Turkey: The New Commercial Code And Its Major Impact On Commercial Practices In Turkey

Last Updated: 3 November 2011
Article by Esra Tekil

Originally published August 2011

Since the 1990s, businesses in Turkey were in urgent need of a new Commercial Code redesigning principal business transactions and rationalising corporate legal proceedings. Following the start of Turkey's membership negotiations with the EU, which was a motivating force for the harmonisation of Turkish law with the EU legal system, the legislator focused on incorporating the principal legal requirements of the EU into national laws, based on a short and medium-term enactment programme.

As part of this legislative reform, the new Turkish Commercial Code no. 6102, replacing the former law no. 6762 dated 1957, passed through the Parliament in January 2011. The new law reflects the essential principles of EU law in terms of corporate practices and ensures a much more modernised, transparent and corporate infrastructure for foreign and domestic companies conducting business activities in Turkey. Upon implementation of the new law, which will become effective in July 2012, the structuring and management of companies will also be subject to a technology based legal system that replaces old fashioned commercial rituals.

Economic indicators show that foreign investors' interest in Turkey will continue to increase in the coming years. In 2011, the rate of direct foreign investment generated between January and May increased by 117.7 percent compared to the same period in 2010. Considering that 87.7 percent of this international direct foreign investment originated from EU countries, it seems crucial for Turkey to harmonise its business environment and commercial legislation with EU laws in order to facilitate investment proceedings for foreigners and reduce all possible bureaucratic barriers. From this perspective, the new Commercial Code will certainly make the investment environment more comfortable for investors and will ensure their trust in the Turkish legal system.

Company formations. The new law allows the incorporation of a single member company in Turkey and the payment of the whole capital by one person. The capital may be paid in cash or may be allocated in kind, including intellectual property rights and cyber rights. The minimum capital requirement is Turkish Lira 50,000 (approximately US$30,500) for joint stock companies if the total capital is subscribed at the stage of incorporation, and Turkish Lira 100,000 (approximately US$61,000) for non-public joint stock companies which are incorporated with a registered capital (meaning that the articles of association determine a capital cap indicating the maximum amount of capital that may be increased by the board of directors). In terms of limited liability companies, the new law states the minimum capital requirement as Turkish Lira 10,000 (approximately US$6,100).

In principle, the incorporation of a company in Turkey is not subject to any official authority's permission. Companies to be incorporated in certain public service sectors, which will be announced by the Ministry of Commerce, require permission from the Ministry. The company is incorporated upon certification of the founders' signatures on the articles of association by a local notary public and the payment of the part of the capital which is subscribed in cash. Nevertheless, the company is not considered as a legal entity until it is registered with the Trade Register. The persons who transact or give commitments on behalf of the company before its registration are personally and jointly bound by these acts, unless the company approves these transactions or commitments within three months following registration, and it is certain that these acts were carried out in the name of the company.

Exclusion of 'ultra vires' principle. According to the former Law no. 6762, commercial companies were allowed to acquire rights and take on debts within the limits of their scope of activities stated in the company's articles of association. The transactions that were beyond the company's scope of activity were legally considered as null based on 'ultra vires' principle. This principle was severely criticised in Turkey for not protecting third parties' good faith and damaging the reliability of the commercial market in terms of transaction security. Considering these ongoing criticisms and the EEC directive asking member states to exclude this principle from their national laws, the Turkish legislator finally removed the ultra vires principle from the new law.

Mergers and acquisitions. The law determines two types of merger: (i) takeover of a company by another company, in which case the whole assets of the acquired company are taken over by the acquiring company and the acquiring company is obliged to increase its capital to the extent it is necessary for protecting the rights of the acquired company's shareholders; or (ii) merger of companies by incorporating a new company. The law allows the takeover of a company under liquidation, provided that the distribution of its assets has not yet begun.

The terms and conditions of the merger are precisely stated in a merger agreement, which has to be approved by the board of directors and the general assemblies of the merging companies. The merger resolutions of the general assemblies are registered with the Trade Register, and the acquired company is declared as dissolved upon registration.

The new law also contains particular provisions concerning the entire or partial spin-off of a company, which determine a legal procedure similar to the merger provisions.

Corporate management. In joint stock companies, the company is managed by a board of directors consisting of at least one person. The members of the board may be appointed from third parties who are not company shareholders. Except for single member companies, the company is represented with joint signatures towards third parties. According to the new law, at least one of the board members authorised to represent the company should be a Turkish citizen and resident in Turkey.

In limited liability companies, the corporate management is executed by the director(s) who may be appointed from the shareholders or third parties. At least one of the directors is required to be appointed as a director for the management and representation of the company.

The law enables online meetings of the board of directors in both joint stock and limited liability companies, provided that this condition exists in the articles of association. Likewise, the shareholders may use their voting rights via the internet in the general assembly meetings or the shareholders' meetings.

Unfair competition. Unfair competition is one of the most important issues for both domestic and foreign companies with commercial activities in Turkey. The new law significantly modifies the provisions of the former law concerning unfair competition acts by redefining 'unfair competition' and listing the types of commercial behaviours considered to be unfair competition practices. Under the new law, any act affecting the relations between competitors or between suppliers and customers as a result of misleading practices or by means of violation of the 'good faith' principle is considered illegal and unfair. In line with the legal precautions provided in the Intellectual Property Law, the new Commercial Code allows the person who is affected or at risk of being affected by an unfair competition act to stop and request the prohibition of this act, to claim the material and moral damages incurred due to unfair competition, to seek the correction of misleading statements and remedies for the destruction of goods, if the latter is necessary to avoid violation.

First published in August 2011 issue of Financier Worldwide Magazine.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions