Matters Subject And Not Subject To Registration In The Trade Registry In Capital Companies

1. Introduction and Conceptual Framework

Within the framework of the Turkish Commercial Code No. 6102 (TCC), the trade registry is one of the most fundamental institutions ensuring the security, transparency, and public disclosure of commercial life. The trade registry aims to establish trust and stability in commercial transactions by making the legal statuses of merchants and commercial enterprises known to third parties. This publicity function is of vital importance, particularly for capital companies (Joint-Stock Companies [A.Ş.], Limited Liability Companies [Ltd. Şti.], and Partnerships Limited by Shares) where the liability of the partners/shareholders is limited to the capital they have subscribed.

As a rule, the principle of numerus clausus (legality of registration) applies to the trade registry. Pursuant to Article 27 of the TCC and the Trade Registry Regulation (TRR), only matters explicitly mandated or permitted by law or relevant legislation may be registered in the trade registry. It is legally impermissible to register a matter in the registry merely through the will of the parties if not stipulated by law; likewise, the failure to record a mandatorily registrable matter in the registry records entails various legal and penal sanctions.

Transactions occurring throughout the lifecycle of capital companies are divided into two main categories regarding the obligation to register: matters subject to registration and matters not subject to registration (remaining within internal relations). This distinction is decisive in terms of the validity of the transaction, its enforceability against third parties, and the legal effect it produces (constitutive vs. declaratory effect).

2. Matters Subject to Registration in the Trade Registry in Capital Companies

Matters subject to registration in capital companies encompass the incorporation of the company, structural changes, amendments to the articles of association/company agreement, representation and management authorities, and dissolution phases. In terms of the legal effect they produce upon registration, these transactions may be either constitutive (inshai) or declaratory (izhari/explanatory) in nature.

2.1. Incorporation and Acquisition of Legal Personality

The acquisition of legal personality by capital companies takes place upon registration:

• Joint-Stock Companies (TCC Art. 355): A joint-stock company acquires legal personality upon registration in the trade registry following the execution of the articles of association by the founders and the fulfillment of statutory requirements. The registration here has a constitutive (inshai) effect.
• Limited Liability Companies (TCC Art. 588): A limited liability company likewise acquires legal personality at the moment it is registered in the trade registry. Liability arising from transactions executed on behalf of the company prior to registration rests with the founders.

2.2. Amendments to the Company Agreement and Articles of Association

Any amendment made to the articles of association—which serves as the constitution of the company—is subject to registration (TCC Art. 456, Art. 589):

• Capital Increase and Reduction: The resolution for a capital increase and the actual increase of capital gain legal validity upon registration (constitutive effect). In a capital reduction, registration is mandatory following the completion of notices to creditors and audit reports.
• Amendments to Company Name, Objectives and Scope, and Registered Office: Changing the corporate name, expanding/restricting the scope of activity, or relocating the company’s registered office to another registry district must be registered and announced.
• Extension of Duration or Alteration of Other Mandatory Provisions in the Articles of Association: If the company was incorporated for a definite term, the extension of its duration or the alteration of provisions concerning the distribution of powers among corporate bodies is subject to registration.

2.3. Transactions Concerning Representation and Management Bodies

Changes in the management and representation mechanism governing the company's relations with the outside world are subject to registration for reasons of public safety:

• Election and Division of Duties of the Board of Directors / Managers: The election, terms of office, and dismissal of board members in joint-stock companies and managers in limited liability companies are registered (TCC Art. 359, Art. 623). This registration is declaratory in nature; the act comes into existence via a general assembly or board of partners resolution, and registration serves to notify third parties.
• Restriction of Representation Authority and Internal Regulations (İç Yönerge): Pursuant to TCC Art. 371/3, representation authority can only be restricted and registered in two ways:
• Limitation to the business of the head office or a specific branch,
• Joint representation (dual signature rule).

Restrictions other than these two exceptions (e.g., monetary or subject-matter limitations) cannot, as a rule, be registered against third parties. However, pursuant to TCC Art. 367 and Art. 371/7, the appointment of commercial agents (ticari vekil) or other commercial assistants designated in accordance with the registration and announcement of an internal regulation (iç yönerge) governing the delegation of management authority is subject to registration.

• Signatory Authorities and Signature Circulars: The signature powers of persons authorized to represent the company solely or jointly must be registered.

