposited goods.

c) The endorsement of the warehouse receipt alone transfers ownership of the deposited goods, subject to the right of the holder of the warrant.

3. Endorsement of the warrant

Article 840 – (1) The first endorsement of the warrant shall state the debt for the securing of which it is made, the interest rate and the maturity.

(2) The entries written in the endorsement of the warrant shall also be written exactly on the warehouse receipt and shall be signed by the person to whom the warrant is endorsed.

C) Dispositions over the goods

I – Transactions that may not be carried out

Article 841 – (1) Except for disputes arising from the loss of the warrant and the warehouse receipt, from inheritance or from bankruptcy, no attachment, seizure or pledge may be made over the things deposited in public warehouses.

II – Withdrawal of the goods

1. In general

Article 842 – (1) The holder of a warehouse receipt separated from the warrant may withdraw the goods even before the day of maturity by depositing with the public warehouse the principal of the debt secured by the warrant together with interest thereon up to the day of maturity.

(2) The money deposited shall be paid to the holder of the warrant against return of the warrant.

2. Partial withdrawal

Article 843 – (1) If the holder of a warehouse receipt separated from the warrant wishes to withdraw part of the fungible goods deposited with the public warehouse, he is obliged to deposit with the public warehouse, under the responsibility of the warehouse, an amount of money proportionate both to the part he will withdraw and to the debt secured by the warrant.

III – Right to have the goods sold

1. Conditions

Article 844 – (1) The holder of a warrant whose claim has not been paid on the day of maturity may, like the holder of a bill of exchange, have the deposited goods sold in accordance with the provisions on pledge ten days after having a protest drawn up.

(2) The cases set out in Article 841 do not prevent the sale.

2. Sale price

Article 845 – (1) Customs duty and other duties, fees and taxes, the expenses incurred by the public warehouse for the deposited goods and the charges of the warehouse shall be paid first out of the sale price.

(2) After payment of the sums set out in the first paragraph and of the secured debt, the balance shall be handed over to the owner of the warehouse to be paid to the holder of the warehouse receipt.

3. Right of recourse

Article 846 – (1) Where the deposited goods which the holder of a warrant has had sold are not sufficient on their own to cover his claim, he has a right of recourse against the assets of the debtor or of the endorsers.

(2) The holder of a warrant who has not had a protest drawn up or has not attempted to have the deposited goods sold within the legal period loses all his rights against his endorsers, but his right of recourse against the debtor remains valid.

4. Insurance

Article 847 – (1) In the event of loss of or damage to the insured goods, the holder of the warrant shall collect his claim from the insurance indemnity.

D) Statute of limitations

Article 848 – (1) Claims arising from the warehouse receipt and the warrant are subject to the limitation periods applicable to bills of exchange. The commencement of the limitation period for recourse against the endorsers is the day of sale of the goods.

E) Loss of the instruments

Article 849 – (1) A holder who has lost a warehouse receipt or a warrant may, by proving that he is the owner of these instruments and by providing security, obtain a second copy upon permission to be obtained from the court of the place where the warehouse is located, after the situation has been announced in the local newspapers indicated in the decision and the period to be granted for objection has expired. If the term of the lost warrant has expired, the court may, in the same manner, upon the request of the holder, permit the payment of the debt. If the permission relates to the warehouse and the warrant, it shall be served both on the warehouse and on the first debtor. The creditor must also indicate a domicile at the place where the warehouse is located. The owner of the warehouse and the debtor may object to the permission decision. Upon objection, the court shall give its judgment forthwith. If the judgment is in favour of the creditor, no decision may be given to stay the enforcement. However, upon the request of the persons concerned, the enforcement court may decide that the money to be obtained from the sale of the deposited goods be kept in the cash office of the enforcement office until the judgment becomes final.

BOOK FOUR

Carriage

PART ONE

General Provisions

A) Carrier

Article 850 – (1) A carrier is a person who, by a contract of carriage, undertakes the carriage of goods or of passengers, or of both together. Goods also include every kind of load.

(2) By the contract of carriage, the carrier undertakes to carry the goods to the place of destination and deliver them there to the consignee, or to bring the passenger to the place of destination; in return, in the carriage of goods the consignor, and in the carriage of passengers the passenger, undertakes to pay the carrier the freight (carriage charge).

(3) Carriage is a commercial enterprise activity.

B) Scope of application of the provisions

Article 851 – (1) The provisions of this Book shall also apply, insofar as appropriate, to a person who undertakes the carriage of goods and passengers incidentally.

C) Reserved provisions

I- Rule

Article 852 – (1) The special provisions relating to carriage by sea, rail and air and to the postal administration are reserved.

II- Special provisions not affecting liability

Article 853 – (1) The carrier and the freight forwarder may not, even where they have the carriage performed by an organisation which is bound by the special provisions provided for in Article 852, request that the liability imposed on them by the Code be mitigated or removed. The provisions of Part Four on carriage by different modes of transport are reserved.

D) Invalidity of provisions excluding or mitigating liability

Article 854 – (1) All contractual provisions which have the effect of mitigating or removing in advance the liabilities imposed by the Code on the carrier, the freight forwarder and carriage enterprises whose activities are subject to State permission are invalid. The rule is the same where these provisions are provided for in operating by-laws, general terms and conditions, tickets, tariffs or other similar documents.

E) Statute of limitations

Article 855 – (1) In carriage subject to the provisions of this Book, claims are time-barred in ten years where the passenger dies or suffers damage impairing his bodily integrity as a result of an accident, and in one year in the case of other damage.

(2) This period begins, in the carriage of goods, on the date of delivery of the goods to the consignee and, in the carriage of passengers, on the date on which the passenger arrives at the place of destination. If the goods have been totally lost or the passenger has not been able to reach his destination, the limitation period begins to run from the date on which the goods should have been delivered or the passenger should have arrived.

(3) The limitation period relating to rights of recourse begins to run, provided that the recourse creditor has notified the recourse debtor of the damage within three months from the date on which he learned of the damage and of the recourse debtor, from the day on which the court decision against the recourse creditor becomes final or, in cases where there is no final court decision, from the date on which the recourse creditor performed the obligation.

(4) The consignor or the consignee may at any time assert their rights against the carrier by way of defence, provided that they have claimed them within one year in accordance with the third paragraph of Article 18.

(5) Where, owing to an act or omission of the carrier committed intentionally or recklessly and with knowledge that such damage would probably result;

a) The goods have been lost or damaged or delivered late,

b) The passenger has arrived late,

the liability of the carrier is time-barred in three years.

(6) The provisions on the statute of limitations in the Highway Traffic Law No. 2918 dated 13/10/1983 are reserved.

PART TWO

Carriage of Goods

A) Performance of the contract of carriage

I – Consignment note

Article 856 – (1) A consignment note shall be issued upon the request of one of the parties. The note shall be prepared in three original copies and signed by the consignor. The consignor may request that the carrier also sign the consignment note. The signature on copies of consignment notes signed by hand may be in the form of a stamp or seal, or printed. One copy belongs to the consignor, another accompanies the goods, and the third remains with the carrier.

(2) Even if no consignment note has been issued, the contract of carriage is concluded by the mutual and corresponding declarations of intent of the parties. Delivery of the goods to the carrier constitutes a presumption of the existence of the contract of carriage.

II – Contents of the consignment note

Article 857 – (1) The consignment note contains the following entries:

a) The place and date of issue.

b) The name and surname or trade name and address of the consignor.

c) The name and surname or trade name and address of the carrier.

d) The place and day of taking over of the goods and the place of delivery.

e) The name and surname or trade name and address of the consignee.

f) Where necessary, a notification address.

g) The customary designation of the type of goods and the method of packing and, in the case of dangerous goods, the markings provided for in the relevant legislation and, in other cases, the generally recognised markings.

h)The number, marks and numbers of the packages to be carried.

i) The gross weight of the goods or their quantity otherwise declared.

j) The period within which the carriage is to be performed.

k) The agreed freight and the expenses to be incurred up to delivery, and, where the freight is to be paid by a person other than the consignor, an entry to that effect.

l) In carriage on cash-on-delivery terms, the cash-on-delivery entry and the amount to be paid.

m) Instructions relating to the customs and other official formalities for the goods.

n) Where applicable, the agreement that the carriage may be performed in an open or uncovered vehicle or on deck.

(2) Other entries which the parties consider appropriate may also be included in the consignment note.

III – Evidential force of the consignment note

Article 858 – (1) A consignment note signed by both parties constitutes evidence of the conclusion of the contract of carriage, of its contents and of the taking over of the goods by the carrier.

(2) A consignment note signed by both parties constitutes a presumption that the goods and their packing were, at the time the goods were taken over by the carrier, in good condition as regards their external appearance, and that the number, marks and numbers of the packages carried correspond to the entries in the consignment note; unless the carrier has entered a reservation in the consignment note for a justified reason. The reservation may also be based on the ground that the carrier does not have appropriate means to check the accuracy of the entries.

(3) If the gross weight of the goods or their quantity otherwise declared, or the contents of the packages to be carried, have been checked by the carrier and the result of the check has been entered in the consignment note signed by both parties, this entry constitutes a presumption that the weight, quantity and contents correspond to the entries in the consignment note.

(4) The carrier is obliged to check the weight, quantity or contents of the goods if the consignor has so requested and the carrier has appropriate means for this. In this case, the carrier shall claim the expenses relating to the check.

IV – Freight receipt

Article 859 – (1) If no consignment note has been issued, the carrier is obliged, upon the request of the consignor, to sign and give to the consignor a freight receipt containing sufficient information about the goods and the carriage.

V – Accompanying documents

Article 860 – (1) The consignor is obliged, before delivery of the goods, to give the carrier the information of an official nature, in particular that necessary for customs formalities, and to place the documents in question at the disposal of the carrier.

(2) The carrier is liable for damage arising from the loss of, damage to or misuse of the documents given to him; unless the loss, damage or misuse resulted from circumstances which the carrier could not avoid and the consequences of which he could not prevent. However, the liability of the carrier is limited to the amount payable in the event of loss of the goods.

VI – Dangerous goods

Article 861 – (1) If dangerous goods are to be carried, the consignor is obliged to notify the carrier in good time, clearly, in understandable terms and in writing, of the nature of the danger and, where necessary, of the precautions to be taken.

(2) If, when taking over the goods, the carrier does not know the nature of the danger or no notification has been made to him, he may request from the consignor, without incurring any obligation to compensate the consignor, the unloading, storage, return carriage or, where necessary, the destruction of the dangerous goods and the rendering of them harmless, as well as reimbursement of the expenses necessitated by these measures.

VII – Packing and marking

Article 862 – (1) If the nature of the goods, having regard to the agreed carriage, requires packing, the consignor is obliged to pack the goods in such a manner as to protect them against loss and damage and not to cause damage to the carrier. Furthermore, if the goods need to be marked so that they can be handled in accordance with the terms of the contract, the consignor is also obliged to affix these markings.

VIII – Loading and unloading

Article 863 – (1) Unless otherwise understood from the contract, the requirements of the situation or commercial usage, the consignor is obliged to load the goods by placing them in the vehicle, stowing, lashing and securing them in a manner consistent with the safety of carriage, and to unload them in the same manner. The carrier is furthermore obliged to ensure that the loading is consistent with operational safety.

(2) Unless otherwise agreed, no separate charge may be claimed in relation to loading and unloading for a reasonable period to be determined according to the requirements of the situation.

(3) If the carrier, on the basis of the terms of the contract or for reasons not originating from his own sphere of risk, waits longer than the reasonable loading or unloading period, he is entitled to appropriate remuneration as demurrage.

IX – Strict liability of the consignor in special circumstances

Article 864 – (1) The consignor, even if he is not at fault, is obliged to compensate the carrier for his damage and expenses arising from:

a) Inadequate packing and marking,

b) Untruths, errors and omissions in the information entered in the consignment note,

c) Failure to give notice of the dangerous character of dangerous goods,

d) Deficiencies, untruths or the absence of the documents and information specified in the first paragraph of Article 860,

as the case may be.

(2) However, the amount of compensation for which the consignor is liable in these cases is limited to 8.33 Special Drawing Rights for each kilogram of the gross weight of the consignment. In this case too, the fourth paragraph of Article 882 and Articles 885 to 887 shall apply by analogy.

(3) If the conduct of the carrier has also contributed to the occurrence of the damage or expenses, the extent to which this conduct contributed shall also be taken into account in determining the obligation to compensate and the scope of the compensation to be paid.

(4) If the consignor is a consumer, he shall be held liable to compensate the carrier for damage and expenses only in the event of his fault and in accordance with the provisions of the first and second paragraphs.

(5) A consumer is a natural or legal person who concludes the contract for a purpose not related to his commercial or professional activity.

X – Termination by the consignor

Article 865 – (1) The consignor may terminate the contract of carriage at any time.

(2) If the consignor terminates the contract, the carrier may claim:

a) The amount remaining from the agreed freight, the demurrage and the expenses to be reimbursed after deduction of the expenses saved as a result of the termination of the contract or of the benefits otherwise obtained or which he has in bad faith omitted to obtain, or

b) One third of the agreed freight,

as he elects. If the termination of the contract of carriage resulted from a cause falling within the carrier’s sphere of risk, no claim may be asserted under subparagraph (b) of this paragraph and, furthermore, if the consignor has no interest in the performance of the contract, the carrier’s right of claim under subparagraph (a) of this paragraph also lapses.

(3) If the goods were loaded before the termination of the contract, the carrier may, at the expense of the consignor, take the measures in accordance with the second to fourth sentences of the third paragraph of Article 869. The carrier may permit the unloading of the goods provided that unloading does not cause inconvenience to his enterprise and the consignors and recipients of other consignments do not suffer damage as a result. If the termination results from a cause falling within the carrier’s sphere of risk, the carrier, contrary to the first and second sentences, is obliged to unload the loaded goods immediately at his own expense.

XI – Right to demand partial carriage

Article 866 – (1) The carrier is obliged, upon the request of the consignor, to set off even if not all of the goods agreed to be carried have been loaded. In this case, the carrier may claim:

a) The entire freight agreed in the contract,

b) The demurrage that has accrued,

c) The expenses he was compelled to incur and the damage he suffered because of the incomplete loading,

d) If his claims have become wholly or partly unsecured because of the incomplete loading, the provision of additional security to him,

as the case may be. However, if goods have been carried under another contract in place of the goods not loaded, the freight to be received for those goods shall be set off against the freight to be claimed under subparagraph (a).

(2) If the incomplete loading results from causes falling within the carrier’s sphere of risk, the carrier has the rights of claim specified in the first paragraph in proportion to the load actually carried.

XII – Rights of the carrier in the event of non-compliance with the loading period

Article 867 – (1) If the consignor does not load the goods within the period or, in cases where there is no obligation to load, does not make the goods available, the carrier shall, granting a reasonable period, give the consignor notice to load the goods or make them available.

(2) If the goods are not loaded or made available within the period granted in accordance with the first paragraph, the carrier may terminate the contract and exercise his rights in accordance with the second paragraph of Article 865.

(3) If, within the period granted in accordance with the first paragraph, the agreed loading has been carried out in part or the goods have been made available in part, the carrier may set off with the incompletely loaded goods and exercise his rights of claim in accordance with subparagraphs (a) to (d) of the first paragraph of Article 866.

(4) If the non-compliance with the loading period results from a cause falling within the carrier’s sphere of risk, the carrier has no right of claim.

XIII – Orders, instructions and dispositions

Article 868 – (1) The consignor may give the carrier orders and instructions for the performance of the carriage, and may also make dispositions in the form of stopping the carriage, having the goods brought back, having them taken to another place of destination or delivery, or having them delivered to another consignee. The carrier is not obliged to comply with such orders, instructions and dispositions of the consignor if they are disadvantageous for the carrier’s enterprise or entail a threat of damage to the consignments of other consignors and recipients. The carrier may claim the expenses necessary for carrying out the orders, instructions and dispositions received from the consignor and appropriate remuneration. The carrier may make the commencement of the execution of the orders, instructions and dispositions conditional on the payment of an advance.

(2) Upon the arrival of the goods at the place of delivery, the consignor’s power to give orders and instructions and right to make dispositions come to an end. From that moment, the said powers and rights belong to the consignee. The provisions of the second to fourth sentences of the first paragraph also apply here.

(3) If the consignee, exercising the right of disposition, has requested delivery of the goods to a third party, that person may not designate another consignee.

(4) If a consignment note has been issued and signed by both parties, the consignor may exercise the right of disposition only by producing the copy belonging to him, provided that this is stipulated in the consignment note.

(5) If the carrier is unable to carry out the orders and instructions given to him or the dispositions of the consignor, he must notify the consignor thereof.

(6) If the exercise of the right of disposition has been made conditional on the production of the consignment note and the carrier has carried out any instruction without the consignment note having been produced, he is liable to the persons entitled for the damage resulting therefrom. Provisions limiting the liability of the carrier are invalid.

XIV – Obstacles to carriage and delivery

Article 869 – (1) If, before the goods arrive at the place where they are to be delivered, it becomes apparent that the carriage cannot be performed in accordance with the contract, or if obstacles to delivery arise at the place where the goods are to be delivered, the carrier is obliged to obtain instructions from the person who has the right of disposition under Article 868. If the right of disposition is held by the consignee and the consignee cannot be found or refuses to take delivery of the goods, the right of disposition shall be exercised by the consignor in accordance with the first sentence. In this case, production of the consignment note is not necessary even if the exercise of the right of disposition has been made conditional on the production of the consignment note. In cases where instructions have been given to him, the carrier may assert the rights of claim provided for in the third and fourth sentences of the first paragraph of Article 868, provided that the obstacle to delivery did not result from a cause falling within the carrier’s sphere of risk.

