In accordance with the general circular of the Customs and Trade Ministry ("Ministry") dated January 25, 2013 certain clarifications have been introduced in relation with the application of Article 462 of Turkish Commercial Code on capital increases in joint stock companies and limited liability companies.  

Article 462 of the Turkish Commercial Code provides that the capital of the company may not be increased through capital subscription without the funds indicated in the balance sheet of the company that are permitted to be added to capital in accordance with the applicable regulations ("Permitted Funds") are first capitalized or without a simultaneous capitalization of Permitted Funds at an amount equal to the capital subscription amount.  

The aforesaid general circular of the Ministry clarifies the application of the Article 462 of the Turkish Commercial Code and indicates the following: 

(1)  Public Companies or companies which applied to the Capital Markets Board of Turkey for a public offering may increase their capital through capital subscription regardless of whether there are Permitted Funds; and 

(2)  For Companies which are not public or which have not applied to the Capital Markets Board of Turkey for a public offering and of which balance sheet indicates that there are Permitted Funds, capital may be increased through capital subscription only if Permitted Funds in the amount equivalent to the capital subscription amount are also added to capital at the same time with the capitalization of the capital subscription amount. In order to increase the capital through capital subscription without the capitalization of the Permitted Funds or to increase the capital through capital subscription simultaneous with the capitalization of Permitted Funds at an amount lower than the capital subscription amount, the general assembly to decide for such capital increase needs to be convened by the presence of all shareholders of the company and such capital increase needs to be approved by the affirmative vote of all shareholders.     

The circular of the Ministry also indicates that until a further regulation is issued on the matter, the following shall apply: 

(a)   in case of increase of capital through capital subscription, the report of certified public accountant needs to be obtained on the following matters:

  • the equity of the company;
  • confirmation whether the company is in capital loss;
  • the ratio at which the capital is maintained and,
  • for joint stock companies only, verification whether there are any Permitted Funds. 

(b)  if the capital is increased only through capitalization of internal resources the report of the certified public accountant needs to be obtained on the following matters:

  • the equity of the company;
  • confirmation whether the company is in capital loss;
  • confirmation that the funds to be increased from the internal resources actually exist. 

On the other hand, in case the declaration of the board of directors of the company explicitly indicates that the capital of the company is maintained and that the funds to be increased from internal resources actually exist is submitted to the trade registry together with the balance sheet of the company approved by the general assembly of the company and, if more than 6 months has passed since the date of such balance sheet, the interim balance sheet of the company certified by the board of directors, the reports of certified accountants mentioned above shall not be sought by the trade registry for registration of the capital increase. 

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