2.4. Specific Changes in the Shareholding Structure

• Sole Shareholder/Partner Status (TCC Art. 338/2, Art. 574/2): If a joint-stock or limited liability company is incorporated with a sole partner/shareholder, or if all shares subsequently coalesce into a single person, this condition—along with the name, domicile, and citizenship of the sole shareholder/partner—must be registered and announced by the management body within 7 days.
• Share Transfer in Limited Liability Companies (TCC Art. 595/7): The transfer of basic capital shares in limited liability companies occurs via a notarized agreement and the approval of the general assembly (unless otherwise agreed in the company agreement). Managers are obliged to register the share transfer with the trade registry within 30 days from the date of the transfer. Share transfers in joint-stock companies are not subject to registration.
• Notification and Registration of Control and Shareholding Thresholds in Corporate Groups (TCC Art. 198): Where an enterprise directly or indirectly acquires shares representing 5%, 10%, 20%, 25%, 33%, 50%, 67%, or 100% of the capital of a capital company, or where its shareholding falls below these thresholds:
• The enterprise acquiring or disposing of the shares notifies the capital company and competent authorities within 10 days.
• The company must register this shareholding status with the trade registry and announce it in the Turkish Trade Registry Gazette (TTSG) within 10 days of receiving the notification.
• Legal Nature and Special Sanction: This registration is declaratory. However, pursuant to TCC Art. 198/3, so long as the registration and announcement obligation is not fulfilled, all shareholding rights—including the voting right attached to the relevant shares—are suspended (frozen).

2.5. Structural Changes, Liquidation, and Deregistration

• Mergers, Demergers, and Conversions (TCC Arts. 134–194): Mergers, demergers, or conversions from a limited liability company to a joint-stock company (or vice versa) attain legal validity upon registration. The registration here is constitutive (inshai) in nature.
• Dissolution and Entry into Liquidation: The entry of the company into liquidation by resolution of the general assembly, court decision, or statutory dissolution grounds, as well as the appointment of liquidators, is subject to registration.
• Revocation of Liquidation: In instances such as the lifting of bankruptcy or the extension of duration, the decision to revoke liquidation must be registered.
• Deregistration from the Trade Registry (Termination of Legal Personality): Following the completion of the liquidation process and the satisfaction of creditors, the striking-off (deregistration) of the company from the registry is effected by registration, and legal personality terminates upon registration (constitutive effect).

2.6. Appointment of Independent Auditor and Registration Regime (TCC Art. 399)

In capital companies subject to independent auditing under TCC Art. 397 and the relevant Presidential Decree, the election of the auditor is among the matters mandatorily subject to trade registry registration. Pursuant to TCC Art. 399/2, the management body (the Board of Directors in joint-stock companies, managers in limited liability companies) is obliged to promptly register the independent auditor—whether elected by the general assembly or appointed by the court—in the trade registry and announce it in the Turkish Trade Registry Gazette (TTSG) and on the company's website. The registration of the independent auditor is declaratory (explanatory) in nature; the source of the mandate is the election by the general assembly and the executed audit agreement.

2.7. Branch Opening, Branch Representatives, and Branch Closure (TCC Art. 40 and TRR Art. 118 et seq.)

Branches established by capital companies to expand their commercial operations subordinate to the head office are subject to the trade registry publicity regime:

• Obligation of Registration and Announcement (TCC Art. 40/3): Capital companies must register and announce every branch opened—whether within the registry district of their head office, in another registry district, or abroad—with the trade registry where the branch is located, starting from the date of the branch opening resolution taken by the authorized corporate body (Board of Directors in joint-stock companies, Board of Managers / General Assembly in limited liability companies).
• Scope of Registration: The commercial name of the branch (formed by adding the branch designation to the head office name), full address, allocated capital (if any capital has been allocated to the branch), branch managers authorized to represent the branch, and the boundaries of their representation authority are registered.

3. Matters Not Subject to Registration in the Trade Registry in Capital Companies

Pursuant to the principle of legality in registration, decisions that are not explicitly enumerated by law or that solely concern the internal operation, operational processes, and commercial secrets of the company cannot and should not be registered in the trade registry.

3.1. Share Transfers and Shareholding Changes in Joint-Stock Companies

Joint-stock companies are structures centered around capital and grounded on the principle of free transferability of shares (TCC Art. 491 et seq.). Accordingly:

• Share Transfers: The transfer of registered or bearer share certificates, or bare shares, in joint-stock companies is not registered in the trade registry. The transfer takes place in accordance with the provisions governing the transfer of possession, endorsement, or assignment of claims and is entered into the company's share ledger (pay defteri). The share ledger is an internal corporate record and is not subject to public registry disclosure.
• Exception: As noted above, the coalescence of all shares in a single person (sole shareholding) is exceptionally subject to registration for reasons of public policy and transparency (TCC Art. 338/2). Aside from this, changes of shareholders in multi-partner joint-stock companies are not reported to the registry.