(2) If an obstacle to carriage or delivery arises after the consignor, relying on his power of disposition under Article 868, has given the instruction that the goods be delivered to a third party, then, in the application of the first paragraph, the consignee takes the place of the consignor and the third party takes the place of the consignee.

(3) If the carrier cannot obtain, within an appropriate period, the instructions which he must follow under the first sentence of the first paragraph of Article 868, he is obliged to take the measures which appear best in the interest of the holder of the right of disposition. The carrier may unload and store the goods, deposit them for safekeeping for the account of the person holding the right of disposition in accordance with the provisions of the first to fourth paragraphs of Article 868, or carry them back. If the carrier deposits the goods with a third party, he is liable only for the care required to be exercised in the selection of that person. If perishable goods are concerned, if the condition of the goods justifies such a measure, or if the expenses that would otherwise be incurred are not in reasonable proportion to the value of the goods, the carrier may have the goods sold in accordance with the provision of Article 108 of the Turkish Code of Obligations. The carrier may destroy goods for which there is no possibility of disposal. Upon the unloading of the goods, the carriage shall be deemed to have ended.

(4) The carrier shall claim reimbursement of the expenses necessitated by the measures taken under the third paragraph and appropriate remuneration; unless the obstacle resulted from a cause falling within his own sphere of risk.

XV – Calculation and payment of freight

Article 870 – (1) The freight is payable upon delivery of the goods. In addition to the freight, the carrier may also claim the expenses incurred for the goods which were necessary according to the situation and circumstances.

(2) If the carriage is ended prematurely because of an obstacle to carriage or delivery, the carrier is entitled to freight in proportion to the completed part of the carriage. If the obstacle resulted from a cause falling within the carrier’s sphere of risk, the carrier may assert a claim in respect of the completed part of the carriage only to the extent that it is in the interest of the consignor.

(3) If, after the commencement of the carriage but before arrival at the place of delivery, a delay occurs and this delay resulted from a cause falling within the consignor’s sphere of risk, the carrier may claim appropriate compensation in addition to the freight.

(4) If the freight has been agreed according to the number, weight or quantity of the goods otherwise expressed, it shall be assumed, in calculating the freight, that the entries in the consignment note or freight receipt in this respect are correct. This assumption also applies where a reservation has been entered to the effect that appropriate means for checking the accuracy of the entries were not available.

XVI – Rights of the consignee and obligation to pay

Article 871 – (1) After the arrival of the goods at the place of delivery, the consignee may request the carrier to deliver the goods to him against fulfilment of the obligations arising from the contract of carriage. If the goods have been lost or damaged or delivered late, the consignee may assert against the carrier the rights of claim of the consignor arising from the contract of carriage. The consignor remains entitled to assert these rights. It makes no difference whether the consignee or the consignor acts in their own interest or in the interest of another.

(2) The consignee who asserts the right of claim under the first sentence of the first paragraph is obliged to pay the freight or, if part of the freight has been paid, the remaining part, limited to the amount indicated in the consignment note. If no consignment note has been issued or it has not been produced to the consignee, or if the amount to be paid cannot be ascertained from the consignment note, the consignee is obliged to pay the freight agreed between the consignor and the carrier, provided that it is reasonable.

(3) The consignee who asserts the right of claim under the first sentence of the first paragraph shall pay the demurrage at the place of unloading and, in addition, provided that he was notified thereof at the time of delivery of the goods, the demurrage at the place of loading and the amount payable under the third paragraph of Article 870.

(4) The liability of the consignor continues for the amounts payable under the contract.

XVII – Cash on delivery

Article 872 – (1) Delivery of the goods to the consignee may be made conditional on payment of an agreed amount. In this case, payment must be made in cash or by a means of payment equivalent to cash.

(2) The amount obtained as a result of collection shall be deemed, as regards the creditors of the carrier, to have passed to the consignor.

(3) If the goods are delivered to the consignee without the amount having been collected, the carrier is liable to the consignor for the resulting damage, even if he is not at fault, limited to the amount payable upon delivery of the goods.

XVIII – Period of carriage

Article 873 – (1) The carrier is obliged to deliver the goods within the agreed period or, if no period has been agreed, within a reasonable period which, having regard to the circumstances, could be allowed to a diligent carrier.

XIX – Presumption of loss

Article 874 – (1) If the goods are not delivered within twenty days following the period of carriage, the person entitled may treat them as lost. In cross-border carriage this period is thirty days.

(2) If the person entitled receives compensation for the loss of the goods, he may, at the time of payment, request that he be notified forthwith if the goods are subsequently found.

(3) The person entitled may, within thirty days of receiving notice that the goods have been found, request that the goods be delivered to him by repaying the compensation, after deduction of expenses where applicable. The obligation to pay the freight and the right to compensation are reserved.

(4) If the goods have been found after payment of the compensation, the carrier may freely dispose of the goods in cases where the person entitled did not request to be informed thereof or did not assert the right of claim relating to delivery of the goods after notice that they had been found.

B) Liability of the carrier

I – Liability for damage arising from loss or damage and from delay

Article 875 – (1) The carrier is liable for damage arising from loss of or damage to the goods, or from delay in their delivery, occurring during the period from the taking over of the goods for carriage until their delivery.

(2) If the damage was caused by an act of the consignor or the consignee or by a special defect of the goods, the extent to which these facts contributed shall be taken into account in the arising of the obligation to compensate and in determining its scope.

(3) In the event of delay, even if no damage has occurred, the freight shall be reduced in proportion to the period of delay; unless the carrier has proved that he exercised all due care.

II – Exemption from liability

1. In general

a) Care of the carrier

Article 876 – (1) The carrier is exempted from liability if the loss, damage or delay has arisen from causes which the carrier could not avoid and the consequences of which he could not prevent despite exercising the utmost care.

b) Defect of the vehicle and fault of the lessor

Article 877 – (1) The carrier may not exempt himself from liability by relying on a defect in the means of transport or on the fault of the person from whom he hired the vehicle, or of that person’s representatives or employees.

2. Special cases

Article 878 – (1) The carrier is exempted from liability if the loss, damage or delay in delivery can be attributed to one of the following circumstances:

a) The use of an open vehicle or loading on deck in accordance with the contract or usage.

b) Insufficient packing by the consignor.

c) The handling, loading or unloading of the goods by the consignor or the consignee.

d) The natural characteristics of the goods which cause them to be easily damaged, in particular by breakage, rust, decay, desiccation, leakage or normal wastage.

e) Insufficient labelling by the consignor of the packages to be carried.

f) The carriage of live animals.

g) Cases in which the provisions of the Customs Law No. 4458 dated 27/10/1999 and of other laws and regulations justify the exemption of the carrier from liability.

(2) In cases where, according to the circumstances and conditions, any damage could probably be attributed to a cause specified in the first paragraph, that damage is presumed to have arisen from that cause. This presumption shall not apply in the event of extraordinary loss or damage in the case provided for in subparagraph (a) of the first paragraph.

(3) If the loss, damage or delay has arisen from the carrier’s failure to comply with the consignor’s special instructions concerning the carriage of the goods, the carrier may not exempt himself from liability by relying on subparagraph (a) of the first paragraph.

(4) If the carrier is, under the contract, under an obligation to protect the goods specially against heat, cold, changes in temperature, humidity, vibrations or similar effects, he may rely on subparagraph (d) of the first paragraph only if, according to the circumstances and conditions, he has taken all the measures incumbent upon him, in particular with regard to the selection, maintenance and use of the necessary equipment, and has acted in accordance with special instructions.

(5) The carrier may rely on subparagraph (f) of the first paragraph only if, according to the circumstances and conditions, he has taken all the measures incumbent upon him and has acted in accordance with special instructions.

III – Fault of assistants

Article 879 – (1) The carrier is liable, as for his own acts and omissions, for the acts and omissions of:

a) His own servants,

b) Persons whose services he uses for the performance of the carriage,

committed in the course of the performance of their duties.

IV – Value to be taken as the basis for compensation

Article 880 – (1) Where the carrier is held liable to pay compensation for the total or partial loss of the goods, this compensation shall be calculated according to the value of the goods at the place and time at which they were taken over for carriage.

(2) In the event of damage to the goods, the difference between their undamaged value at the place and time at which they were taken over for carriage and their damaged value shall be compensated. It is presumed that the expenses to be incurred for mitigating and remedying the damage correspond to the difference in value to be determined according to the first sentence.

(3) The value of the goods shall be determined according to the market price or, failing this, according to the current value of goods of the same kind and quality. If the goods were sold immediately before being delivered for carriage, the sale price shown in the seller’s invoice, after deduction of the carriage costs, is presumed to be the market price.

V- Costs of ascertaining the damage

Article 881 – (1) In the event of loss of or damage to the goods, the carrier is obliged, in addition to the compensation payable under Article 880, to compensate also the costs necessarily incurred for ascertaining the damage.

VI – Limits of liability

Article 882 – (1) In the event of loss of or damage to the entire consignment, the compensation payable under Articles 880 and 881 is limited to the amount corresponding to 8,33 Special Drawing Rights for each kilogram of the gross weight of the consignment.

(2) In the event of loss of or damage to individual parts of the consignment, the liability of the carrier is limited, in respect of the gross weight of:

a) The entire consignment, if the entire consignment has lost its value,

b) The part that has lost its value, if a part of the consignment has lost its value,

to the amount corresponding to 8,33 Special Drawing Rights for each kilogram of that gross weight.

(3) The carrier’s liability arising from exceeding the transit period is limited to three times the freight.

(4) The Special Drawing Right shall be converted into Turkish Lira according to its value as determined by the Central Bank of the Republic of Türkiye on the date on which the goods were delivered to the carrier for the purpose of carriage, or on another date agreed by the parties.

VII – Compensation of other costs

Article 883 – (1) In cases where the carrier is liable for loss or damage, he shall, in addition to paying the compensation payable under Articles 880 to 882, refund the freight and also bear the taxes and duties relating to the carriage and the other costs arising from the carriage. However, in the event of damage, the payments to be made under the first sentence shall be determined in proportion to the amount to be ascertained under the second paragraph of Article 880. Further damage shall not be compensated.

VIII – Maximum amount of liability for other damage

Article 884 – (1) The carrier is liable, up to a limit of three times the amount of compensation payable in the event of total loss, for damage which occurs by reason of his breach, in the performance of the carriage, of an obligation arising from the contract, which does not result from the loss of or damage to the goods or from exceeding the transit period, and which is other than damage to goods or persons.

IX – Non-contractual claims

Article 885 – (1) The cases of exemption from liability and the limitations provided for in this Part also apply to the non-contractual claims which the consignor or the consignee may bring against the carrier by reason of loss, damage or delay.

(2) The carrier may rely on the grounds for exemption from liability and on the limitations against the non-contractual claims of third parties by reason of loss of or damage to the goods. However, in the following cases:

a) If the third party has not consented to the carriage and the carrier knows or ought to know that the consignor was not authorised to send the goods,

b) If the goods left the possession of the third party, or of a person who obtained possession from him, without his consent before they were taken over for carriage,

these may not be invoked.

X – Loss of the right to limit liability

Article 886 – (1) The carrier or the persons specified in Article 879 who are proved to have caused the damage by an act or omission committed intentionally, or recklessly and with knowledge that such damage would probably result, may not benefit from the cases of exemption from liability and the limitations of liability provided for in this Part.

XI – Liability of auxiliary persons

Article 887 – (1) If claims arising from non-contractual liability are brought against one of the carrier’s assistants by reason of loss of, damage to or late delivery of the goods, that person may rely on the grounds for exemption from liability and the limitations of liability provided for in this Part. The provision of the first sentence shall not apply if the damage was caused by an act or omission committed intentionally, or recklessly and with knowledge that such damage would probably result.

XII – Actual carrier

Article 888 – (1) If the carriage is performed in whole or in part by an actual carrier who is a third party, that person is liable, in the same manner as the contracting carrier, for damage occurring during the carriage performed by him by reason of loss of, damage to or delay of the goods. Agreements made by the contracting carrier with the consignor or the consignee for the extension of liability are valid against the actual carrier on condition that he accepts them in writing.

(2) The actual carrier may raise all the defences of the contracting carrier arising from the contract of carriage.

(3) The contracting carrier and the actual carrier are jointly and severally liable.

(4) If recourse is had to the assistants of the actual carrier, the provision of Article 887 shall apply.

(5) The actual carrier may have the condition of the goods delivered to him recorded in the consignment note or in another document. If this provision is not complied with, the provisions of the second paragraph of Article 858 shall apply.

XIII -Notice

Article 889 – (1) If the loss of or damage to the goods is apparent, and the consignor or the consignee does not give notice of the loss or damage at the latest by the time of delivery, the goods are presumed to have been delivered in accordance with the contract. The notice must specify and characterise the damage with the necessary clarity.

(2) The presumption in the first paragraph also applies where the loss or damage is not apparent and notice is not given within seven days after delivery of the goods.

(3) If the consignee does not notify the carrier within twenty-one days from delivery that the delivery period has been exceeded, his rights arising from the delay are extinguished.

(4) Notice given after delivery must be in writing. Notice may also be given by means of telecommunication. If the identity of the person giving notice can be ascertained in any manner, a signature is not required. For the preservation of the time limit, it is sufficient that the notice has been dispatched in due time.

(5) If the loss, damage or delay is notified at the time of delivery, it is sufficient that this notice is given, in accordance with the above provisions, to the person delivering the goods.

XIV – Competent court

Article 890 – (1) In legal disputes arising from carriage subject to the provisions of Part One and Part Two, the court of the place where the goods were taken over or of the place designated for delivery also has jurisdiction.

(2) An action against the actual carrier may also be brought in the court of the domicile of the contracting carrier, and an action against the contracting carrier may also be brought in the court of the domicile of the actual carrier.

XV – Right of retention

Article 891 – (1) The carrier has a right of retention over the goods, pursuant to Articles 950 to 953 of the Turkish Civil Code, for all claims arising from the contract of carriage. The right of retention also covers the accompanying documents referred to in Article 860.

(2) The carrier has the right of retention for as long as he holds the goods in his possession or has the right of disposal over the goods by means of a bill of lading or a consignment note.

(3) The notice concerning the realisation of the pledge must be given to the consignee. If the consignee cannot be found or refuses to take delivery of the goods, the notice shall be given to the consignor.

XVI – Several carriers

Article 892 – (1) Where the goods are carried by several carriers, the last carrier, if he is obliged on delivery of the goods to collect the claims of the preceding carriers, exercises the rights held by the preceding carriers, in particular the right of retention. As long as the last carrier holds the right of retention, the right of retention of the preceding carriers continues to exist.

(2) If the claim of a preceding carrier is paid by a subsequent carrier, the claim and the right of retention of the preceding carrier pass to the subsequent carrier.

(3) The provisions of the first and second paragraphs also apply to the claims and rights of a freight forwarder who has participated in the carriage.

XVII – Ranking of several rights of retention

Article 893 – (1) If there are several rights of retention over the same goods connected with the carriage of the goods, those rights of retention which are directly connected with the carriage of the goods take precedence over the others. As regards the latter, those arising later take precedence over those arising earlier.

PART THREE

Carriage of Removal Goods

A) Applicable provisions

Article 894 – (1) Goods taken from a house, an office or a similar place and carried to a similar place are “removal goods”. Unless otherwise provided in the provisions of this Part or in the international conventions which must be applied, the provisions of Part One and Part Two of this Book apply to a contract of carriage the subject matter of which is removal goods.

B) Obligations of the carrier

Article 895 – (1) The obligations of the carrier also include the dismantling and assembly of furniture and the loading and unloading of the removal goods.

(2) If the consignor is a consumer as defined in the fifth paragraph of Article 864, the performance of other tasks relating to the carriage, such as the packing and marking of the removal goods, is also the obligation of the carrier.

C) Consignment note, dangerous goods, accompanying documents, obligations of notification and of providing information

Article 896 – (1) By way of derogation from Articles 856 and 857, the consignor is not obliged to issue a consignment note.

(2) If the removal goods are deemed to be dangerous goods and the consignor is also a consumer, the carrier, by way of derogation from Article 861, shall be informed only in general terms about the danger arising from the goods. The information is not subject to any form. The carrier shall also warn the consignor of his obligation under the first sentence.

(3) If the consignor is a consumer, the carrier shall inform the consignor about the customs rules and other administrative provisions which must be complied with. However, the carrier is not obliged to verify whether the information and documents made available to him by the consignor are correct and complete.

D) Liability of the consignor in special cases

Article 897 – (1) By way of derogation from the second paragraph of Article 864, the consignor is liable to the carrier for the damage he has caused only for compensation in the amount of 1.500 Special Drawing Rights per cubic metre of the loading space required for the performance of the contract of carriage.

E) Grounds for exemption from liability

Article 898 – (1) By way of derogation from the provisions of Article 878 of the Law, the carrier is exempted from liability if the loss or damage results from the following causes:

a) If the carrier carries precious metals, stones, jewellery, postage stamps, coins, documents or negotiable instruments.

b) If the packing or labelling carried out by the consignor is insufficient.

c) If the goods carried have been handled, loaded or unloaded by the consignor.

d) If goods not packed by the carrier have been carried.

e) If, at the insistence of the consignor and despite the carrier having warned the consignor in advance of the risk of possible damage, goods whose size and weight were not suited to the conditions at the place of loading and unloading have been loaded or unloaded.

f) If live animals or plants have been carried.

g) If the goods, owing to their natural or defective nature, are liable to be easily damaged, in particular by causes such as breakage, malfunction, rust, decay or leakage.

