Turkey: Amendments Made In The New Turkish Commercial Code With The Law No. 6335

The New Turkish Commercial Code ("New TCC") entered into force on July 1st, 2012. The Law on the Amendment of the Turkish Commercial Code and Law on the Entry into Force and Application of the Turkish Commercial Code numbered 6335 ("Law no. 6335") is promulgated by the Turkish Grand National Assembly on June 26, 2012 and published in the Official Gazette on June 30, 2012. In this article, we shall analyze the significant amendments made in the New TCC by Law no. 6335.

Requirement to Use a Trade Name

Article 39 of the New TCC which regulates the requirement to use a trade name is among the articles amended by Law no. 6335. Prior to the amendment, the second paragraph of the relevant article used to regulate that the registry number, trade name, registered office, the subscribed and paid-in capital for equity companies, the internet address and number of the webpage of the merchant shall be indicated in all papers and documents used in relation to the enterprise of the merchant. Additionally, with regards to joint stock companies, limited liability companies and limited partnerships divided into shares, the names and surnames of the chairman and members of the board of directors, directors and managers should have been indicated. With the amendments made with Law no. 6335, the expression of "all papers and documents" is clarified as "commercial letters drafted in relation to the enterprise of the merchant and the documents on which the registrations to commercial ledgers are based". Furthermore, the information that is required to be indicated on these documents are limited to the registration number, trade name, registered office and the registered internet address in case the merchant is subject to the requirement to have a webpage. Consequently, problems which could have arisen by the requirement to include all information in all documents related to the business of the merchant prior to the amendment are prevented.

Abolishment of the Operational Auditor

One of the new concepts introduced by the New TCC was the operational auditor. The operational auditor is the auditor responsible for the audit of qualified operations within the company such as incorporation, capital increase and decrease, merger, spin-off, conversion of type and issuance of securities. The operational auditor is abolished with Law no. 6335 and the references made to the operational auditor have been excluded from the New TCC accordingly.

The operational auditor was an appropriate concept aiming at the audit of important transactions and safeguard of the interests of relevant persons such as shareholders and creditors of the companies. As the operational auditor has been abolished, the said qualified transactions are no longer audited. The operational auditor would have audited whether the ratio of exchange, breakaway fee and equalization payment were fair or not. Since the operational auditor has not been replaced by any other means of auditing, the said operations are left outside of the scope of auditing.

Prohibition of Indebtedness towards the Company

Article 358 of the New TCC regulates the prohibition of indebtedness towards the company in joint stock companies. Pursuant to the said article prior to amendment introduced by Law no. 6335, the shareholders could not become indebted towards the company, except the debt with regards to subscription of capital. A debt arising from a transaction made with the company in relation to the enterprise of the shareholder and falling within the scope of activities of the enterprise of the company, which is subject to the same or similar conditions with similar operations, constitutes an exception to this rule. Pursuant to the said article, the shareholders may not be indebted towards the company except for this case. According to the justification of the New TCC for this article, this article aims to prevent that the shareholders from misusing the resources of the company for their operations and transactions and making their personal expenses by this means, and from withdrawing money from the company. The shareholders withdrawing money from the company was indeed a common practice, which indisputably causes many inconveniences.

Pursuant to the amendments made in Article 358 with Law no. 6335, the shareholders may not be indebted towards the company, unless they perform their due debts resulting from subscription of capital, and unless the profit of the company together with independent reserve funds cover the loss of the company for previous years. As is seen, the conditions of the debt arising in relation to the enterprise of the shareholder and being subject to the same or similar conditions with similar operations are abolished. Accordingly, it is sufficient to fulfill the following conditions of the shareholders performing the debts resulting from subscription of capital, and the profit together with the independent reserve funds of the company cover the loss of the previous year. This provision moderates the prohibition of indebtedness towards the company. Given the possibility of distributing advance dividends and the principle of preservation of capital, the accuracy of enabling indebtedness to the company without any limitations may be questionable.

Qualification of the Members of the Board of Directors

Article 359 of the New TCC governs the number and qualifications of the members of the board of directors ("BoD") in joint stock companies. Pursuant to the relevant article prior to amendments introduced under Law no. 6335, at least one BoD member entitled to represent the company was required to be a Turkish citizen and to reside in Turkey. Additionally, pursuant to third paragraph the said article, at least one fourth of the BoD members should hold a university degree.

Law no. 6335 abolished the requirement of at least one BoD member being a Turkish citizen and residing in Turkey. I find this amendment to Article 359 which contradicted the essence and the possibilities provided by the New TCC to be positive.

Article 628 which provided that at least one director of limited liability companies, who is entitled to solely represent the company, was required to reside in Turkey was abolished, in line with the above amendment.

Joint Stock Companies Subject to Auditing

Article 397 of the New TCC regulates the auditing of joint stock companies. The said article prior to amendments used to regulate that the financial statements of joint stock companies and group companies shall be audited by an auditor, in accordance with Turkish Auditing Standards which are compatible with international auditing standards. Law no. 6335 regulated that the said article would be applicable only to joint stock companies which are subject to auditing. Joint stock companies which are subject to auditing shall be specified by the Council of Ministers, pursuant to Article 397/4 of the New TCC. With the amendments made in the New TCC with Law no. 6335, all joint stock companies are not subject to auditing. However, the external auditing was one of the most significant innovations introduced by the New TCC and replaced the statutory auditing which was not functional anymore. The fact that some joint stock companies are totally out of the scope of auditing may give raise to problems with regards to the principle of preservation of capital in joint stock companies, and the guarantee of the rights of shareholders and creditors.