3.2. General Assembly Resolutions Concerning Internal Relations and Operations

Resolutions adopted by the general assembly that do not constitute an amendment to the articles of association are not subject to registration:

• Approval of Financial Statements and Release (İbra): The release (discharge of liability) of board members and managers regarding their financial and administrative activities is not registered.
• Profit Distribution and Attendance Fee (Huzur Hakkı) Resolutions: General assembly resolutions regarding the distribution of net period profit, transfer to reserves, distribution to partners without adding to capital, or the granting of attendance fees to board members/managers fall outside the scope of registration.
• Managerial Advisory Resolutions Outside Internal Regulations: Non-binding advisory or managerial resolutions adopted by the general assembly concerning internal relations are not registered in the registry.

3.3. Internal Division of Duties and Appointments Not Conferring Representation Authority

Decisions of the management body that do not bind third parties and merely concern internal division of labor and administrative hierarchy cannot be made the subject of registration:

• Internal Duties of Non-Executive Board Members: Committee members established solely for audit/oversight purposes without representation authority (e.g., Committee for Early Detection of Risk, Audit Committee) are not registered.
• Department Managers and Subordinate Staff Appointments: Internal position appointments—such as Human Resources Manager or Accounting Chief—that fall outside the scope of properly registered commercial agency under TCC Arts. 367/371 cannot be registered in the trade registry.

3.4. Shareholders' Agreements and Protocols Between Shareholders

Contractual arrangements under the law of obligations frequently executed in practice, such as Shareholders' Agreements (SHA), Voting Agreements, Pre-emption, Tag-Along, or Drag-Along rights:

• Create relative (inter partes) binding effect strictly between the contracting parties.
• Cannot be registered in the trade registry unless incorporated into the articles of association and permitted by law.
• A breach of these rights does not automatically invalidate the relevant general assembly resolution under corporate law; it merely gives rise to damages and contractual penalty liabilities between the parties.

3.5. Representation Restrictions Impermissible for Registration Under Law

Pursuant to TCC Art. 371/3, restrictions other than the two registrable limitations (branch business and dual signature) cannot be registered by the registry office:

• For instance, a monetary authorization limit such as "Person X may act alone up to 500,000 TL, but requires Person Y's signature for amounts above that" cannot be registered against third parties (unless the internal regulation mechanism of TCC Art. 367 is utilized). Even if registered, it has no legal effect against third parties.

4. Legal Consequences of Registration: Positive and Negative Functions

Whether a matter is subject to registration produces legal consequences within the scope of the positive and negative functions of the trade registry regulated under TCC Art. 36:

4.1. Positive (Müspet) Function of Registration (TCC Art. 36/1)

Third parties cannot claim ignorance of a matter that has been registered in the trade registry and announced in the Turkish Trade Registry Gazette. From the date of publication, third parties are legally deemed to have knowledge of the registered matter. For example, if the revocation of a manager's representation authority has been registered and announced, a third party transacting with the dismissed manager cannot claim good faith.

4.2. Negative (Menfi) Function of Registration (TCC Art. 36/2–3)

A matter that was mandatorily registrable but was not registered, or was registered but not announced, cannot be asserted against bona fide third parties. Unless it is proven that the third party had actual knowledge of the circumstance, the unregistered situation does not produce consequences against that third party.

4.3. Distinction in Terms of Legal Effect

• Constitutive Effect: Registration is a constituent element of the transaction. As long as registration is not performed, the legal transaction produces no legal effect either in internal or external relations (e.g., incorporation of a joint-stock company, capital increase, amendment to articles of association, type conversion).
• Declaratory Effect: The legal transaction has already come into valid existence prior to registration (e.g., via a general assembly resolution). Registration functions to publicize this transaction to third parties and render it enforceable against them (e.g., election of board members, registration of share transfer in a limited liability company).

5. Conclusion

In Turkish Commercial Law, the registration regime regarding capital companies strikes a balance between the public disclosure of commercial life and corporate internal autonomy. In accordance with the principle of legality in registration, matters explicitly mandated and permitted by law are disclosed to the public, whereas areas concerning the commercial dynamism, strategic decisions, and internal contractual relations of the company are kept outside registry records.

While the failure to register registrable matters results in non-enforceability against third parties under TCC Art. 36 or invalidity of the transaction (in cases of constitutive effect), attempting to register non-registrable matters results in the rejection of the registration application within the scope of the examination powers of trade registry directorates (TCC Art. 32).

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.