(2) In cases where, according to the circumstances and conditions, the damage which has occurred could have resulted from the risks specified in the first paragraph, the damage is presumed to have arisen from those risks.

(3) The carrier may rely on the provision of the first paragraph only if, according to the circumstances and conditions, he has done what was incumbent upon him, taken all measures and complied with the instructions.

F) Limit of liability

Article 899 – (1) By way of derogation from the provisions of the first and second paragraphs of Article 882, the liability of the carrier by reason of loss or damage is limited to 1.500 Special Drawing Rights per cubic metre of the loading space required for the performance of the contract of carriage.

G) Notice

Article 900 – (1) By way of derogation from the first and second paragraphs of Article 889, rights of claim arising from the loss of or damage to the goods are extinguished if,

a) where the loss of or damage to the goods is apparent, at the latest within three working days following delivery, or

b) where the loss or damage is not apparent, at the latest within fourteen days following delivery,

notice has not been given to the carrier.

H) Loss of the right to limit liability

Article 901 – (1) If the consignor is a consumer, the carrier or one of the persons referred to in Article 879:

a) May not rely on the provisions of Articles 898 and 899 or on the cases of exemption from liability and the limitations of liability provided for in Part Two of this Book, if the carrier, when the contract was concluded, did not inform the consignor about the liability provisions and did not point out the possibilities of concluding an agreement extending liability or of having the goods insured,

b) May not rely on the provision of Article 900, if the carrier did not inform the consignee, at the latest at the time of delivery of the goods, about the form of and time limit for the notice of damage and about the legal consequences that will arise if this notice is not given.

(2) The information must be given in writing and in an easily legible and comprehensible form.

PART FOUR

Multimodal Carriage

A) Contract

Article 902 – (1) The provisions of Part One and Part Two of this Book also apply to contracts for multimodal carriage where all of the following conditions exist together:

a) If the carriage of the goods is based on a single contract of carriage.

b) If, within the framework of this contract, the carriage is to be performed by different modes of transport.

c) If, had the parties concluded a separate contract for each mode of transport, at least two of those contracts would have been subject to different provisions.

d) If there is no provision to the contrary in the following provisions or in the international conventions which must be applied.

B) Known place of damage

Article 903 – (1) If it is known in which part of the carriage the event causing the loss, damage or delay in delivery occurred, the liability of the carrier shall be determined, instead of according to the provisions of Part One and Part Two of this Book, according to the provisions to which a separate contract of carriage would have been subject had such a contract been concluded for that part of the carriage. The burden of proof as to the part of the carriage in which the event causing the loss, damage or delay in delivery occurred lies with the party alleging it.

C) Notice and limitation

Article 904 – (1) As regards notice of damage, the provision of Article 889 shall apply irrespective of whether the place of damage is known, unknown or becomes known subsequently. Where notice is given in accordance with the provisions that would apply to a separate contract of carriage had such a contract been concluded for the last part of the carriage, the form and time limit prescribed for notice of damage are also deemed to have been complied with.

(2) In cases where the date of delivery is taken as the basis for the commencement of the limitation period to which a claim based on loss, damage or delay in delivery is subject, this date is the date of delivery of the goods to the consignee. Even where the place of damage is known, the right of claim becomes time-barred at the earliest in accordance with Article 855.

D) Carriage of removal goods

Article 905 – (1) If the subject matter of a contract for multimodal carriage consists of removal goods, the provisions of Part Three of this Book apply to the contract. As regards the part of the carriage in which the damage occurred, the provision of Article 903 of the Law applies only if one of the international conventions binding on the Republic of Türkiye is applicable.

PART FIVE

Carriage of Passengers

A) Obligation to comply with rules

Article 906 – (1) The passenger is obliged to comply with the rules laid down by the carrier for regulating internal services.

B) Failure of the journey to take place

Article 907 – (1) If the journey has not taken place by reason of a cause arising after the conclusion of the contract of carriage but before departure, the following provisions shall apply:

a) If the journey could not take place by reason of death, illness or a similar force majeure, the contract becomes void of its own accord without giving rise to an obligation to compensate on the part of either party.

b) If the journey has not taken place by reason of a cause which relates to the means of transport and does not constitute fault on the part of the carrier, or which arises from the fault of both parties and prevents the journey or renders it dangerous, the contract becomes void of its own accord without giving rise to an obligation to compensate on the part of either party.

c) If the journey has not taken place by reason of an act or omission of the carrier, the passenger may claim compensation.

d) If the journey has not taken place for any reason and the passenger was also unable to be present at the required place on time for that journey, he has the right to travel on one of the journeys following that journey, in a vehicle of the same standard and in a seat of the same standard; unless the fulfilment of this claim is impossible for the carrier or would constitute a heavy financial burden. A carrier who is unable to offer the passenger a journey shall pay compensation in the amount of three times the ticket price. If the carrier is not at fault for the failure of the journey to take place, and the passenger refuses, without showing a justified reason, the journey offered to him on the same conditions, he shall pay the freight.

e) In the cases referred to in subparagraphs (a), (b) and (c), the carrier shall refund the freight which he has received in advance.

C) Delay of the journey

I – Delay of departure

Article 908 – (1) If departure is delayed for a period which, according to the situation and the circumstances, the passenger cannot be expected to endure, the passenger may withdraw from the contract and claim the fare he has paid and his damage, if any. If the passenger has made the journey despite the delay, he may sue only for compensation for the damage arising from the delay. Withdrawal is not subject to any form; leaving the place of departure is deemed to be withdrawal. Whether or not the contract has been withdrawn from, the court shall award compensation of three times the ticket price even if no damage arising from the delay can be proved.

II – During the journey

1. Change of route

Article 909 – (1) If, during the journey, the carrier stops at a place not included in the timetable, follows a route other than the ordinary route without reason, or otherwise arrives late, through his own act, at the intended destination, the passenger may withdraw from the contract and claim compensation.

(2) If the carrier also carries cargo in addition to passengers, he may interrupt the journey for the period necessary for the unloading of the cargo.

(3) The provisions of this Article apply unless otherwise provided in the contract.

2. Compelling causes

Article 910 – (1) If the journey has been delayed by reason of a government order, an administrative act, the necessity of repairing the vehicle by which the carriage is performed, or a cause arising suddenly and rendering the continuation of the journey dangerous, the following provisions shall apply in the absence of an agreement between the two parties on this matter:

a) If the passenger does not wish to wait for the removal of the impediment or the completion of the repair, he may withdraw from the contract by paying the freight in proportion to the distance travelled.

b) If the passenger waits for the departure of the means of transport, he shall pay only the agreed fare. If meals are included in the freight, the passenger shall bear the cost of meals during the period of the stoppage.

D) Interruption of the journey

Article 911 – (1) If the journey is interrupted after the conclusion of the contract of carriage and after departure, the following provisions shall apply unless otherwise provided in the contract:

a) If the passenger, of his own will, abandons the journey at a place on the route, he shall pay the entire fare.

b) If the carrier abandons the continuation of the journey, or if the passenger is compelled to disembark at a place on the route by reason of the fault of the carrier, the freight shall not be paid; if it has been paid, the passenger shall recover it in full. The passenger’s right to compensation is reserved.

c) If the journey is interrupted by reason of a cause concerning the passenger himself or the means of transport and not constituting fault on the part of the carrier, the fare shall be paid in proportion to the distance travelled. In this case, neither party shall pay compensation to the other.

E) Luggage

I – Liability of the carrier

Article 912 – (1) Unless otherwise agreed, the passenger shall not pay a separate fare for his luggage and hand luggage. The carrier is liable for the loss of or damage to the passenger’s goods pursuant to Articles 875 to 886 of the Law.

(2) The carrier is liable for the personal effects of the passenger.

II- Right of retention of the carrier

Article 913 – (1) The carrier has a right of retention over the luggage, pursuant to Articles 950 to 953 of the Turkish Civil Code, as security for the travel fare.

F) Liability of the carrier

Article 914 – (1) The carrier is obliged to convey passengers to their destination in comfortable travel and in good health, in particular to establish the arrangements necessary to avoid air, noise, ground and environmental pollution, to take all other necessary measures and to comply with the rules prescribed in the legislation.

(2) The carrier shall compensate the damage arising from accidents suffered by passengers. If the passenger dies as a result of the accident, those deprived of his support may claim from the carrier compensation for the damage they have suffered. However, the carrier is released from compensation if he proves that the accident arose from a cause which he or his assistants could not avoid and the consequences of which they could not prevent despite exercising the utmost care.

(3) The carrier is also liable under the second paragraph by reason of the seat indicated on the ticket being given to another person, another vehicle not of the same standard being put into service instead of the vehicle indicated on the ticket, the passenger being unable to catch the vehicle owing to its departure before the appointed time, or the failure to keep on board the means of transport the first-aid supplies and medicines required by the situation or to provide the opportunity of making immediate use of them; even if no damage is proved, the carrier shall pay three times the ticket price as compensation.

(4) Drivers of vehicles who commit the acts indicated in the third paragraph, persons who have the vehicles under their command, and persons who use the vehicles in the business of carriage shall, upon complaint, be punished by law enforcement officers with an administrative fine of from one hundred Turkish Lira to one thousand five hundred Turkish Lira.

G) Death of the passenger

Article 915 – (1) If the passenger dies during the journey, the carrier shall, in order to protect the interests of the heirs, take the measures necessary for the luggage and goods belonging to the passenger to be kept in good condition until they are delivered to the persons concerned.

(2) If one of the relatives of the deceased is present there, he may supervise these operations and may request from the carrier a written declaration that the goods specified in the first paragraph are in the carrier’s hands.

H) Regulation

Article 916 – (1) The carriage of passengers shall be regulated by a regulation issued by the Ministry of Transport, Maritime Affairs and Communications in accordance with the provisions of this Law. The regulation shall contain measures ensuring the safety of travel in every respect, including matters concerning the vehicle and the driver; cleanliness of the air, noise, ground and environment; and other requirements. The regulation shall contain provisions on the form of the document evidencing the receipt of luggage and, in particular, on entries concerning the weight and contents of the luggage. The regulation may not contain provisions permitting arrangements which limit the weight of luggage and liability otherwise than in accordance with the provisions of this Law.

(2) The liability of the carrier arising from luggage shall be determined by the Ministry of Transport, Maritime Affairs and Communications, provided that it does not exceed 500 Special Drawing Rights in domestic carriage and 1.000 Special Drawing Rights in international carriage.

PART SIX

Freight Forwarder

A) Freight forwarding contract

Article 917 – (1) By a freight forwarding contract, the forwarder undertakes to arrange for the carriage of goods. By this contract, the consignor assumes the obligation to pay the agreed remuneration.

(2) Freight forwarding is an activity of a commercial enterprise.

(3) Without prejudice to the special provisions of this Part, the provisions on the commission contract and, in matters relating to the carriage of goods, the provisions on the contract of carriage also apply to freight forwarding.

B) Provisions

I – Arranging the carriage of goods

Article 918 – (1) The obligation to arrange for the carriage of goods comprises the organisation of the carriage and, in particular, the obligations:

a) To determine the means of transport and the route of carriage,

b) To select the carrier or carriers who will actually perform the carriage, and to conclude the contracts of carriage, warehousing and freight forwarding necessary for arranging the carriage of the goods,

c) To give the necessary information and instructions to the carrier or carriers,

d) To secure the consignor’s rights to compensation,

as set out above.

(2) The scope of the forwarder’s obligations also includes the performance of other services agreed in relation to the carriage, such as the insurance, packing, marking and customs clearance of the goods. Unless otherwise provided, the forwarder is obliged only to conclude the contracts necessary for the performance of these services.

(3) The freight forwarder concludes the necessary contracts in his own name or, on condition that he has been given such authority, in the name of the consignor.

(4) In performing his services, the freight forwarder is obliged to safeguard the interests of the consignor and to comply with his instructions.

II – Obligation of notification

Article 919 – (1) The consignor is obliged, where necessary, to pack and mark the goods and to provide the necessary documents, and also to give the freight forwarder the information necessary to enable him to perform his services. If the cargo consists of dangerous goods, the consignor is obliged to notify the freight forwarder in writing and in due time of the nature of the danger and of the measures to be taken.

(2) The consignor is obliged, even if no fault is attributable to him, to cover the costs and damage of the freight forwarder arising from:

a) Insufficient packing and marking of the goods,

b) Failure to give sufficient information about the danger of the cargo, or

c) The incompleteness, absence or inaccuracy of the documents and information necessary for official procedures concerning the goods,

as set out above. The second to fifth paragraphs of Article 864 also apply here.

III – Maturity of the remuneration

Article 920 – (1) The forwarder’s remuneration shall be paid upon delivery of the goods to the carrier or to the sea carrier.

IV – Fixed remuneration

Article 921 – (1) If a single price which also includes the costs of carriage has been agreed as remuneration, the freight forwarder has, with regard to the carriage, the rights and obligations of a carrier or of a sea carrier. In this case, the forwarder may claim reimbursement of expenses only where this is customary.

V – Claims of the consignor

Article 922 – (1) The consignor may assert claims arising from contracts concluded by the forwarder in his own name and for the consignor’s account only after these claims have been assigned to him by the forwarder. Such claims, and performances obtained in the course of the fulfilment of these claims, are deemed to have passed to the consignor in the relationship with the forwarder’s creditors.

VI – Right of retention

Article 923 – (1) The forwarder has a right of retention over the goods, pursuant to Articles 950 to 953 of the Turkish Civil Code, for all claims arising from the freight forwarding contract. In this respect, the provisions of the second sentence of the first paragraph and of the third paragraph of Article 891 also apply by analogy.

VII – Subsequent forwarder

Article 924 – (1) If, in addition to the carrier, a freight forwarder also participates in the carriage and the goods are to be delivered by this forwarder, the provision of Article 892 concerning the contract of carriage applies by analogy to the forwarder.

VIII – Subrogation

Article 925 – (1) If the claims of a preceding carrier or freight forwarder are paid by a subsequent freight forwarder, the claims and rights of retention of the preceding forwarder or carrier pass to the subsequent freight forwarder.

IX – Forwarder undertaking the carriage himself

Article 926 – (1) The freight forwarder may himself undertake the carriage of the goods. If he exercises this right, he is deemed to be a carrier or a sea carrier with regard to the rights and obligations arising from the carriage. In this case, he may claim the ordinary freight in addition to the remuneration he may claim for his own activity.

X – Consolidated cargo

Article 927 – (1) The freight forwarder has the right, on the basis of a contract of carriage concluded for his own account, to have the goods carried together with the goods of another consignor.

(2) If the forwarder exercises this right, he has the rights and obligations of a carrier or of a sea carrier with regard to the carriage of the consolidated cargo.

C) Liability

I – Liability of the forwarder

Article 928 – (1) The freight forwarder is liable for loss of and damage to goods in his possession. Articles 876 to 878, Articles 880 and 881, the first, second and fourth paragraphs of Article 882, and Article 883 and Articles 885 to 887 apply by analogy.

(2) The freight forwarder is liable for damage not resulting from the loss of or damage to the goods in his possession only if he breaches an obligation incumbent upon him under Article 918. The forwarder is exempted from liability if the damage could not have been prevented despite the care that a prudent merchant would exercise.

(3) If conduct of the consignor or a special defect of the goods has also contributed to the occurrence of the damage, the extent to which these facts were effective shall be taken into account in the establishment of the obligation to compensate and in the determination of its scope.

II – Fault of assistants

Article 929 – (1) The freight forwarder is liable, as for his own acts and omissions, for the acts and omissions of:

a) His own servants,

b) Persons whose services he uses for the performance of the carriage,

committed in the course of the performance of their duties.

D) Limitation

Article 930 – (1) Claims and rights arising from the provisions of this Part are subject to a limitation period of one year.

(2) As regards the commencement of the limitation period, the assertion of a time-barred claim or right by way of defence, and the case where the damage arises from an act or omission of the freight forwarder committed intentionally, or recklessly and with knowledge that such damage would probably result, the provisions of Article 855 shall apply.

BOOK FIVE

Maritime Commerce

PART ONE

Ship

CHAPTER ONE

General Provisions

A) Definitions

I- Ship, merchant ship

Article 931 – (1) Any craft which, by reason of the purpose for which it is assigned, is required to move on water, which has the capacity to float and which is not very small, is deemed a “ship” for the purposes of this Law, even if it is not capable of self-propulsion.

(2) Any ship assigned to the purpose of obtaining economic benefit on water, or actually used for such a purpose, is deemed a “merchant ship”, regardless of by whom and in whose name or for whose account it is used.

II- Seaworthy, voyageworthy and cargoworthy ship

Article 932 – (1) A ship which, with regard to its essential parts such as the hull, general equipment, machinery and boilers, is capable of withstanding the perils (excluding wholly abnormal perils) arising from the waters in which the voyage is to be made is deemed “seaworthy”.

(2) A seaworthy ship is deemed “voyageworthy” if, with regard to its organisation, loading condition, fuel, provisions, and the competence and number of the crew members, it possesses the qualities necessary to withstand the perils (excluding wholly abnormal perils) of the voyage it is to make.

(3) A ship whose parts used for the carriage of goods, including the refrigerating installations, are fit for the reception, carriage and preservation of the goods is deemed “cargoworthy”.

(4) The provisions of the legislation relating to the protection of life and property at sea are reserved.

III- Irreparable ship, ship not worth repairing

Article 933 – (1) For the purposes of the application of this Law, a ship which has become unseaworthy is deemed:

a) An “irreparable ship”, if its repair is not possible at all or not possible at the place where it is located and it cannot be taken to a port where it could be repaired,

b) A “ship not worth repairing”, if the costs of repair would exceed three quarters of its previous value, without regard to the difference between old and new,

as set out above.

