Share certificates are regulated in the seventh chapter of the fourth part of The Turkish Commercial Code No. 6102 ("TCC") about joint stock companies, titled as "Securities". The first division of seventh chapter, "Share Certificates"; commence with the Article 484 in which the rules and conditions of the share certificates are regulated under the main heading "General Provision" and various subjects are regulated between the articles 484 and 501.

Bearer share certificates are the type of securities that whoever holds the certificate as understood from the text will be considered as the holder of the right.

Due to the fact that bearer share certificates have a strong negotiability, it brings disposers together. Bearer share certificates, along with their easily negotiatiable feature, it is also an important investment objective for the investors.


In the Article 484 of TCC No.6102, it is clearly stated that share certificates will be to the bearer or in the name of the holder. Yet there are some conditions for issuance of a bearer share certificates as follows;

  • First of all, there should be a provision in the articles of association in order to issue bearer share certificates.(TCC 339/2/d)
  • Pursuant to the TCC Article 484/2, all share prices have to be paid completely in order to issue bearer share certificates.


3.1 The Principle of Freedom of Transfer

As mentioned above, bearer share certificates cannot be issued as long as the share price is totally paid. Freedom of transfer is also fundamental for bearer share certificates issued after the payment of share prices. This principle is mandatory. It is not possible to prohibit the transfer of bearer share certificates even if it is included in the articles of association. In other words, provisions in articles of incorporation which prohibit the transfer of bearer share certificates is null and void.

3.2 The Principle of Having Purpose of Transfer of Ownership While Transfering the Possession

Since bearer share certificates have the characteristics of negotiable instruments, the provisions regarding transfer of negotiable instruments shall also be applied. From the expression of Article 647 of TCC which indicates that "Transfer of any negotiable instrument conferring title or a limited right in rem requires the transfer of possession of the instrument in all cases" it is understood that in order to transfer bearer share certificates, transfer of possession shall be made with the purpose of transferring ownership.

Moreover, it is not possible to register the bearer share certificates in the ledger as they do not have stock ledger.

3.3 The Possession Transferor's Authority to Transfer Ownership

As a rule, for the transfer of bearer share certificates, possession transferor should be entitled to transfer the ownership. If this authority does not exist, the ownership cannot be transferred to another person, but if the acquiring person is in good faith and if the rules concerning possession save the acquisition of the acquirer, the ownership can be acquired from anyone who does not have authority.

In order to protect the good faith of the ownership rights acquirer, primarily valid share should be issued that is to say the costs of shares have to be fully paid. Invalidity of bearer share certificates issued for not fully paid shares can be alleged against everyone including those who take over with good faith. However, it is obvious that the acquirer with good faith will have right to compensation even if he cannot acquire his share ownership.

The reason of this rule is based on the fact that the owner of the money and bearer shares are not known. However, since ownership of the shares is also transferred with the transfer of possession, investigating whether the transferor is authorized to transfer the bearer shares will queer the confidence and pace in business environment.


4.1. Income Tax

The securities owned by natural persons (and share certificates in this context) and the income to be made by selling-out the capital market instruments are included in "value increase gains" in the first paragraph of the Income Tax Law Article 80. Pursuant to the mentioned article; the security transfer income which are acquired non-controversial by natural persons is not subject to income tax. Likewise, natural person's income made by transfering the share certificates of fully accountable corporations retained for more than two years are not subject to income tax. Therefore, on the occasion that the share certificates which are acquired by natural persons and belong to joint stock companies established in Turkey, is floated 2 years after (1 year after for the shares traded on BIST) or transfered, the income will not be subject to income tax; however if the duration between acquisition and transfer is shorter than 2 years (1 year for the shares traded on BIST), the profit to be gained will be subject to income tax.

4.2. In Terms of Value Added Tax

4.2.1. Transfer of The Shares Owned by Natural Persons

Natural persons are not value added tax ("VAT") payers therefore the shares of Joint Stock Partnership and Limited Company owned by natural person are not subject to VAT. According to the Ministry of Finance, interim certificate or share certificates which are not retained in print by and are ubject to disposition within 2 years following the acquisition shall be subject to VAT.

4.2.2. The Transfer of Shares Owned by Corporations Joint Stock Company Shares Sold Within 2 Years Following the Acquisition

Pursuant to the VAT Law Article 17/4-g, the transfer of share certificates is exempted from VAT. Accordingly, if the share certificates and interim certificates of a joint stock company in print is transfered within 2 years, this conveyancing is not subject to VAT. Pursuant to the Ministry of Finance, if there are no share certificates or interim certificates in print and the shares are subject to transfer within 2 years following the acquisition, the transfer shall be subject to 18% VAT. Joint Stock Company's Shares Which is Sold After the 2 Years Period Following the Acquisition

Pursuant to the VAT Law article 17/4-r, participation stocks which are retained in the assets of the corporations for at least 2 years are exempted from VAT. Though, the retaining of participation stocks in the assets of which the corporations trading participation stocks is not included in such exemption. If the sale of the joint-stock company shares which are possessed for this purpose as share certificates shall not be subject to VAT, however it will be subject to VAT if there is no share certificate or interim certificate.


The consequences of the transfer of bearer share certificate can be indicated as follows; the transferee gains the title of shareholder without any further action and can use all the rights of the shareholder. In principle, share certificate should be submitted in order to exercise mentioned rights. (Article 654 and 415/3 of TCC) . Transferee will not have any debt to the the partnership since the payment of the whole share price is the prerequisite for issuance of bearer share certificates.

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.