Another article amended by Law no. 6335 is Article 400 of the New TCC which regulates the persons who may be qualified as auditors. Pursuant to the said article prior to amendments, the auditor could only be an independent audit company whose shareholders are certified financial advisers or independent financial advisers. The companies of medium and small scale may appoint one or more certified financial advisers or independent financial advisers as their auditor. Law no. 6335 regulated that auditors may be certified financial advisers or independent financial advisers certified in accordance with Law on Independent Financial Advisers and Certified financial advisers dated 1/6/1989 and numbered 3568 and who are authorized by Public Surveillance, Accounting and Auditing Standards Authority, and/or companies whose shareholders have the said qualifications.

Privileged Shares

Law no. 6335 inserted a fourth paragraph to Article 478 of the New TCC which regulates privileged shares, and introduced certain limitations with regard to privilege rights. Pursuant to the new provision, shares, shareholders that form a group, groups of share and minorities may not be granted privilege rights regulated under the New TCC in joint stock companies with more than the half of its capital owned individually or collectively by the State, special provincial administration, municipality and other public legal persons, syndicates, associations, foundations, cooperatives and their superior entities; as well as the subsidiaries with more than the half of their capital owned by such joint stock companies with the same capital percentage; without prejudice to the privilege rights held by the said institutions. Consequently, the amendments made in Article 401 of the Turkish Commercial Code numbered 6762 with Law no. 6215 have been included in the New TCC as well.

Crimes and Punishments

Important amendments have been made with Law. No. 6335 in Article 562 of the New TCC which governs crimes and punishments. The punishment of imprisonment pertaining to infringement of the first and fourth paragraphs of Article 199 of the New TCC pertaining to the reports of subsidiary and parent companies is abolished. Additionally, the punishment of imprisonment concerning the persons who refuse to give the ledgers, registrations and documents and the relevant information which are required to be kept in accordance with the New TCC to persons who are authorized to audit, persons who prevent the auditors to perform their duties is abolished. Article 563 of the New TCC which regulates that the said crimes would be pursued ex officio is also deleted. Therefore, the criminal provisions criticized by the public are moderated.

Incorporation of Limited Liability Companies

With the amendments made with Law no. 6335, the requirement of payment of the capital in cash at once and in full in limited liability companies pursuant to Article 585 of the New TCC is abolished. Similar to joint stock companies, the possibility for one fourth of the capital of limited liability companies to be paid at the stage of incorporation, and the rest to be paid within twenty four months is introduced. Additionally, it has been regulated that the provisions with regards to the payment of capital shares, place of payment, performance obligation, results of non-performance and transfer of shares whose value has not been totally paid for joint stock companies shall be applied by analogy. I am of the opinion that this provision is positive.


Article 1524 of the New TCC provides a disposition regarding the website. While this article regulated, prior to being amended, that all equity companies were obliged to establish a website, as a result of the amendments introduced under Law no. 6335, the website requirement shall be applied to equity companies which are subject to auditing pursuant to Article 397/4 of the New TCC. The said companies shall open their websites in three months following their registration to trade registry. Additionally, pursuant to Provisional Article 8 adopted by Law no. 6335, equity companies subject to auditing which have been incorporated prior to the entry into force of Article 1524 shall establish their websites within three months and allocate a section of the site to the publication of the issues provided under the relevant article.

Amendments Made in Law no. 6103

Law no. 6335 introduced important amendments in Law on the Entry into Force and Application of the Turkish Commercial Code numbered 6103 ("Law no. 6103").

Article 22 pertaining to amendments of articles of association has been amended, and it has been regulated that the said amendments shall be made within 12 months following the entry into force of the New TCC. Prior to amendments, the said article regulated that the amendments of articles of association shall be made in 18 months following the publication of the New TCC, which provided a shorter period of time, and was widely criticized by the scholars.

Pursuant to amended article 26 of Law no. 6103, the references made in the articles of association to the Turkish Commercial Code numbered 6762 with regards to meeting and resolution quorums in the articles of association shall be readjusted through amending the articles of association within 12 months following the entry into force of the New TCC. Article 28 pertaining to voting rights, privileged voting rights and transfer limitations of registered shares states that the relevant provisions of the New TCC shall enter into force in 12 months following the entry into force of the New TCC.


Many important amendments have been made in the New TCC with Law no. 6335 a short time before the entry into force of the New TCC, and the New TCC has been amended before becoming effective. This is not an ordinary situation for such a principal code as the New TCC whose preparation took almost ten years with regards to the legislation technique, it is very difficult to deem convenient that many new and principal concepts (such as operational auditor and external auditing) introduced by the New TCC are rapidly abolished or amended without leaving room for necessary debates. Additionally, most of the secondary legislation foreseen in the law are not yet enacted, which causes many problems, especially before Trade Registries. It would have been more appropriate for these amendments to be made opened to discussion in advance. We hope that the inconveniences which we pointed out will be eliminated and the practices pursuant to the New TCC will become clearer as soon as possible.

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.

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