(2) The previous value consists of the value which the ship had when setting out on the voyage, if the unseaworthiness occurred during a voyage; and in other cases, of the value which the ship had before it became unseaworthy, or which it would have had if it had been properly equipped.

IV- Crew members

Article 934 – (1) “Crew members” are the master, the ship’s officers, the ratings and other persons employed on board the ship.

B) Scope of application of the provisions

Article 935 – (1) Without prejudice to provisions of law providing otherwise, the provisions of this Law relating to maritime commerce apply to merchant ships.

(2) However, the following provisions of this Book apply:

a) The Parts entitled “Ship”, “Master”, “Maritime Claims” and “Special Provisions Relating to Compulsory Enforcement”, the Chapters entitled “Collision” and “Salvage”, the provisions on the limitation of liability for maritime claims, and Article 1062 concerning the liability of the shipowner arising from the fault of crew members, to ships assigned solely to the purposes of pleasure, sport, education, instruction and science, such as yachts and seamanship training ships,

b) The Chapters entitled “Collision” and “Salvage”, the provisions on the limitation of liability for maritime claims, and Article 1062 concerning the liability of the shipowner arising from the fault of crew members, to State ships assigned exclusively to a public service and to warships and auxiliary ships belonging to the navy,

c) The second paragraph of Article 944 and Articles 945, 947, 948 and 949 concerning the flag certificate, Articles 955, 956, 973 and 991 concerning the registry, Article 1013 concerning the statutory mortgage, and Articles 1054 to 1058 concerning rights over ships under construction, also to ships being built in Türkiye in the name of a foreign State or its nationals, to the extent compatible with their nature,

as set out above.

C) Legal nature of ships

I- In general

Article 936 – (1) All ships, regardless of whether or not they are entered in the registry, are movable property for the purposes of the application of this Law and of other laws.

II- Provisions relating to immovables which apply to ships

Article 937 – (1) The provision of Article 936 does not apply to ships which are expressly stated in this Law to be subject to the provisions of the Enforcement and Bankruptcy Law relating to immovables.

(2) In the application of point (2) of the first paragraph of Article 429 and of Articles 444, 523 and 635 of the Turkish Civil Code, the term “immovable” includes all ships, whether under construction or completed, and the term “land register” includes “ship registries”.

CHAPTER TWO

Identity of the Ship

A) Name of the ship

I- Freedom of choice

Article 938 – (1) The first Turkish owner of the ship is free to give the ship any name he wishes. However, the name chosen must differ from the names of other ships in such a way as not to give rise to confusion.

(2) The name of a ship for which a certificate of registry has been issued may be changed with the permission of the Ministry of Transport, Maritime Affairs and Communications.

II- Obligation to inscribe on the hull

Article 939 – (1) The name of a ship entered in the registry shall be inscribed on both sides of its hull, and its name and port of registry on its stern, in indelible, durable and easily legible letters.

B) Flag of the ship

I- Right and obligation to fly the Turkish Flag

Article 940 – (1) Every Turkish ship shall fly the Turkish Flag.

(2) Only a ship owned by a Turkish citizen is a Turkish ship.

(3) Ships belonging to more than one person are deemed Turkish ships on condition that:

a) In the case of co-ownership in shares, the majority of the shares,

b) In the case of joint ownership, the majority of the owners,

belong to Turkish citizens.

(4) The following, established under Turkish laws, are deemed Turkish ships:

a) Ships belonging to organisations, institutions, associations and foundations having legal personality, provided that the majority of the persons constituting the management body are Turkish citizens,

b) Ships belonging to Turkish commercial companies, provided that the majority of the persons authorised to manage the company are Turkish citizens and that, under the company contract, the majority of votes is held by Turkish partners, and, additionally, in joint stock companies and limited partnerships with share capital divided into shares, that the majority of the shares are registered shares and that their transfer to a foreigner is subject to the approval of the company’s board of directors,

on the conditions stated above.

(5) Ships owned by joint ship-owning partnerships registered in the Turkish trade registry are deemed Turkish ships, on condition that more than half of their shares belong to Turkish citizens and that the majority of the part-owners authorised to manage the partnership are Turkish citizens.

II- Exceptions

Article 941 – (1) If a Turkish ship has been made over, for a period of at least one year, to be operated in their own name, to persons who would lose the right to fly the Turkish Flag if the ship belonged to them, the Ministry of Transport, Maritime Affairs and Communications may, upon the request of the owner, permit the ship to fly a foreign flag for the duration of the making over, if the laws of that country allow this. Unless this permission expires or is withdrawn for legal reasons, the ship may not fly the Turkish Flag.

(2) If a ship that is not a Turkish ship has been made over, for a period of at least one year, to be operated in their own name, to persons who could fly the Turkish Flag on it, the Ministry of Transport, Maritime Affairs and Communications may permit the ship to fly the Turkish Flag, on condition that the consent of the owner has been obtained, that the provisions of Turkish legislation on masters and ship’s officers are complied with, and that there is no provision in the foreign law preventing this. However, the person who has obtained the permission is obliged to prove every two years that the conditions required for the permission continue to exist.

(3) The ships specified in the second paragraph shall be entered in a special registry to be kept by the Ministry of Transport, Maritime Affairs and Communications.

III- Loss of the right to fly the Turkish Flag

Article 942 – (1) Upon the cessation of one of the conditions set out in Article 940 and in the second paragraph of Article 941, the ship loses the right to fly the Turkish Flag. This situation shall be notified without delay to the Ministry of Transport, Maritime Affairs and Communications. The Undersecretariat may permit the ship to fly the Turkish Flag for a further period of at most six months.

IV- Proof of the right

1. Certificate of registry

Article 943 – (1) The right of the ship to fly the Turkish Flag is proved by the certificate of registry.

(2) The right to fly the Turkish Flag may not be exercised unless the certificate of registry has been obtained.

(3) The certificate of registry, or an extract thereof certified by the registry directorate, or the flag certificate shall be kept on board the ship at all times during the voyage.

2. Flag certificate

Article 944 – (1) If a ship located outside Türkiye acquires the right to fly the Turkish Flag, the “flag certificate” concerning the right to fly the Turkish Flag to be issued by the Turkish consul at the place where the ship is located replaces the certificate of registry. The flag certificate is valid only for one year from the date of its issue; if the voyage is prolonged by reason of force majeure, the period is also extended.

(2) A flag certificate valid until arrival at the place where they are to be delivered may be issued by the Ministry of Transport, Maritime Affairs and Communications to ships built in Türkiye which do not have the right to fly the Turkish Flag under Article 940.

(3) In the cases set out in the second paragraph of Article 941 and in Article 942, the flag certificate shall be issued by the Ministry of Transport, Maritime Affairs and Communications, valid for the period of the permission.

3. Exemption

Article 945 – (1) Ships of less than eighteen gross tons and the ships set out in subparagraph (a) of the second paragraph of Article 935 may fly the Turkish Flag without the need for a certificate of registry or a flag certificate.

C) Port of registry of the ship

Article 946 – (1) The port of registry of a ship is the place from which the voyages of that ship are managed.

D) Penal provisions

I- Acts constituting offences

1. Flying a flag unlawfully

Article 947 – (1) The master of a ship which flies the Turkish Flag despite not having the right to fly the Turkish Flag, or which flies the flag of another State when it ought to fly the Turkish Flag, shall be punished with imprisonment of up to six months or a judicial fine.

2. Flying a flag without obtaining a certificate of registry or flag certificate or without keeping it on board

Article 948 – (1) With the exception of the ships set out in Article 945, the master of a ship which flies the Turkish Flag without obtaining the certificate of registry or its certified copy or the flag certificate shall be punished with imprisonment of up to four months or a judicial fine of up to two hundred days.

(2) A master who does not keep the certificate of registry or its certified copy or the flag certificate on board the ship shall be punished with imprisonment of up to two months or a judicial fine of up to one hundred days.

3. Failure to fly the flag before warships and fortifications and in port

Article 949 – (1) A master who does not have the flag flown on a merchant ship before warships and coastal fortifications and when entering or leaving Turkish ports shall be punished with imprisonment of up to three months or a judicial fine.

4. Failure to inscribe the name and port of registry of the ship

Article 950 – (1) A master who does not comply with the obligation to have the name of a ship entered in the registry duly inscribed on both sides of its hull, and its name and port of registry on its stern, shall be punished with imprisonment of up to three months or a judicial fine.

II- Common provisions

1. Fault

Article 951 – (1) In order for a penalty to be imposed in respect of the offences defined in Articles 947 to 950, the act must have been committed intentionally.

2. Place of commission of the offence and nationality of the offender

Article 952 – (1) The acts provided for in Articles 947 and 948 are punishable even if committed in a foreign country or on the high seas, by a Turkish national or by a foreigner.

E) Regulation¹⁰⁰

Article 953 – (1) The manner in which the certificate of registry and the flag certificate are to be issued, the manner in which the name of the ship is to be inscribed on the ship, and the manner of application of the provisions of this Chapter shall be determined by a regulation issued by the President of the Republic.

CHAPTER THREE

Ship Registry

A) General provisions

I- Registry directorates and regions

Article 954 – (1) A ship registry shall be kept for Turkish ships at the places that the Ministry of Transport, Maritime Affairs and Communications deems appropriate.

(2) Ship registries shall be kept by the registry directorates operating within the harbour masters’ offices, under the supervision of the commercial court of first instance competent to hear maritime commerce matters at that place or, if there is none, of the commercial court of first instance or, if there is none either, of the civil court of first instance competent to hear commercial cases. If there is more than one court hearing commercial cases at a place, the court which shall supervise the keeping of the ship registry shall be determined by the Council of Judges and Prosecutors upon the proposal of the Ministry of Justice.

(3) Article 1007 of the Turkish Civil Code also applies to ship registries.

II- Competent registry directorate

Article 955 – (1) A ship shall be registered by the registry directorate to which its port of registry is subject.

(2) If the voyages of a ship are managed from a foreign port, from an inland city or from the ship itself, the owner may have his ship registered in the registry of any place he wishes.

(3) If the owner has no domicile or commercial enterprise in Türkiye, he is required to designate to the registry directorate a representative residing in that region, in order to exercise the rights and perform the duties set out in this Law.

III- Ships eligible for registration

Article 956 – (1) Merchant ships having the right to fly the Turkish Flag under Article 940 and the ships set out in subparagraphs (a) and (c) of the second paragraph of Article 935 shall be entered in the ship registry.

IV- Ships subject to compulsory registration

Article 957 – (1) The owner of every merchant ship of eighteen gross tons or more is obliged to apply for registration.

V- Ships not eligible for registration

Article 958 – (1) Ships that are not Turkish ships, Turkish ships entered in a foreign ship registry, warships and auxiliary ships belonging to the navy, and ships belonging to the State, special provincial administrations, municipalities and villages and to other public legal entities which are assigned exclusively to the performance of a public service may not be registered in the Turkish Ship Registry.

B) Registration of the ship

I- Application

1. Form

Article 959 – (1) A ship shall be registered in the ship registry only upon the application of the owner or of one of the owners.

(2) The application shall be made by petition.

2. Content

Article 960 – (1) The following matters shall be declared together with the application for registration:

a) The name of the ship.

b) Its type and the principal material used in its construction.

c) The port of registry.

d) If it can be determined, the place where it was built and the year in which it was launched.

e) The results of the official measurement and the engine power.

f) The owner of the ship:

1. If a natural person, his name and surname, Turkish Republic identity number, trade name, if any, and the trade registry directorate in which he is registered together with the registration number.

2. If a commercial company, the type of the company, its trade name and the trade registry directorate in which it is registered together with the registration number.

3. If another legal entity, its name and seat.

4. If a joint ship-owning partnership, its trade name if it has merchant status, and the names and surnames of the part-owners, their Turkish Republic identity numbers, if any, and the amount of the ship shares, and, if any, the name, surname and Turkish Republic identity number of the ship’s manager.

g) The ground of acquisition.

h) The grounds on which the right to fly the Turkish Flag is based.

i) In the case set out in the third paragraph of Article 955, the name, surname, Turkish Republic identity number and address of the representative.

3. Documents

a) In general

Article 961 – (1) It is compulsory that the statements concerning the matters set out in subparagraphs (c), (d), (f) and (g) of the first paragraph of Article 960 and concerning the engine power be shown to be very probably correct, and that the facts on which the right to fly the flag is based and the results of the measurement be documented.

(2) If the ship has not yet been officially measured in Türkiye, it is sufficient to submit, in place of the tonnage certificate, a document relating to a measurement carried out outside Türkiye or another certified document.

(3) If the ship has been built wholly or partly in Türkiye, it is compulsory to submit a document, to be obtained from the registry directorate of the place of construction, as to whether or not it is entered in the registry specific to ships under construction.

b) For ships entered in a foreign registry

Article 962 – (1) In order for a Turkish ship previously entered in a foreign ship registry to be entered in the Turkish Ship Registry, documents showing it to be very probable that it is no longer entered in the foreign ship registry must be submitted to the registry directorate.

(2) If a ship subject to compulsory registration is entered in a foreign ship registry, its owner must have this entry deleted and document the situation; in the event of impossibility, this may be dispensed with.

II- Registration

1. Matters to be registered

Article 963 – (1) In the entry of a ship, the matters set out in subparagraphs (a) to (g) and (i) of the first paragraph of Article 960, the nature of the document proving the measurement, the day on which the ship was entered and the registration number shall be recorded in the registry. The nationality of the owner or owners of the ship and, where the ship belongs to a commercial company, another legal entity or a joint ship-owning partnership, the fact that it possesses the qualities necessary to be deemed a Turkish ship shall also be entered in the registry. The entry shall be signed by the competent registry officer.

(2) If, before the ship is registered, any person, claiming that he himself is the owner, objects to the ownership of the person applying for registration, the ship shall be registered but an annotation shall be entered in the registry in favour of the objecting party.

(3) If the ship has been registered in the registry specific to ships under construction, the ship mortgages entered in that registry shall be transferred ex officio to the ship registry, their ranks being reserved. The registration of the ship shall be notified to the officer keeping the registry specific to ships under construction.

2. Changes

Article 964 – (1) Changes occurring in the matters registered in the ship registry must be notified to the registry directorate by petition in order to be recorded in the registry.

(2) For a ship which has been permitted, under the first paragraph of Article 941, to fly another flag instead of the Turkish Flag, the period during which it may not fly the Turkish Flag shall be notified to the registry directorate and this matter shall be registered. If the permission expires or is withdrawn, this fact shall also be registered.

(3) If the ship sinks beyond salvage or becomes irreparable or loses, in whatever manner, the right to fly the Turkish Flag, these matters must also be notified without delay to the registry directorate.

(4) The ship owner and, in a joint ship-owning partnership, the ship’s manager are also obliged to make the applications required under the first to third paragraphs. If there is more than one person who is required to make the application, the application of one of them is sufficient. The same principle applies if the owner is a legal entity represented by more than one person.

(5) Articles 960, 961 and 963 apply to the registration of the change to the extent compatible with its nature.

C) Deletion

I- Upon application

Article 965 – (1) If the ship sinks beyond salvage or becomes irreparable or loses, in whatever manner, the right to fly the Turkish Flag, its entry shall be deleted from the registry upon application. The entries of ships whose registration is optional shall be deleted from the registry upon the application of the owner or owners.

(2) Where the deletion of the entry is requested on the ground that the ship has become irreparable, the registry officer shall, by informing the registered ship mortgage creditors of the situation, where necessary by an announcement to be made according to the procedure set out in Article 966, invite them to submit their objections within an appropriate period to be determined by him. The entry of the ship shall be deleted upon the decision of the court that the objections submitted within the period are not well founded becoming final.

(3) If the ship loses the right to fly the Turkish Flag, its entry may be deleted from the registry only with the consent of the mortgage creditors and of third parties who, according to the entries and documents in the ship registry, hold rights over the mortgage. If the consent is not documented together with the application for deletion of the entry, the fact that the ship has lost the right to fly the Turkish Flag shall be entered without delay in the ship registry. Unless there are registered ship mortgages on the ship, this entry has the effect of deletion of the ship’s entry. However, where the ship is sold by way of compulsory enforcement to a person who does not possess the qualities set out in Article 940, the provisions of the second paragraph of Article 1388 and, if the compulsory enforcement took place abroad, of the second and third sentences of the first paragraph of Article 1350 are reserved.

(4) In order for the entries relating to ships whose registration is optional to be deleted solely upon the applications of their owners, the mortgage creditors and third parties who, according to the content of the ship registry, hold rights over the mortgage must give their consent thereto.

II- Ex officio

1. General conditions

Article 966 – (1) If a ship which is not eligible for registration because one of the essential conditions is lacking has been registered, or if the occurrence of one of the cases set out in the third paragraph of Article 964 is not notified to the registry directorate, the provision of Article 33 shall apply. However, the situation must also be notified to the other right holders entered in the registry. If the identity or domiciles of the owner and the other right holders are not known, the invitation to deletion and the period determined shall be announced in the Turkish Trade Registry Gazette and in another newspaper deemed appropriate and, if any, on the company’s website, and the announcement document shall be posted at the registry directorate and on the court’s notice board.

(2) The entry of the ship may be deleted from the registry only if the grounds for refraining and objection are not submitted within the period, or if the decision of the court that they are not well founded becomes final. If a mortgage creditor objects to the deletion from the registry of a ship which has lost the right to fly the Turkish Flag, claiming that the ship mortgage still exists, the entry shall not be deleted and only the fact that the ship has lost the right to fly the Turkish Flag shall be registered.

