Turkey: Stepping Into The Procedures Of An Electronic Trade Registry: Mersis

Mersis is an electronic trade registry, which is highly popular and a significant e-portal for attorneys and companies which came about since the enactment of the new Turkish Commercial Code ("TCC"). Mersis is the abbreviation for the Central Registration System (merkezi sicil kayıt sistemi) which allows and obligates companies to conduct transactions electronically instead of using the old manual processes which existed before this new technology was developed for the trade registries. Mersis was developed following the Customs and Trade Ministry's decision, dated 12.07.2006; No. 2006/38 and from the Higher Planning Board's act, namely the "Central Information System for Legal Entities." There were many purposes for its development, including the ability to conduct legal business transactions through electronic media, to improve the business investment environment , to comply with the necessity of information disclosure and to avoid unrecorded transactions. The electronic trade registry is designated and regulated by the article 24/2 of TCC which states that the Ministry of Customs and Trade and Turkey Chambers and Stock Exchanges Association, shall establish a central common database, which can be presented in the electronic form and in which trade registry records and their content which is registered and announced should regularly be stored. Mersis is (i) an electronic database where all information, which should be registered before the trade registry with regard to stock companies, cooperation, sole proprietorships and branch offices of foreign companies in Turkey, institutions and foundations are stored; and (ii) a system where certain transactions (i.e. documents of incorporation, amendments to the articles of association ("AoA"), liquidation, establishment of branches, cancellation and pledge) with regard to such named entities are conducted.

Out of the 238 trade registry directorates within Turkey, currently 235 registries started carrying out registration actions through Mersis in 2014. However, since the system is newly established, only select transactions may be carried out via this electronic system . For instance, the Istanbul Trade Registry has commenced the application of Mersis on 24 February 2014. For the Istanbul Trade Registry, only the registration of the documents and information regarding new incorporations, the opening of branches and the transfer of a headquarters may be carried out through this electronic system. Therefore, the former paper based system is still being used during this transitional period. In this respect, it is important to understand the paper-based system and its difference in relation to the new Mersis system.

The paper-based system for registrations starts with the company preparing such documents as the articles of associations and petitions which usually do not have common wording required by legislation. After these documents are prepared, they must contain the authorized company signatures. The second step, is to the documents notarized by a Notary Public. The notary should examine the validity of the signatures- to ensure that the documents are duly signed enabling the company to engage in business on behalf of the authorized signatories. The third step is the physical submission of any related notarized or duly prepared documents to the Trade Registry where the relevant company is registered. The Trade Registry Directorate reviews and maintains the documents received for the registration and announcement purposes in the Trade Registry Gazette. Such procedures must be followed in order to validate most transactions (i.e. As per TCC, the company is deemed to be incorporated after its registration and the announcement in the Trade Registry Gazette) The Trade Registry Directorate will determine if all the documents are are valid and sufficient. , The Registry will publish and announce the documents it deems relevant (which may include a decision regarding an amendment to AoA or a declaration regarding the capital increase, etc.) in Turkish Trade Registry Gazette, which may take about one week.

The paper-based system is not sufficient or effective due in part to its long-continuous procedures and recording keeping of the paper-based documents. The Trade Registry Directorate's paper process takes a long time which causes delays in completing registrations and announcing transaction. The paper process is said to take so long since it is not automated and does not contain standard processes such as for common wording or when revisions of submitted documents needs to take place.

Even though the electronic trade registry system seems to change and ease this paper based system, in practice, the Mersis recording and registration is not carried out completely through electronic means. Therefore, the companies and authorized representatives of these companies should prepare the documents both in physical and electronic means in order to prove and ensure the validity of the documents by submitting them in a paper version. Yet, the Mersis electronic registry makes the registration and control over the documents easier because it uses a standard template for the wording of the documents which companies can complete to standardize the documents and to copy them electronically from the system for ease of recording and announcement purposes through the virtual Trade Registry Gazette. Whereas if the Mersis system is not used, then the documents may only be submitted in hard-copy physical form which means they need to be separately copied word-by-word to an electronic form of media. This process can take a very long time and can slow down the recording of the documents.

In contrast to the paper registration system, the application and usage of the Mersis system is a streamlined approach. For instance, in order to be able to carry out any type of registration for a company, such company should be registered with the Mersis system and should have a Mersis number. Companies will be provided with a Mersis number which may include a logarithm consisting of six digits of the local code and the tax number of such company. A real person may also receive a Mersis number consisting of five digits of the local code and the Turkish identity number of such person. Mersis may be reached by the username-password or the e-signature from the website address of Ministry of Customs and Trade1.

In order to register the company with Mersis, the first step is to ensure that one of the authorized signatories is registered as a "registration representative," and an electronic signature is obtained in order to represent the company for the registration. As per article 13 of Trade Registry Regulation, an e-signature is compulsory for trade registry processes, except for incorporation. An electronic signature for the registration representative can be obtained by the submission of (i) an application letter and letter of undertaking to be signed by the registration representative; (ii) a bank statement evidencing payment of the electronic signature fee; and (iii) a copy of the registration representative's passport or Turkish ID number.

After obtaining an electronic signature, the registration representative should register with the Mersis system to complete the process. Since the Mersis system is in Turkish, a non-Turkish speaking representatives may need the assistance of a Turkish-speaking. This issue is generally resolved for a non-Turkish speaking registration representative by authorizing the Turkish attorney of a company, who generally speaks Turkish and can act as the registration representative. Authorization will be granted via the electronic signature of the registration representative.

The final stage of the registration process requires the registration representative to log into the system by using his/her username and password that was given as part of the incorporation process. The login also requires the use of the representative's electronic signature which can be used for any transaction conducted through Mersis. The representative then chooses the transaction to be completed from the list of transactions, and following such completes the related articles of AoA, including such details as the title, registered address, scope of work and any additional articles. After the registration request is completed, the representative submits to a notary public the request number given by the system. The AoA or the AoA amendments, etc. that will be approved by the notary public are delivered to the directorate of the trade registry together with the information for approval. Finally, the trade registry finalizes the registration and makes the announcement.

The Mersis electronic registry system has not completely eliminated the paper based system yet and, it continues to mature and smooth out any remaining wrinkles as more and more applications are filed and new challenges are identified.

Footnote

1 http://mersis.gumrukticaret.gov.tr

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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