2. Special cases

Article 967 – (1) If no entry has been made for twenty years in respect of a registered ship and, according to the information obtained from the Ministry of Transport, Maritime Affairs and Communications, it is concluded that the ship no longer exists or has become unusable for navigation, the court shall, upon the proposal of the registry officer, decide on the deletion of the ship’s entry without the need for the procedure set out in Article 966, provided that no mortgage or usufruct is registered on the ship.

D) Certificate of registry

I- Content

Article 968 – (1) The registry directorate shall issue a certificate of registry stating that the ship has been entered in the registry. The registry entries shall be transferred to the certificate verbatim and in full.

(2) The certificate of registry shall also indicate that the documents required for the registration of the ship have been submitted and that it has the right to fly the Turkish Flag.

(3) Upon his request, the ship owner shall be given a certified extract of the certificate of registry. Only the matters set out in subparagraphs (a) to (f) of the first paragraph of Article 960 and the fact that the ship has the right to fly the Turkish Flag shall be written in this extract.

II- Reissue

Article 969 – (1) In order for a new certificate of registry to be issued, it is required that the old one be produced or that its loss be credibly demonstrated. The same provision applies to the certified extract of the certificate of registry.

(2) If the ship is located in a foreign country, the registry directorate shall send the new certificate to the local Turkish authorities, to be given to the master against return of the old one.

III- Changes

Article 970 – (1) Every entry recorded in the ship registry shall also be written without delay on the certificate of registry. This provision does not apply to entries relating to the restriction of the transfer of a ship share.

IV- Obligation to produce

Article 971 – (1) In the event of changes occurring in the matters registered in the ship registry, of the transfer of ownership of the ship or of the acquisition of a ship share, those obliged to apply for the change are obliged to produce the certificate of registry and, if any, its certified extract to the registry directorate. As long as the ship is at its port of registry or at the port where the registry directorate is located, the master is also obliged to make the application.

(2) In the cases set out in the first and third paragraphs of Article 965, the certificate of registry and, if any, its extract shall be withdrawn and cancelled.

E) Invitation to have registry procedures carried out

Article 972 – (1) The provision of Article 33 shall apply to persons who are obliged to apply for the entry of a matter in the ship registry, the amendment or deletion of an entry, or to produce the documents necessary for these procedures to be carried out, if they do not fulfil their obligations within fifteen days after learning of the matters requiring these procedures.

(2) The provision of Article 966 concerning ex officio deletion is reserved.

F) Effects

I- Publicity of the registry

Article 973 – (1) The ship registry is public. Anyone may examine the registry entries and, on condition of paying the cost, obtain certified or uncertified copies thereof.

(2) A person who credibly demonstrates that he has a legitimate interest is also entitled to examine the registry files, the documents referred to in the ship registry for the completion of an entry and pending applications for registration, and to obtain copies thereof.

II- Registry presumptions

Article 974 – (1) The person entered in the ship registry as owner is deemed to be the owner of the ship.

(2) The person in whose favour a ship mortgage, a right over a mortgage or a usufruct has been registered in the ship registry is deemed to be the holder of that right.

(3) If a registered right is deleted from the registry, that right is deemed to no longer exist.

(4) The provision of the second paragraph of Article 992 of the Turkish Civil Code is reserved.

III- Bringing the registry into conformity with the true legal situation

Article 975 – (1) If the content of the ship registry does not conform to the true legal situation as regards ownership, a ship mortgage, a right over a mortgage, a usufruct, or a restriction on disposal of the kind set out in the second sentence of the first paragraph of Article 983, the person whose right has not been registered or has been incorrectly registered, or whose right has been infringed as a result of the registration of a non-existent right or restriction, may request the person whose right will be infringed as a result of the amendment to consent to the amendment of the entry.

(2) If the ship registry can be amended only after the right of the person obliged under the first paragraph has been registered, this person is obliged, upon request, to have his right registered.

(3) The rights to request the amendment set out in the first and second paragraphs are not subject to limitation.

IV- Objections

Article 976 – (1) In the cases set out in Article 975, an objection that the registry entry is incorrect may be registered in the ship registry.

(2) The objection shall be entered in the registry on the basis of an interim injunction or of the consent of the person whose right will be harmed as a result of the amendment of the entry in the registry. In granting the interim injunction, the requirement of prima facie proof that the right is endangered shall not be sought.

V- Annotations

1. Cases in which they may be entered

Article 977 – (1) An annotation may be entered in the ship registry in order to secure the right to request the creation or removal of a right over a ship or ship mortgage, or the amendment of the content or rank of such a right. It is possible to enter an annotation in the ship registry for the purpose of securing a future or conditional right of claim.

(2) Dispositions to be made over the ship or the mortgage after the annotation are invalid to the extent that they infringe the right secured by the annotation. The same applies where the disposition is made by way of compulsory enforcement or precautionary attachment or by the bankruptcy administration.

(3) The date of the annotation is taken as the basis for determining the rank of the right secured by the annotation.

(4) To the extent that the right has been secured by the entry of an annotation, the heir of the obligor may not claim that his liability is limited.

2. Entry

Article 978 – (1) The annotation shall be entered on the basis of an interim injunction or of the consent of the person whose ship or right is restricted as a result of the annotation. In granting the interim injunction, the requirement of prima facie proof that the right is endangered shall not be sought.

3. Right conferred

Article 979 – (1) Where the acquisition of ownership, of a ship mortgage, of a right over a mortgage or of a usufruct is invalid against the person in whose favour the annotation was entered, the holder of the annotation may request the acquirer to consent to the registration or deletion necessary for the realisation of the right of claim secured by the annotation.

4. Extinction

Article 980 – (1) Where the creditor whose claim has been secured by means of an annotation in the register is unknown, and the conditions specified in Article 1052 for the annulment of the right of a ship mortgage creditor are present, the annulment of the creditor’s right may be decided after the creditor has been summoned by public notice. Upon the decision of annulment, the annotation also becomes extinct.

5. Deletion

Article 981 – (1) Where the person whose ship or right is restricted as a result of the annotation has a defence which permanently renders impossible the assertion of the claim secured by the annotation, he may request the creditor to have the annotation deleted.

VI- Removal of the objection or annotation

Article 982 – (1) Where the objection or annotation has been registered on the basis of an interim injunction decision, the objection or annotation is also removed upon the removal or lapse of the injunction.

VII- Principle of reliance on the register

Article 983 – (1) In favour of a person who acquires, by a legal transaction, the ownership of a ship, a usufruct, a ship mortgage or a right over a mortgage, the content of the ship register shall be deemed correct insofar as it relates to these rights, unless the acquirer knew or ought to have known that the entry was not correct. Where the power of disposal of the right holder over a registered right has been restricted in favour of a specific person, this restriction shall have effect against the acquirer only on condition that it is entered in the ship register or that he knew or ought to have known that the register entry was not correct.

(2) In cases where registration is a requirement for the acquisition of the right, the date of the request for registration is decisive with respect to knowledge that the entry was not correct.

(3) The provisions of the first and second paragraphs shall also apply where a performance is rendered, by reason of that right, to a person in whose favour a right has been registered in the ship register, or where a transaction of disposal, other than those set out in the first paragraph, is concluded between this person and a third person over a right entered in the register.

G) Statute of limitations

Article 984 – (1) Claims arising from registered rights in rem are not subject to the statute of limitations as long as the registration continues. Claims relating to accrued performances that are required to be performed at specific times and to the payment of compensation constitute an exception to this.

(2) Rights which are the subject of an objection entered in the register are also deemed to be rights entered in the register.

(3) The registration of a ship mortgage prevents the running of the statute of limitations in respect of the claim.

H) Registration costs

Article 985 – (1) Unless otherwise agreed, the registration costs relating to the transfer of ownership of a ship or share in a ship or to the creation or transfer of another right in rem, including the costs of the instruments and documents necessary for this, shall be borne by the person acquiring the right.

(2) Unless otherwise understood from the legal relationship between him and the obligor, the person requesting the amendment of an entry shall bear the costs of the amendment and of the declarations necessary for it.

İ) Register specific to ships under construction

I- In general

Article 986 – (1) A ship under construction shall be entered in the register specific to ships under construction upon the request of the owner, or where a ship mortgage is to be established over the construction, or the construction is to be subject to a provisional or definitive attachment, or an annotation is to be entered in the register for the purpose of securing the claim of the shipyard owner for the establishment of a ship mortgage.

(2) The construction shall be registered by the registry office to which the place of construction is attached. Even if the construction is taken to another place outside the jurisdiction of this registry office, the same registry office shall remain competent. However, this office shall notify the registry office at the new place of construction that the construction has been registered.

II- Registration of the construction

1. Request for registration

a) Form

Article 987 – (1) The construction shall be entered in the register specific to ships under construction upon the petition of its owner or of the shipyard owner wishing to have a statutory mortgage right registered.

(2) A creditor who has obtained a provisional or executory attachment order may also request the entry of the construction in the register by means of a letter of the enforcement director.

b) Content

Article 988 – (1) The following matters shall be notified together with the request for registration:

a) The type and the name or number of the ship under construction, or any mark serving to distinguish it.

b) The place of construction and the shipyard where the ship is being built.

c) Its owner.

(2) The existence of the conditions deemed necessary in the second paragraph of Article 1054 for the establishment of a ship mortgage over the construction shall be proven by a document to be issued by the competent ship measurement institution.

2. Registration

a) Matters to be registered

Article 989 – (1) In the entry of a construction, the matters set out in the first paragraph of Article 988, the nature of the document set out in the second paragraph, and the day on which the construction was registered shall be entered in the register. The entry shall be signed by the competent officer.

b) Changes

Article 990 – (1) The owner of the construction or the owner of the shipyard where the ship is being built is obliged to notify the registry office without delay, by means of a registration petition for the purpose of registration, of the changes occurring in the registered matters and of the completion of the construction of the ship. Where there is more than one person required to make the request, the request of one of them is sufficient. The same principle applies where the owner is a legal entity represented by more than one person. The matters notified to the register must be documented. The provision of Article 972 shall also apply here.

(2) After the completion of the construction of the ship has been notified or the document set out in the third paragraph of Article 961 of the Code has been issued, a ship mortgage may no longer be registered in the register specific to ships under construction.

c) Effects

Article 991 – (1) Articles 954 and 973 of the Code shall apply to the register specific to ships under construction. However, a person wishing to examine the pages of the register and the bases of the register entries and to obtain copies thereof must prove his interest.

(2) A person in whose favour a mortgage right has been registered in the register specific to ships under construction shall be deemed a construction mortgage creditor. A construction mortgage deleted from the register, on the other hand, is deemed not to exist.

(3) Articles 977 and 983 to 985 of the Code shall also apply to the register specific to ships under construction.

d) Deletion

Article 992 – (1) The entry of the construction in the register, in the cases of:

a) Notification by the shipyard owner that the ship has been delivered to a foreign country,

b) Request by the owner of the construction and the owner of the shipyard where the ship is being built that the entry be deleted from the register,

c) Destruction of the construction,

shall be deleted.

(2) Where there is a mortgage over the construction, in the cases set out in subparagraphs (a) and (b) of the first paragraph, the consent of the mortgage creditor and of the other right holders entered in the register to the deletion of the entry from the register is also required.

(3) Where the delivery of the ship to a foreign country upon completion of the construction, or the destruction of the construction, is not notified within the time limit, the entry of the construction shall be deleted from the register ex officio in accordance with the procedure in Article 966.

J) Objection to the decisions of the registry office

Article 993 – (1) An objection may be made against the decisions of the registry office in accordance with Article 34 of the Code.

K) Regulation¹⁰¹

Article 994 – (1) The supplementary provisions concerning the establishment of the ship register and how it is to be kept, the qualifications that its directors and officers must possess, how legal relationships are to be documented and registered, and the correction, amendment and deletion of entries shall be determined by a regulation issued by the President of the Republic.

L) Turkish International Ship Register

Article 995 – (1) The provisions relating to the “Turkish International Ship Register” are reserved.

CHAPTER FOUR

Ownership and Other Rights in Rem

SECTION ONE

Applicable Provisions

A) To ships entered in the register

Article 996 – (1) Unless otherwise provided in the Code, the provisions of this Chapter shall apply only to ships entered in the Turkish Ship Register.

B) To ships not entered in the register

Article 997 – (1) The provisions of the Turkish Civil Code relating to movables shall apply to ownership and limited rights in rem over Turkish ships not entered in the Turkish Ship Register.

(2) In the case of the transfer of a ship or a share therein, each of the parties may, on condition of covering the costs, request that an official instrument, or an instrument whose signature is certified by a notary, relating to the transfer be given to him.

SECTION TWO

Ownership

A) Acquisition

I- Original acquisition

1. Appropriation

Article 998 – (1) The right to appropriate an ownerless ship belongs solely to the State. An ownerless ship is a ship whose owner cannot be identified from the register entries, or ownership of which has been duly abandoned.

(2) The State acquires ownership of the ship by having itself registered in the ship register as owner.

2. Ordinary prescription

Article 999 – (1) A person who, although not the owner of a ship entered in the register, has been registered in the ship register as owner, acquires ownership of the ship on condition that the registration has lasted at least five years and that during this period he has held the ship in his hands as original possessor without dispute and without interruption. This period begins to run from the date on which the non-owner was registered in the register. The calculation, interruption and suspension of the period are subject to the provisions of the Turkish Code of Obligations relating to the limitation of claims. Where an objection to the effect that the entry in the ship register is not correct has been registered, prescription does not run as long as the objection remains registered.

(2) Upon the fulfilment of the conditions prescribed for prescription, the person appearing in the register as owner of the ship acquires its ownership.

3. Extraordinary prescription

Article 1000 – (1) A person who has held in his hands, as original possessor, without dispute and without interruption for at least ten years, a ship which should have been entered in the register but has not been entered, may request that the ship be registered in the register as his property.

(2) A person who holds, under the conditions set out in the first paragraph, a ship which is registered in the name of a person who died or was declared absent at least ten years ago and in respect of which no matter subject to the consent of the owner has been entered for ten years, may also request to be registered as the owner of that ship. The calculation, interruption and suspension of the period of possession are subject to the provisions of the Turkish Code of Obligations relating to the limitation of claims.

(3) Registration shall take place only by court decision. The action for registration shall be brought against the registry office in which the ship is registered or ought to be registered. The court shall summon the interested parties to make their objections known, by determining a period of at most three months, by means of a notice to be published on an internet news site and in a newspaper with a circulation of over fifty thousand that is distributed nationwide. If no objection is made or the objection is rejected, registration shall be decided.¹⁰²

(4) If, before registration is decided, a third person is registered as owner, or an annotation of objection to the effect that the ship register is not correct is entered in the register by reason of the ownership of a third person, the registration decision shall have no effect with respect to the third person.

(5) The original possessor acquires ownership of the ship at the moment he has himself entered in the register on the basis of the registration decision given by the court.

II- Derivative acquisition

1. Form of transfer

Article 1001 – (1) For the transfer of a ship entered in the ship register, it is required that the owner and the acquirer agree on the transfer of ownership to the acquirer and that possession of the ship be transferred.

(2) The agreement on the transfer of ownership must be made in writing and the signatures must be certified by a notary. This agreement may also be made at the ship registry office.

(3) The provision of the third paragraph of Article 11 is reserved.

2. Scope of transfer

Article 1002 – (1) Unless otherwise agreed by the parties, the acquirer, together with the ownership of the ship, also acquires ownership of the accessories existing at the time of acquisition and belonging to the transferor.

(2) If, as a result of the transfer, accessories which do not belong to the transferor or which are restricted by rights belonging to third persons also pass into the possession of the acquirer, Articles 763, 988, 989 and 991 of the Turkish Civil Code shall apply. The moment at which the acquirer obtains possession shall be taken as the basis with respect to the good faith of the acquirer.

(3) If the ship is transferred while it is on a voyage, the profit and loss of this voyage shall, in the relations between the transferor and the acquirer, belong to the acquirer unless otherwise agreed.

B) Loss

I– Loss of the ship

Article 1003 – (1) The right of ownership over a ship entered in the register ends upon its loss for reasons such as sinking in such a way that it cannot be salvaged, being destroyed without leaving usable wreckage, exploding or having been demolished. However, the owner’s movable property ownership over the usable wreckage, and his obligations and debts relating to the removal of any kind of wreckage, the protection of the environment and similar matters, shall continue.

II- Abandonment

Article 1004 – (1) The owner of a ship entered in the register may abandon ownership of the ship by notifying the registry office that he renounces his right of ownership over the ship and having this registered in the ship register.

III- Prescription

Article 1005 – (1) Upon the fulfilment of the conditions of ordinary prescription in favour of the original possessor holding the ship, the right of ownership of the previous owner ends.

(2) In extraordinary prescription, the right of ownership of the previous owner ends upon registration being decided as a result of the action for registration brought, in accordance with the third paragraph of Article 1000, by the person holding the ship as original possessor.

C) Ownership of a share in a ship and a partnership share entered in the register

I- Acquisition

1. Original

Article 1006 – (1) The original acquisition of ownership of a share in a ship or a partnership share entered in the register is subject to the provisions concerning ships entered in the register.

2. Derivative

a) By way of transfer

Article 1007 – (1) Ownership of a share in a ship entered in the register passes to the transferee upon the agreement of the owner and the acquirer on this matter. The agreement must be made in writing and the signatures must be certified by a notary. This agreement may also be made at the ship registry office.

(2) In a shipowning partnership, each of the part-owners may, at any time he wishes, transfer his partnership share in whole or in part to another person without the consent of the other part-owners. The transfer of a partnership share in a ship entered in the register takes place through the transfer of the share in the ship and its registration in the register.

(3) If, as a result of the transfer of a share in the ship or of a partnership share, the ship would lose the right to fly the Turkish Flag, the transfer shall be valid only with the consent of all co-owners or part-owners.

(4) If a share in a ship is transferred while the ship is on a voyage, the scope of the transfer shall be determined in accordance with the third paragraph of Article 1002.

b) By way of relinquishment of the partnership share

Article 1008 – (1) Where, in a shipowning partnership, a new voyage, or the repair of the ship at the end of a voyage, or the payment of a ship claim for which the shipowning partnership is liable is decided, each of the part-owners who did not participate in the decision may be released from making the payments required to implement the decision by relinquishing his partnership share without claiming any consideration.
(2) A part-owner wishing to exercise this right is obliged to make a notification, through a notary, to the part-owners or to the ship’s manager within three days from the date on which the decision was taken or, if he or his representative was not present when the decision was taken, from the notification of the decision.

(3) The right of ownership over the relinquished partnership share passes to the other part-owners in proportion to their partnership shares upon a notification of relinquishment to be made in accordance with the second paragraph.

II- Loss

Article 1009 – (1) The loss of ownership over a share in a ship and a partnership share entered in the register is subject to the provisions on the loss of ownership concerning ships entered in the register.

(2) Where the partnership share is relinquished in accordance with Article 1008, the right of ownership of the part-owner over the partnership share ends at the moment the duly made notification of relinquishment is sent.

D) Ownership over ships under construction and shares in constructions

I- Constructions and shares in constructions not entered in the register specific to ships under construction

Article 1010 – (1) The acquisition and loss of ownership over constructions and shares in constructions not entered in the register specific to ships under construction are subject to the provisions relating to the acquisition and loss of ownership over ships and shares in ships not entered in the register.

II- Constructions and shares in constructions entered in the register specific to ships under construction

Article 1011 – (1) The acquisition and loss of ownership over constructions and shares in constructions entered in the register specific to ships under construction are subject to the provisions relating to the acquisition and loss of ownership over ships and shares in ships entered in the register.

SECTION THREE

Ship Pledge

A) Pledge of a partnership share in ships not entered in the register

Article 1012 – (1) Where a ship not entered in the register is operated by a shipowning partnership, the pledge of the partnership share of each of the part-owners is subject to the provisions of the Turkish Civil Code relating to pledges over claims and other rights.

B) Pledge of ships entered in the register

I- Mortgage right of the shipyard owner

Article 1013 – (1) The shipyard owner has the right to request the registration of a mortgage over the construction or ship for his claims arising from the construction and repair of the ship. Waiver of this right in advance is not valid.

(2) Articles 895 to 897 of the Turkish Civil Code shall apply to the establishment of this mortgage.

(3) An annotation may be entered in the ship or construction register in order to secure the claim for the establishment of a ship mortgage. If the construction or repair of the ship has not yet been completed, the establishment of a security mortgage may be requested for a part of the price corresponding to the completed work and for the costs not included in the price.

II- Ship mortgage

1. Nature

Article 1014 – (1) A mortgage may be established over a ship in order to secure a claim. A ship mortgage grants the creditor the power to obtain his claim from the value of the ship. The contractual pledge of ships entered in the register is provided solely by way of a ship mortgage. A mortgage may also be established for a claim that may arise in the future or that is conditional or linked to a negotiable instrument.

(2) The right of the creditors arising from the ship mortgage is determined solely according to the claim.

(3) A share in a ship may be restricted by a ship mortgage only on condition that it consists of the share of one of the co-owners who own the ship in accordance with the principles of co-ownership in shares.

(4) As long as all the shares of a ship are in the hands of one owner, ship mortgages may not be established over individual shares in favour of different persons.

2. Establishment

Article 1015 – (1) For the establishment of a ship mortgage, it is required that the owner of the ship and the creditor agree on the establishment of a mortgage over the ship and that the mortgage be registered in the ship register.

(2) Contracts relating to the establishment of the mortgage must be made in writing and their signatures must be certified by a notary. This agreement may also be made at the ship registry office. Unless made in conformity with one of these forms, the agreement on the establishment of the mortgage shall not be valid.

(3) Where, before registration, the agreement has been made in the form prescribed by the Code, or the owner has notified the creditor, in accordance with the Ship Register By-law, that he has consented to the entry, or a registration petition has been submitted to the registry office, the interested parties may not refrain from registration.

(4) A subsequent restriction of the owner’s capacity of disposal does not render invalid his consent to the entry notified to the register or the request for entry.

(5) In respect of ships acquired in a foreign country and not yet registered in the Turkish Ship Register or the Turkish International Ship Register, an annotation on the certificate of flag has the effect of registration. Upon the registration of the ship, such mortgages shall be entered in the register ex officio.

(6) For the establishment of a ship mortgage for the purpose of securing a claim linked to a bearer bond, a declaration by the owner to the registry office and registration in the register are sufficient.

3. Matters to be entered in the register

Article 1016 – (1) In the registration of a ship mortgage, the name and surname or trade name of the creditor, the amount of the claim in Turkish Lira, for claims whose subject is not money its equivalent in Turkish Lira, if the claim bears interest the interest rate, if other ancillary performances have been agreed their amount in the currency in which the amount of the claim is determined, and the rank of the mortgage shall be entered in the register; the amount secured by each rank shall be shown in the currency in which the pledged claim is determined. With respect to other matters assisting in the determination of the content of the right and the claim, reference may be made to the request for registration.

(2) In debts payable in Turkish Lira, the amount of the claim and ancillary debts to be covered by the mortgaged ship may be determined by reference to gold or foreign currency.

(3) If the amount of the claim is not certain or is variable, the upper limit of the amount of the claim to be secured by the mortgage shall be determined and registered in the ship register, in order to establish the actual amount in due time; if the claim bears interest, the interest shall also be deemed to fall within the upper limit.

(4) A ship mortgage may be established in foreign currency. In this case, the foreign exchange buying rate of the Central Bank of the Republic of Türkiye on the day of calculation shall be taken as the basis in calculating the foreign currency or Turkish currency equivalents. The foreign currencies in which pledge rights may be established shall be determined by the Undersecretariat of Treasury. A ship mortgage may not be established using more than one type of currency in the same rank.

(5) Where the rank belonging to a pledge established in foreign currency becomes vacant, a pledge may be established in its place in Turkish currency, being its equivalent on the date of registration, or in foreign currency. Where the rank belonging to a pledge established in Turkish currency becomes vacant, a pledge may be established in its place in foreign currency, being its equivalent on the date of registration.

(6) Where a ship mortgage is to be established in order to secure a claim linked to bonds, the amount of the entire claim shall be registered by showing the number of bonds and the value and distinguishing marks of each bond and, if the mortgage is to be established for the entire loan, in favour of a representative acting on behalf of the debtor and all the creditors instead of the creditor; if the mortgage is to be established for an enterprise undertaking the issuance of the bonds, a pledge right over the ship mortgage in favour of the bondholders shall also be registered.

(7) In the establishment of a ship mortgage for the purpose of securing claims arising from a bill of exchange, a bearer instrument or another instrument transferable by endorsement, the representative who may be designated to carry out certain dispositions over the ship mortgage for and against those who subsequently acquire the claim and to represent the creditor in the enforcement proceedings to be conducted for the realisation of the mortgage must also be entered in the register. Reference may be made to the request for registration with respect to the powers of this representative.

4. Rank of the mortgage

Article 1017 – (1) The ranks of mortgages over a ship are determined in accordance with the provisions of the Turkish Civil Code on the pledge of immovables.

5. Claim secured by the mortgage

a) In general

Article 1018 – (1) The mortgaged ship provides security for the claims provided for in the first paragraph of Article 875 and in Article 876 of the Turkish Civil Code.

(2) In order for the debt to become due upon notice by the creditor, notice must also be given to the owner together with the debtor. Unless notice is given to the owner, the debt does not become due with respect to him. Where the debt becomes due against the owner, the mortgage also covers default interest.

b) Interest

Article 1019 – (1) If the claim bears no interest or the interest rate is lower than the rate determined in the provision regulating the minimum statutory interest rate in force at that time, the mortgage may be extended to cover this statutory interest as well, without the need for the consent of right holders of equal or subsequent rank.

(2) The consent of these right holders is not required for changes to be made in the time and place of payment of interest.

6. Scope of the mortgage

a) Ship, share in a ship, integral part, accessory, sale or expropriation price replacing the ship, and claims for compensation

Article 1020 – (1) Articles 862 and 863 of the Turkish Civil Code shall apply to the scope of the mortgage.

(2) If accessories are removed from this status as required by normal operation, or are transferred and removed from the ship before being seized in favour of the creditor, the mortgage no longer covers them.

(3) If integral parts are separated and removed from the ship otherwise than for a temporary purpose, the mortgage does not cover them, unless the ship was seized in favour of the creditor before their removal.

(4) The price of an expropriated ship and the claims for compensation which the shipowner has against third persons by reason of the loss of or damage to the ship are within the scope of the mortgage.

b) Several ships or shares in ships in a joint ship mortgage

Article 1021 – (1) If several ships or shares in ships have been mortgaged for one claim, each of them is liable for the entire debt.

(2) The creditor may divide his claim among the ships or shares, each ship or share being liable only for a specific portion. The division takes place by a declaration to be made to the registry office and by registration. If there are persons holding rights over the joint mortgage, their consent is also required.

c) Insurance indemnity

aa) Rule

Article 1022 – (1) Where the owner’s interest in the matters falling within the scope of the ship mortgage has been insured by the owner or by another person in his favour, the mortgage also covers the insurance indemnity.

(2) The mortgage also secures the sums spent by the creditor for the payment of insurance premiums or other payments required to be made to the insurer under the insurance contract, together with the interest thereon.

(3) Without prejudice to the following provisions, the provisions of the Turkish Civil Code relating to pledged claims and other rights shall also apply here; the insurer may not assert that he did not know of the mortgage entered in the ship register. However, where the insurer or the policyholder has notified the creditor of the occurrence of the loss and a period of two weeks has elapsed from the notification, the insurer is also released from liability towards the creditor by paying the indemnity to the insured. Notification may be dispensed with if it is extremely difficult to make. In this case, the period begins to run from the date on which the indemnity becomes due. Until the expiry of the period, the creditor may object to the payment vis-à-vis the insurer.

bb) Payments to be made by the insurer

Article 1023 – (1) Where the insurer has made a payment to the owner, to be set off against the indemnity, for the purpose of restoring the ship to its former condition or of paying the ship creditors, and the achievement of these purposes has been secured, the payment is also valid against the mortgage creditor.

(2) Where the ship has been restored to its former condition or new parts constituting accessories have been put in their places, the insurer’s liability towards the mortgage creditors ends. Where the debts of the owner forming the basis of a ship creditor’s right are paid, the payment to be made by the insurer to the owner releases the insurer from liability towards the mortgage creditor only in proportion to the value which the elements constituting the security for the ship creditor’s right had immediately after the occurrence of the risk.

cc) Notification of the ship mortgage to the insurer

aaa) Obligation to notify

Article 1024 – (1) If the mortgage creditor has notified the insurer of the mortgage, then, where the insurance premium is not paid on time and a payment period is therefore set for the policyholder, the insurer must notify the creditor of this without delay. The same provision applies where the insurance contract is terminated at the end of the period because of non-payment of the insurance premium.

(2) Where the insurance contract ends before its term by notice of termination, withdrawal or any other reason, the insurer must notify the mortgage creditor that the insurance contract has ended or, if it has not yet ended, of the date on which it will end. The reasons requiring the termination of the insurance contract before its term shall have effect with respect to the mortgage creditor only upon the lapse of two weeks from this notification or from the date on which the mortgage creditor learned of them in any manner.

(3) The provision of the second paragraph shall not apply where the insurance contract is terminated because the insurance premium was not paid in time or ends upon the bankruptcy of the insurer.

(4) Where the insurer makes an agreement with the policyholder reducing the sum insured or narrowing the scope of the risk for which the insurer is liable, the provision of the first sentence of the second paragraph shall apply by analogy.

(5) If the insurance contract is invalid because it was concluded by the policyholder with the intention of obtaining an unjust increase in his assets by means of over-insurance or double insurance, the insurer may not assert invalidity against the mortgage creditor who has notified the ship mortgage. However, upon the lapse of two weeks from the insurer’s notification of the invalidity to the mortgage creditor or from the creditor’s learning of it in any manner, the insurance relationship also ends with respect to the mortgage creditor.

bbb) Where there are several insurers

Article 1025 – (1) If the ship has been insured jointly by several insurers, it is sufficient, for the purposes of Article 1024, that the mortgage be notified to the insurer designated by the owner to the creditor as the leading insurer (gérant). The leading insurer is obliged to notify the other insurers of the situation.

ccc) Change of domicile of the mortgage creditor

Article 1026 – (1) If the mortgage creditor changes his domicile and does not notify the insurer of this, it is sufficient that the notifications to be made to him under Article 1024 are sent to his last address known to the insurer. The notification takes effect from the date on which it would have reached him had it been made by a means of communication providing regular service, had the mortgage creditor not changed his domicile.

dd) Release of the insurer from its debt

Article 1027 – (1) Even if the insurer is released from the obligation to pay indemnity owing to an act of the policyholder or the insured, its debt towards the mortgage creditor continues to exist. The same provision applies where the insurer withdraws from the contract after the occurrence of the risk.

(2) If the insurer is released from its debt because;

a) The insurance premium was not paid on time,

b) The ship set out in a condition unseaworthy or unfit for the voyage,

c) The ship deviated from the notified or customary route,

the first sentence of the first paragraph shall not apply.

ee) Passing of the mortgage to the paying insurer

Article 1028 – (1) To the extent that the insurer has made payment to the mortgage creditor in accordance with the second, fourth and fifth paragraphs of Article 1024 and Article 1027, the ship mortgage passes to it. However, the passing may not be asserted to the detriment of the creditor or of mortgage creditors of equal or subsequent rank towards whom the insurer’s obligation to pay continues.

ff) Obligation of the insurer to accept premiums and payments

Article 1029 – (1) The insurer is obliged to accept from the insured and from the mortgage creditor the insurance premiums that have become due and the other payments required to be made to it under the insurance contract, even in cases where it could lawfully refuse them.

7. Effects of the mortgage

a) Before the claim becomes due

aa) Rights of the mortgage creditor

aaa) Against the shipowner

Article 1030 – (1) If the security provided by the mortgage is endangered as a result of the deterioration of the ship or its equipment, the creditor may give the owner a reasonable period to eliminate the danger. If the danger is not eliminated within this period, the creditor immediately acquires the right to realise the mortgage. If the claim bears no interest and has not yet become due, statutory interest for the time between the receipt of the money and the due date shall be deducted.

(2) If, as a result of the manner in which the owner operates the ship, there is concern about the deterioration of the ship or its equipment in such a way as to endanger the security provided by the mortgage, or about the rights of the mortgage creditor being otherwise endangered, or if the owner does not take the necessary measures against such interference and destruction to be carried out by third persons, the court, upon the request of the creditor, shall decide on;

a) The provisional attachment of the ship in accordance with Article 1353,

b) If it deems it necessary, the entrusting of the ship to a custodian other than the master, and

c) The taking of the necessary measures by the owner within a period of one month starting from the execution of the provisional attachment,

If, at the end of this period, it is understood that the measures have not yet been taken or that the measures taken are insufficient, the court shall give the creditor a period of one month to initiate enforcement proceedings based on a judgment by way of realisation of the mortgage.

(3) The deterioration of accessories falling within the scope of the mortgage, or their removal from the ship contrary to the requirements of normal operation, is also deemed to be deterioration of the ship.

bbb) Against third persons

Article 1031 – (1) If there is concern that the ship will deteriorate, owing to the act of a third person, to such a degree as to endanger the security provided by the mortgage, the creditor may bring against the third person only an action for the prevention of this act.

bb) Rights of the owner

aaa) Right to raise defences

Article 1032 – (1) The owner of the mortgaged ship may assert against the mortgage creditor the defences which the debtor has against the creditor, and may also prevent the creditor from obtaining his right from the ship as long as the debtor is able to rescind the legal transaction underlying his debt. Likewise, as long as the debtor has the possibility of setting off his debt against a due claim he has against the creditor, the shipowner may prevent the mortgage creditor from obtaining his right from the ship. If the debtor dies, the owner may not assert that the heirs are liable for the debt only in a limited manner.

(2) If the owner is not at the same time the debtor, the owner does not lose the right to assert a defence by reason of the debtor’s waiver of that defence.

bbb) Right to give notice for the claim to become due

Article 1033 – (1) If the claim becoming due depends on notice, the notice shall have effect with respect to the ship mortgage only if it is given by the creditor to the owner or by the owner to the creditor.

(2) The person registered as owner in the ship register is deemed to be the owner with respect to the creditor.

ccc) Appointment of a representative for the owner

Article 1034 – (1) If the owner has not indicated to the creditor a domicile or a representative within the country, the court of the place where the register in which the ship is registered is located shall, upon the request of the creditor, appoint a representative to whom notifications may be made. The same provision applies where the domicile of the owner is unknown or where the creditor, without any fault of his own, does not know who the owner is.
b) After the claim becomes due

aa) Right of the shipowner to pay the debt

Article 1035 – (1) If the claim becomes due against the owner, or the debtor acquires the right to pay his debt, the owner may pay the debt.

(2) The owner may also satisfy the creditor’s right by depositing the money or by set-off.

bb) Passing of the claim to the owner

Article 1036 – (1) If the owner is not at the same time the debtor, the claim passes to him to the extent that he has satisfied the creditor’s right. The passing may not be asserted to the detriment of the creditor.

(2) The rights of objection arising from the legal relationships of the debtor with the owner are reserved.

(3) If there is a joint ship mortgage for the claim, the provision of Article 1046 shall apply.

cc) Right of the shipowner to request the delivery of documents

Article 1037 – (1) In return for the satisfaction of the creditor’s right, the owner may request that the documents necessary for the amendment of the ship register or the deletion of the ship mortgage be delivered to him.

8. Transfer and amendment of the ship mortgage

a) Transfer of the mortgage

aa) In general

Article 1038 – (1) Upon the assignment of the claim secured by the mortgage, the ship mortgage also passes to the new creditor.

(2) The claim may not be transferred separately from the mortgage, nor the mortgage separately from the claim.

(3) For the assignment of the claim, it is required that the former and the new creditor agree on this matter in writing and that the transfer be registered in the ship register.

(4) In a maximum-amount mortgage, the claim may also be transferred in accordance with the general provisions on the assignment of claims. In this case, the ship mortgage does not pass together with the claim.

(5) If claims embodied in an instrument to order or a bearer instrument are secured by a ship mortgage, the assignment of the claim is subject to the provisions on the transfer of the instruments to which these claims are linked. In this case, the ship mortgage also passes together with the claim.

(6) By reason of his payment of a debt secured by the mortgage, the ship mortgage passes to the debtor who is not the shipowner to the extent that he has a right of recourse against the owner or his legal predecessors.

bb) Objections and defences

Article 1039 – (1) An objection or defence which the owner could assert against the ship mortgage on the basis of the legal relationship existing between him and the former creditor may also be asserted against the new creditor. The provisions of the first and second paragraphs of Article 983 concerning reliance on the ship register, of Articles 975 and 976, and of the last paragraph of Article 985 also apply in respect of this defence and objection.

(2) If the claim relates to interest or other ancillary performances that do not become due later than the calendar quarter in which the owner learned of the transfer or the calendar quarter following it, the creditor may not benefit, against the defences set out in the first paragraph, from the protection provided by the principle of reliance on the register. The quarters shall be calculated from the beginning of the calendar year.

cc) Claims whose transfer is subject to the general provisions

Article 1040 – (1) The assignment of claims relating to accrued interest, other ancillary performances, costs of notice and enforcement, or the matters set out in the second paragraph of Article 1022, and the legal relationship between the owner and the new creditor, are subject to the general provisions on the assignment of claims.

(2) The first and second paragraphs of Article 983 concerning reliance on the ship register shall not apply to the claims set out above.

b) Amendment of the mortgage

aa) Amendment of the content of the mortgage

Article 1041 – (1) For the amendment of the content of a ship mortgage, it is required that an agreement on this matter whose signatures are certified by a notary be made between the owner and the creditor, or that they agree at the ship registry office, and that the amendment be registered in the ship register. The provision of the first paragraph of Article 1016 shall apply to the registration.

(2) If the ship mortgage is restricted by the right of a third person, the consent of that person is also required for the amendment. The consent must be declared to the registry office or to the person in whose favour the amendment is to be made. The consent may not be revoked.

bb) Change of the rank of the mortgage

Article 1042 – (1) In order for the rank of a registered ship mortgage to be changed in favour of a new ship mortgage at the time this new mortgage is being established, it is required that the shipowner and the creditor of the mortgage whose rank is changed make a contract whose signatures are certified by a notary, or agree at the ship registry office, and that this be registered in the ship register.

(2) In order for the ranks of existing ship mortgages to be changed subsequently, it is required that the holder of the mortgage right advancing in rank and the holder of the mortgage right falling in rank make a contract whose signatures are certified by a notary or agree at the ship registry office, that the owner consents to this, and that the situation be registered in the ship register. If there are persons holding rights over the mortgage falling in rank as a result of the change, their consent is also required.

(3) In the case of the division of the mortgage claim, the consent of the owner is not required for changing the ranks of the partial mortgages among themselves.

(4) The change of rank does not prejudice the mortgages lying between the mortgages whose ranks are changed.

cc) Substitution of another claim for the mortgage claim

Article 1043 – (1) Another claim may be substituted for the claim secured by the mortgage. For this, it is required that the creditor and the owner make a contract whose signatures are certified by a notary or agree at the ship registry office, and that the situation be registered in the ship register. If there are third persons holding rights over the mortgage, their consent is also required. Article 1016 shall also apply here.

(2) If the holder of the new claim is not the former mortgage creditor, he must also participate in the agreement set out in the first paragraph.

9. Termination of the ship mortgage

a) Grounds

aa) Grounds resulting in the extinction of the mortgage together with the claim

aaa) Extinction of the claim

Article 1044 – (1) Upon the termination of the claim, the mortgage also becomes extinct. The exceptions in the Code are reserved.

(2) The merger of the capacities of creditor and debtor in the same person is deemed to be payment of the claim.

(3) If the debtor who is not the shipowner pays part of the claim, the part of the ship mortgage remaining with the creditor takes precedence in rank over the part passing to the debtor.

(4) If, as a result of the payment, the debtor who is not the shipowner acquires the mortgage, or has an interest in the correction of the ship register for the same reason, he may request the creditor to deliver to him the documents necessary for the correction of the register.

(5) If the owner undertakes towards another person to have the ship mortgage deleted as well in the event of the extinction of the claim, an annotation may be entered in the ship register in order to secure the right to request the deletion.

bbb) Merger of the capacities of creditor and owner

Article 1045 – (1) The mortgage becomes extinct upon the merger of the ship mortgage and the ownership in the same person.

(2) Where the debtor is a person other than the shipowner, or there is a pledge or usufruct over the claim, the mortgage continues. However, the shipowner may not, in his capacity as creditor, request the realisation of the ship, and the ship does not constitute security for interest claims.

ccc) Payment by the owner to the creditor in a joint ship mortgage

Article 1046 – (1) The shipowner who makes payment to the creditor acquires the mortgage right over the ship of the owner of one of the other mortgaged ships to the extent that he has a right of recourse against that owner or his legal predecessors. This mortgage constitutes a joint mortgage together with the mortgage continuing under the second paragraph of Article 1045.

(2) In the case of partial payment, the mortgage remaining with the creditor takes precedence in rank over the mortgages passing to the owner under the first paragraph and the second paragraph of Article 1045.

(3) The assignment of the claim to the owner, or the merger of the capacities of creditor and debtor in the person of the owner, is deemed to be payment of the claim by the owner.

(4) Where the creditor obtains his right from one of the mortgaged ships by way of compulsory enforcement, the provision of the first sentence of the first paragraph shall apply.

ddd) Passing of the mortgage to the debtor in a joint ship mortgage

Article 1047 – (1) In a joint ship mortgage, if the debtor, in the case set out in the sixth paragraph of Article 1038, has a right of recourse against the owner of only one of the mortgaged ships or his legal predecessors, only the mortgage over this ship passes to him; those over the other ships become extinct.

eee) Limitation of the claim of the creditor against the shipowner

Article 1048 – (1) Contractual mortgages wrongfully deleted from the ship register and statutory mortgages that have not been registered become extinct upon the claim of the creditor against the shipowner becoming time-barred.

bb) Grounds resulting only in the extinction of the mortgage

aaa) Agreement of the parties

Article 1049 – (1) The mortgage ends upon the mortgage creditor and the shipowner agreeing on the removal of the mortgage in the form provided for in the second paragraph of Article 1015 and upon the deletion of the mortgage entry from the ship register. However, if there are persons holding rights over the mortgage, their consent is also required.

bbb) Waiver by the creditor

Article 1050 – (1) The mortgage becomes extinct upon the waiver by the creditor and the subsequent deletion of the mortgage entry from the register. However, if there are persons holding rights over the mortgage, their consent is also required.

(2) Where the owner has a defence which permanently renders impossible the assertion of the mortgage, he may request the creditor to waive the mortgage.

(3) The declaration of waiver shall be made by an instrument whose signature is certified by a notary or at the registry office.

(4) The debtor is released from his debt to the extent that the creditor, by waiving the mortgage or by granting priority to another mortgage, deprives the debtor of the possibility of obtaining his right from the mortgage.

ccc) Expiry of the term of the mortgage

Article 1051 – (1) A mortgage established for a specific term becomes extinct upon the expiry of this term.

cc) Decision of the court on the extinction of the mortgage

aaa) Where the creditor is unknown

Article 1052 – (1) If it is not known who the creditor is, the extinction of the mortgage may be decided after the creditor has been summoned by public notice, provided that ten years have elapsed since the last entry made in the ship register relating to the mortgage and that the creditor’s right has not been acknowledged by the owner within this period in a manner interrupting the statute of limitations under Article 154 of the Turkish Code of Obligations. In claims with a maturity date, this period does not begin to run before the maturity date arrives.

(2) The mortgage ends upon the decision of extinction being given.

bbb) In the case of deposit of the money

Article 1053 – (1) If the owner acquires the right to pay the creditor’s claim or to give notice of termination, and deposits the amount of the claim in the name of the creditor, waiving the right to take it back, the extinction of the mortgage may be decided after the unknown creditor has been summoned by public notice. Interest shall be deposited only if its amount has been entered in the register; no interest shall be deposited except for the three-year period preceding the decision of extinction.

(2) Unless the creditor is deemed to have already obtained his right in accordance with the provisions of the Turkish Code of Obligations relating to deposit, the debt is deemed paid upon the decision of extinction being given.

(3) If the creditor has not previously applied to the place of deposit, his right over the deposited sum ends upon the lapse of ten years from the decision of extinction. In this case, the person who made the deposit may take back the sum deposited, even if he waived the right to take it back at the time of deposit.

III- Mortgage over ships under construction

1. Subject matter

Article 1054 – (1) A mortgage may also be established over ships under construction.

(2) A mortgage may be established over a ship under construction from the moment the construction is clearly and permanently distinguished by placing a name and number on a visible part of it, from the time its keel is laid until it is launched.

(3) No mortgage may be established over constructions which, upon completion, will be smaller than eighteen gross tons.

2. Establishment

Article 1055 – (1) A mortgage over a ship under construction is established upon the agreement of the owner of the construction and the creditor on the establishment of a mortgage over the construction and the registration of the mortgage in the register specific to ships under construction. The agreement on the establishment of the mortgage must be made in writing and its signatures must be certified by a notary. This agreement may also be made at the ship registry office.

3. Scope

Article 1056 – (1) The ship under construction is within the scope of the mortgage at every stage of construction. The mortgage over ships under construction also covers the things set out in Article 1020 and, except for parts that have not come into the ownership of the owner of the construction, the parts located in the shipyard which are to be used in the construction and have been marked for that purpose.

(2) The mortgage over ships under construction covers the insurance indemnity only where the owner’s interest in the matters falling within the scope of the mortgage has been separately insured by the owner or by another person in his favour.

4. Rank

Article 1057 – (1) A ship mortgage established over a construction remains on the ship with its former rank after the completion of its construction.

5. Applicable provisions

Article 1058 – (1) Without prejudice to the special provisions relating to mortgages over ships under construction, the provisions of Articles 1014 to 1053 shall also apply to such mortgages.

SECTION FOUR

Usufruct

A) Establishment

Article 1059 – (1) A usufruct may be established over ships entered in the register.

(2) Unless otherwise agreed, the usufruct grants its holder the power of full enjoyment of the ship over which it is established.

(3) The provision of Article 1015 shall apply to the establishment of a contractual usufruct.

B) Applicable provisions

Article 1060 – (1) A usufruct over a ship entered in the register is subject to the provisions of the Turkish Civil Code on usufruct over immovables.

(2) The relations between the usufruct and ship mortgages are subject to the provision of Article 869 of the Turkish Civil Code. Rights registered with the same date are of the same rank. The provisions relating to the change of ranks of ship mortgages and to the limitation of the rights granted by the mortgage to the creditor against the owner shall also apply here.

PART TWO
Shipowner and Shipowning Partnership

A) Shipowner

I- Definition

Article 1061 – (1) A shipowner is the owner of a ship who uses his ship on water for the purpose of gaining profit.

(2) A person who uses a ship that is not his own on water for the purpose of gaining profit, in his own name, either personally or through a master, is deemed to be the shipowner in his relations with third persons. The owner may not prevent a person who makes a claim in the capacity of ship creditor by reason of the operation of the ship from claiming his right, unless this operation is unlawful vis-à-vis the owner and the creditor is in bad faith.

II- Liability arising from the faults of the crew

Article 1062 – (1) The shipowner is liable for the damage caused to third persons as a result of the fault committed by the crew members, the compulsory advisory pilot or the optional pilot in the performance of their duties. However, the shipowner is liable towards passengers and persons interested in the cargo in accordance with the provisions on the liability of the carrier arising from the fault of the crew.

(2) The right of the shipowner to limit his liability arising from the international conventions on limitation of liability to which the Republic of Türkiye is a party is reserved.

III- Competent court

Article 1063 – (1) An action may also be brought against the shipowner, in respect of any claim against him in that capacity, in the court of the place where the ship’s home port is located.

B) Shipowning partnership

I- Definition

Article 1064 – (1) A shipowning partnership exists where several persons who own a ship in the form of co-ownership in shares use it on water, for the purpose of gaining profit, on behalf and for the account of all of them, pursuant to a contract made among themselves.

(2) The provisions relating to shipowning partnerships shall not apply to commercial companies or other legal entities which alone own a ship or hold the right to operate it.

II- Registration of the partnership

Article 1065 – (1) Within fifteen days following the formation of the shipowning partnership, the partnership shall be registered in the trade and ship registers.

(2) In the trade and ship registers;

a) The names, domiciles and nationalities of the part-owners,

b) The trade name and seat of the partnership,

c) The subject matter of the partnership,

d) The amount of the share in the ship of each part-owner,

e) The names and surnames of the persons authorised to represent the partnership and whether they are authorised to sign alone or jointly,

shall be entered.

III- Relations among the part-owners

Article 1066 – (1) The legal relations among the part-owners and the representation of the shipowning partnership are subject to the provisions of the contract among the part-owners. In cases where the contract contains no provision, Articles 1067 to 1087 shall apply.

IV- Management and representation of the partnership

1. Decisions

Article 1067 – (1) The affairs of the partnership shall be conducted in accordance with the decisions to be taken by the part-owners by majority vote. The voting right held by each part-owner is determined according to the amount of his share or shares in the ship. A majority of votes is deemed to have been attained where those voting in favour of the decision hold more than half of all the shares.

(2) Decisions relating to the amendment of the shipowning partnership contract, or contrary to this contract, or foreign to the purpose of the partnership, shall be taken unanimously.

2. Ship’s manager

a) Appointment and removal

Article 1068 – (1) A ship’s manager may be appointed by majority vote for the conduct of the affairs of the shipowning partnership. Unanimity is required for the appointment of a ship’s manager who is not one of the part-owners.

(2) The ship’s manager may be removed from office at any time by majority vote, without prejudice to his rights arising from the termination of the contract.

(3) The appointment and removal of the ship’s manager shall be registered in the trade and ship registers.

b) Power of management

Article 1069 – (1) The right of management of the ship’s manager is subject to Article 1070. However, a prior decision of the shipowning partnership is required for extraordinary repairs or for the appointment and removal of the master.

(2) The ship’s manager is obliged to comply with the restrictions imposed by the partnership on the scope of his powers. Apart from this, he is obliged to act in accordance with the decisions taken and to implement these decisions.

c) Power of representation

aa) Scope

Article 1070 – (1) The ship’s manager, in this capacity, is authorised to carry out with third persons all transactions and legal dispositions required by the ordinary affairs of the partnership and to collect the money paid in respect of these affairs. The power of representation of the ship’s manager includes, in particular, transactions and dispositions relating to the equipping and maintenance of the ship, as well as the conclusion of freight contracts and the insurance of the ship, the freight, the equipping costs and the claims arising from general average.

(2) The master is obliged to comply only with the orders and instructions of the ship’s manager and is not obliged to comply with instructions to be given by any of the part-owners.

(3) The ship’s manager is also authorised to represent the partnership in actions brought and enforcement proceedings initiated by reason of disputes arising from the affairs he is authorised to carry out under this article.

(4) Unless a special authority has been granted to him, the ship’s manager may neither enter into bill of exchange undertakings or borrow money in the name of the partnership or of one or more of the part-owners, nor dispose of the ship or shares in the ship by selling or pledging them.

bb) Effects

Article 1071 – (1) All rights and obligations arising from the legal transactions carried out by the ship’s manager in this capacity within the framework of his statutory powers belong to the partnership.

cc) Restriction

Article 1072 – (1) A restriction of the statutory power of representation of the ship’s manager may be asserted by the shipowning partnership only against third persons who knew of it at the time the transaction was carried out.

d) Obligations

aa) Duty of care

Article 1073 – (1) In carrying out the affairs of the shipowning partnership, the ship’s manager is obliged to exercise the care of a prudent shipowner.

bb) Obligation to keep books and preserve documents

Article 1074 – (1) The ship’s manager is obliged to keep a separate book relating to the affairs of the partnership and to preserve in an orderly manner the documents he has received and copies of the documents he has issued in connection with the affairs of the partnership.

cc) Obligation to provide information and render accounts

Article 1075 – (1) The ship’s manager is obliged, upon request, to provide each of the part-owners with information on the affairs of the shipowning partnership and to show all the books and documents of the partnership.

(2) In a shipowning partnership, it may be decided at any time that the ship’s manager shall render accounts. The approval by the majority of the accounts rendered by the ship’s manager and the finding that the affairs he has conducted were appropriate do not extinguish the rights of objection of those who voted against this decision.

V- Participation in profit and loss

Article 1076 – (1) The profit and loss of the partnership shall be distributed among the part-owners according to their shares in the ship.

(2) The profit and loss account and the distribution of profit shall be made at the end of the calendar year.

VI- Participation in expenses

Article 1077 – (1) Each of the part-owners is obliged to contribute to the expenses of the partnership, in particular the expenses of equipping and repairing the ship, in proportion to his shares in the ship.

(2) If one of the part-owners does not pay his share of the expenses and this money is advanced on his account by the other part-owners, the obligation of the defaulting part-owner to pay default interest begins from the date on which the advances were made. Where the insurable interest which the payment of the advance gives rise to, for the part-owners who made the advance, over the share or shares in the ship belonging to the defaulting part-owner is insured, the insurance costs shall also be borne by the defaulting part-owner.

VII- Change in the person of the part-owners

Article 1078 – (1) A change occurring in the person of one of the part-owners does not prevent the continuation of the shipowning partnership.

(2) None of the part-owners may be expelled from the partnership.

VIII- Master who is a part-owner

Article 1079 – (1) If the master is one of the part-owners, he may, when his employment is terminated without his consent, request that the share he holds in the partnership as shipowner under the contract made with the part-owners be purchased by the other shipowners by payment of its value as appraised by experts. If the master delays in asserting his request without a just cause, his right lapses.

IX- Liability of the part-owners

1. Liability towards third persons for the debts of the partnership

Article 1080 – (1) Without prejudice to the provisions relating to the limitation of liability for maritime claims, the part-owners are personally liable towards third persons for the debts of the partnership in proportion to their partnership shares.

2. Where the partnership share has been transferred

Article 1081 – (1) A part-owner who transfers his partnership share is deemed to be a part-owner in his relations with the other shipowners or the ship’s manager until he, together with the acquirer, notifies them of the transfer, and continues to be liable towards them in the capacity of part-owner for all debts arising before this notification. The person acquiring the partnership share is also liable, from the moment of acquisition, in the capacity of part-owner in his relations with the other part-owners.

(2) The provisions of the shipowning partnership contract and the decisions taken and transactions undertaken by the partnership bind the acquirer to the same extent as they bind the transferor. Without prejudice to the rights of the acquirer against the transferor with respect to warranty, the other part-owners may also set off against the acquirer the debts falling on the transferor in his capacity as part-owner relating to the share he transferred.

(3) The provisions of the first and second paragraphs shall also apply in the case of acquisition of a partnership share by way of compulsory enforcement.

X- Termination

1. Grounds for termination

a) Decision of dissolution

Article 1082 – (1) The shipowning partnership may be dissolved by majority decision. A decision on the transfer of the ship is also deemed to be a decision to dissolve the partnership.

b) Request for dissolution by a partner wishing to withdraw

Article 1083 – (1) Each of the part-owners may, relying on a just cause, request to be permitted to withdraw from the partnership. A part-owner who is not permitted to withdraw from the partnership may request the court to dissolve the partnership on just grounds.

(2) Events which, according to the rule of honesty, make the continuation of the part-owner in the partnership so difficult that it cannot be expected of him are deemed to be just cause. Events which concern only the person of the part-owner wishing to withdraw and which do not constitute a breach of contract on the part of any of the other part-owners cannot be accepted as just cause.

(3) If the court finds the just cause proven, it shall give the other part-owners a reasonable period to pay the value of the plaintiff’s partnership share, as appraised by experts, and take it over. Each part-owner has the right to take over the share of the plaintiff part-owner in proportion to his own share. If the share of the plaintiff part-owner is not taken over within the period given by the court, the court shall decide on the dissolution of the partnership.

(4) Contractual terms resulting in the provisions of this article being changed to the detriment of the part-owners are invalid.

c) Bankruptcy of the partnership

Article 1084 – (1) The partnership also ends upon the opening of bankruptcy against the shipowning partnership.

2. Circumstances not requiring termination

Article 1085 – (1) The death or bankruptcy of one of the part-owners does not cause the termination of the shipowning partnership.

XI- Liquidation

Article 1086 – (1) If the dissolution of the shipowning partnership or the transfer of the ship has been decided, the ship shall be sold by public auction and the partnership shall be liquidated. Unless it has been established by court decision that the ship is in a condition beyond repair or not worth repairing, the sale may be made only at a time when the ship is in its home port or in a Turkish port and is not yet bound by a freight contract which it is obliged to perform. The form and conditions of sale may be changed by unanimity of the part-owners.

(2) Where the part-owners cannot agree on the form and conditions of sale or on the appointment of the liquidator, or the dissolution has been decided by the court, the court shall appoint a liquidator to sell the ship and liquidate the partnership. The provisions on the liquidators of general partnerships shall apply by analogy to the rights, duties and liability of this liquidator.

XII- Competent court

Article 1087 – (1) An action may also be brought against the part-owners, in respect of any claim against them in that capacity by the other part-owners or by third persons, in the court of the place where the ship’s home port is located.

(2) The same provision applies where the action has been brought against one or more of the part-owners.

PART THREE

Master

A) duty of care

Article 1088 – (1) The master is obliged to act as a prudent master in all his affairs, in particular in the performance of the contracts whose performance falls to him.

B) Liability

Article 1089 – (1) The master is liable towards all persons interested in the ship and the goods, including passengers, for damage he has caused through his fault, in particular for damage arising from his failure to perform the duties specified in this Part and in the other Parts.

(2) Compliance with the order of the shipowner does not release the master from liability.

(3) The shipowner who has given an order to the master with knowledge of the circumstances is also liable.

C) Duties

I- In relation to the seaworthiness of the ship

1. Ensuring that the ship is seaworthy and fit for the voyage

Article 1090 – (1) Before setting out on the voyage, the master is obliged to ensure that the ship is seaworthy and fit for the voyage and that the documents pertaining to the ship, the crew and the cargo are on board.

2. Ensuring that the ship is fit for loading and discharging

Article 1091 – (1) The master is obliged to ensure that the loading and discharging equipment is in a condition appropriate to the purposes of its use, and that stowage, even if carried out by special stevedores, is performed in accordance with the rules prevailing in seamanship.

(2) The master is obliged to ensure, in accordance with the rules prevailing in seamanship, that the ship is not overloaded, that the necessary ballast is on board, and that the holds of the ship are fitted out in a manner suitable for receiving and preserving the goods to be carried.

II- Compliance with foreign legislation

Article 1092 – (1) The master is liable to compensate the damage arising from his failure, while in a foreign country, to comply with the legislation of the State of that country, in particular with police, tax and customs rules.

(2) The master is also liable to compensate the damage arising from his loading onto his ship goods which he knows or ought to know have the character of contraband of war.

III- Setting out on the voyage

Article 1093 – (1) The master is obliged, once the ship is ready to depart, to set out on the voyage at the first suitable opportunity.

(2) Even if the master is unable to command the ship owing to illness or another reason, he may not delay the departure of the ship or the continuation of the voyage in a manner that cannot be considered appropriate. In such a case, the master is obliged, according to the requirements of the situation, if it is possible to obtain instructions from the shipowner, to notify him of the impediments without delay and to take the necessary measures until the instructions arrive; otherwise, to leave another person in his place as master. Unless he was at fault in his choice, the master may not be held liable for the acts of the master acting on his behalf.

IV- Presence on board

Article 1094 – (1) From the commencement of loading until the completion of discharging, the master may not, in the absence of a compelling reason, leave the ship at the same time as the chief mate. If the master is compelled to leave, he is obliged, before leaving, to leave a suitable person from among the officers or the ratings in his place as his substitute.

(2) This provision shall also apply when the ship is in an unsafe port or anchorage, before loading commences and after discharging is completed.

(3) In the event of an imminent danger, or while the ship is at sea, the master is obliged to remain on board unless there is a necessity justifying his leaving the ship.

V- Consultation of the ship’s officers by the master

Article 1095 – (1) Where a danger exists, even if the master deems it necessary to consult the ship’s officers, he shall not be bound by the decision given by them and shall always himself be responsible for the measures he takes.

VI- Ship’s log book

1. Obligation to keep

Article 1096 – (1) A book called the ship’s log book shall be kept on every ship. The principal events occurring on each voyage from the moment the loading of goods or ballast begins shall be entered in this book.

(2) The ship’s log book shall be kept, under the supervision of the master, by the chief mate and, where he is prevented, by the master himself or, provided that it is under the supervision of the master, by a competent crew member.

(3) There is no obligation to keep a log book on small ships making voyages within a port.

2. Content

Article 1097 – (1) Unless there is an impediment, the following matters shall be entered in the ship’s log book day by day:

a) Meteorological data, in particular the state of the weather and the wind.

b) The course followed by the ship and the distance it has covered.

c) The circle of latitude and longitude at which the ship is located.

d) The height of the water in the bilges.

e) The depth of water sounded.

f) The taking on of a pilot and the hours at which the pilot boarded and left the ship.

g) Changes among the crew.

h) All accidents suffered by the ship or the goods, with a detailed description thereof.

i) Offences committed on board and, without prejudice to the provisions of the Civil Registration Services Law No. 5490 dated 25/4/2006, births and deaths on board.

(2) The ship’s log book shall be signed by the master and the chief mate.

VII- Sea protest

1. Persons entitled to request that it be drawn up

Article 1098 – (1) Where, during the voyage, an accident occurs which concerns the ship or the goods carried, or which is likely to cause other material damage, the master is entitled, even if the ship is lost, to request that a sea protest be drawn up, and is obliged to do so if requested to. The drawing up of a sea protest may be requested by the shipowner or by anyone who proves that he has an interest. It may be requested that the sea protest be drawn up, without loss of time, at one of the places specified below:

a) At the port of destination and, if there is more than one port of destination, at the first port reached after the accident.

b) At the port of refuge, if the ship is repaired or the goods are discharged there.

c) If the voyage ends before the port of destination is reached owing to the sinking of the ship or for another reason, at the first suitable place at which the master or the person acting on his behalf calls.

(2) If the master dies or is in a condition in which he cannot have a sea protest drawn up, the highest-ranking officer on board after the master is obliged to have the determination made.

(3) The provisions of the legislation on the safety of life and property at sea are reserved.

(4) Within the borders of the Republic of Türkiye, the sea protest shall be drawn up by the courts. In other places, without prejudice to the provisions of local legislation, Turkish consulates shall draw up the sea protest for Turkish-flagged ships.

2. Matters to be determined

Article 1099 – (1) The important events of the voyage, in particular the accidents and the measures taken to prevent or reduce the damage, shall be determined fully and clearly by the court or the consulate.

3. Procedure

Article 1100 – (1) For the determination, the master shall apply to the court or the consulate specified in Article 1098, together with a list showing the names and surnames of all crew members, the ship’s log book and the other available documents relating to the event.

(2) Upon the application, the court or the consulate shall fix a day as near as possible for the determination and shall announce this in an appropriate manner. However, in cases where delay is deemed prejudicial, the announcement may be dispensed with.

(3) Those interested in the ship or the cargo and other persons concerned with the accident may be present in person at the court or the consulate, or may also be represented by a proxy.

(4) The master shall make the necessary statements on the basis of the ship’s log book. If the ship’s log book cannot be brought to the court or the consulate, or if keeping it is not compulsory, the reasons for these circumstances must be stated.

(5) The judge or the consul may, where he deems it necessary, hear those crew members who have not appeared before the court, and may also put any question he wishes to the master and the other crew members for a sufficient understanding of the events.

(6) The master, the other crew members and those concerned with the event shall be warned that they must tell the truth.

4. Preservation of the original of the record

Article 1101 – (1) The original of the record shall be kept by the court or the consulate. Certified copies shall be given to those of the interested parties who request them.

VIII- Protection of the interests of the shipowner

Article 1102 – (1) The master is obliged, even if the ship is lost, to protect the interests of the shipowner for as long as necessary.

D) Authority of representation arising from the law

I- In the capacity of representative of the shipowner

1. Scope

a) While the ship is in its home port

Article 1103 – (1) Legal transactions concluded by the master while the ship is still in its home port shall not bind the shipowner, unless the master acted on the basis of a special authority separately granted to him or the debt arose from another special ground giving rise to an obligation.

(2) The master is also authorised to engage crew members in the home port.

b) While the ship is outside its home port

Article 1104 – (1) While the ship is outside its home port, the master is authorised, in that capacity, to carry out with third parties on behalf of the shipowner all kinds of transactions and dispositions relating to the equipping of the ship, its fuel and provisions, the crew, the keeping of the ship in a seaworthy, voyageworthy and cargoworthy condition and, in general, the safe conduct of the voyage.

(2) Concluding contracts of carriage and bringing actions in matters falling within his duties are also within the scope of the master’s authority.

(3) On foreign-flagged ships, any action or enforcement proceedings to be brought against the owner or the charterer of the ship may also be directed against the master, with effect in respect of them.

c) Credit transactions

Article 1105 – (1) The master is authorised to borrow money or to acquire goods on credit, and to carry out similar credit transactions, only in the event of necessity for the preservation of the ship or for the performance of the voyage, and in the amount required to meet these needs.

(2) The validity of the transactions which the first paragraph states the master is authorised to carry out shall not depend on whether the transaction he chose was appropriate to the purpose, or on whether the money or other things obtained through this transaction were actually used for the preservation of the ship or for the performance of the voyage. If the third party knows that the master is unauthorised or intends to use the credit obtained for another purpose, or if his not knowing this constitutes gross negligence, the transaction carried out by the master shall not bind the shipowner.

(3) The holding of the shipowner personally liable for obligations of the master under bills of exchange depends on an express authority of representation having been granted to him by the shipowner.

2. Limitation of the authority of representation

Article 1106 – (1) A shipowner who has limited the authority of representation of the master arising from the law may assert the master’s failure to comply with these limitations only against persons who knew of them.

3. Withdrawal of the master’s powers after termination

Article 1107 – (1) A shipowner who has given notice of termination of the contract concluded with the master may prohibit the master from exercising his powers during the period of notice of termination.

4. Agency without authority by the master

Article 1108 – (1) A master who, without authority, makes advances from his own money on account of the shipowner or incurs debts in his own name, shall be in the position of a third party as regards his claim for compensation against the shipowner.

5. Liability of the shipowner arising from transactions carried out by the master

Article 1109 – (1) The shipowner acquires rights and incurs obligations towards third parties by reason of the legal transactions carried out by the master within his statutory powers in his capacity as the person navigating and managing the ship, whether or not the master has disclosed that he is acting on the shipowner’s behalf.

(2) Unless he has separately undertaken their performance or has exceeded his statutory powers, the master shall not personally incur obligations by reason of the transactions he has carried out. The liability of the master arising from Articles 1088 and 1089 is reserved.

6. Rights and obligations of the master towards the shipowner

Article 1110 – (1) Unless limited by the shipowner, the scope of the master’s powers shall, also in the relations between the master and the shipowner, be subject to the provisions contained in Articles 1103 to 1105.

(2) The master is obliged to inform the shipowner regularly of the condition of the ship, the events occurring during the voyage, the contracts he has concluded and the actions brought, and, as far as circumstances permit, to request instructions from the shipowner in all important matters, in particular in the cases set out in Article 1105, where the voyage must be altered or interrupted, and in respect of extraordinary repairs and purchases.

(3) Even if he holds a sufficient amount of money belonging to the shipowner, the master may carry out extraordinary repairs and purchases only in the event of necessity.

(4) The master is obliged to render account to the shipowner upon the ship’s return to its home port or whenever the shipowner so requests.

(5) The master is also obliged to credit to the shipowner’s account all monies, other than freight, received by him from the charterer, the shipper and the consignee, under whatever name, such as a reward or compensation.

II- Prohibition on loading goods onto the ship on one’s own account

Article 1111 – (1) The master may not, without the consent of the shipowner, load goods onto the ship on his own account. If he fails to comply with this prohibition, the master is obliged to pay to the shipowner the highest freight that could be demanded at the place and time of loading for similar goods on such voyages. The right of the shipowner to claim compensation for the damage not covered by the freight paid by the master is reserved.

III- Obligation to protect the interests of those interested in the cargo

1. In general

Article 1112 – (1) The master is obliged to exercise all possible care during the voyage for the best preservation of the goods, as required by the interests of those interested in the cargo.

(2) Where special measures must be taken to prevent or reduce damage, the master is obliged to take into consideration the interests of those interested in the cargo and, if possible, to obtain their instructions and to carry out these instructions according to the requirements of the situation. Where it is not possible to obtain instructions, the master shall act at his own discretion; however, he shall do what is incumbent upon him to inform those interested in the cargo without delay of such circumstances and of the measures taken.

(3) In such cases, the master is authorised to discharge the goods wholly or partly and, if it appears that a major damage which may result from the deterioration of the goods or from other causes cannot otherwise be prevented, to sell the goods, or to pledge them in order to procure the money required for their preservation or onward carriage.

(4) The master is authorised, provided that those interested in the cargo are not in a position to do so themselves in good time, to exercise in his own name, in court or out of court, the claims arising from the loss of and damage to the goods.

2. Deviation from the route

Article 1113 – (1) If an unexpected circumstance prevents the voyage from being continued on the route followed, the master may, according to the requirements of the situation and the instructions he is obliged to apply within the framework of the possibilities, continue the voyage on another route, interrupt it for a short or long period, or return to the port of departure.

(2) In the event of termination of the contract of affreightment, the master shall act in accordance with the provisions of Article 1211.

3. Power of disposal over the goods

a) In general

Article 1114 – (1) Apart from the cases set out in Article 1112, the master may dispose of the goods by selling, pledging or using them only where there is a necessity for the continuation of the voyage.

b) In the case of general average