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LAW 514 LEGAL STRUCTURE OF FINANCIAL INSTITUTIONS AND MARKETS. Prof.Dr.Huriye Kubilay Spring Semester /2013. INTRODUCTION TO FINANCE LAW. Turkish Code of Obligations : The New Code of Obligations ("the New Code") became effective in Turkey as of 1 July 2012 .

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law 514 legal structure of financial institutions and markets


Prof.Dr.Huriye Kubilay

Spring Semester/2013

introduction to finance law
  • TurkishCode of Obligations: The New Code of Obligations ("the New Code") became effective in Turkey as of 1 July 2012.
  • Turkish Commercial Code, 6102Effectiveness: July1, 2012.
  • Capital Market ActThe New Capital Markets Law has been published in the Official Gazette on 30 December 2012and it wasenteredintoforce at thesamedate.
  • BankingAct, 5411Effectiveness: November, 01.2005
  • Bank CardsandCreditCardsAct, 5464

Effectiveness: March 1, 2006

  • InsuranceAct, 5684 Effectiveness: June 14, 2007.
General TransactionConditions
  • The newTurkishCode of Obligationsincludes a section regarding «GeneralTransactionConditions" (Art. 20-25). One of the significant issues introduced by the new TurkishCode of Obligations, numbered 6098 (“NCO”) is the concept of “GTCwhich was not included in the oldCode of Obligations (“CCO”), and reflects the concept of “Terms and Conditions” widely incorporated in standard form contracts in English and American Law.
  • Frequentandwide-rangeuse:GTCis being used in every area of life, because oftechnological developments and accelerating everyday life.

The TCO is based on “freedom of contract” principle and concept of “individual contract” drafted as a result of mutual negotiations of the parties. Individual contract is the contract in which the declarations of intent such as offer, counter offer, acceptance are achieved as a result of reciprocal negotiations. However, in present-day, enterprises such as finance companies, insurance companies or companies that offers goods and services to consumers use standard form contracts –also known as adhesion contracts- which are unilaterally and abstractly prepared for their later utilization in more than one transaction with respect to services rendered by them.

adhesion standard form contracts
  • GTT is a contractual term inserted in these contracts. They also referred to as “adhesion contracts” or “standard form contracts”.

As to GTC, there is imbalanced relationship between the parties in favor of one party over the other during the preparation of the agreement; the terms of the agreement are not negotiated. Mostly, the prices are set forth based on the tariffs. In such case, the party, who will enter into an agreement with the related enterprise, has no opportunity other than accepting or rejecting the text which was prepared unilaterally.So a statutoryintervention is needed.In actual case, the parties are usually composed of one private individual and large organization do not negotiate equitably, because one of the parties has the power to determine the terms of the contract in favor of itself.


The provisions ofTCO regarding GTC are not new for Turkish law system, but expand the framework for better consumer protection.

protection with general provisions
  • Firstly, legalprotection tried to be achieved based on the mandatory provisions of Code of Obligations, Civil Code or Commercial Code such as bona fides, violation of law, public morality or public order or fraudulent actions.
consumer protection act 4077
  • GTT is mainly regulated with respect to the transactions of which the addressees are consumers under article 6 titled “Unfair Conditions of Contracts” of the Act concerning Protection of Consumers numbered 4077 (“Act nr. 4077”).
unfair conditions
  • In accordance with Article 6, added to the Act nr. 4077 with an amendment announced in the Official Gazette dated 14.03.2003, the terms and conditions of contract, which are set forth in the agreement unilaterally by the seller or the provider of the services without any negotiation with the consumer -in other terms adhering party - and which are against the bona fides, and thus causes extensively imbalanced relationship against the consumer, are defined as “Unfair Conditions”. This article also indicates that unfair conditions are not binding for the consumers and can be put aside by the judge.
unfair conditions regulation
  • Again, in accordance with article 6, as per article 7 of the “Regulation on Unfair Conditions under Consumer Contracts” (“Unfair Conditions Regulation”) announced in the Official Gazette dated 13.06.2003 and numbered 25137 emphasize the invalidity of the unfair conditions and it sets forth that if the contract stands, the remaining parts of the contract will be valid.
  • The provisions of TCO with respect to GTCare regulated under articles 20-25. The current legal systems put a three-dimensional assessment system with respect to the assessment of GTT:
  • validity assessment,
  • interpretation assessment and
  • content assessment
  • As per article 20 of TCO, GTCis defined as “the contract terms which are previously and unilaterally prepared by one party with a purpose of using them for several numbers of similar contracts and submitted to the other party during the signing of a contract”.Within the context of this definition, three primary factors taken into account:(i) the use of contractual terms for several numbers of identical agreements,(ii) previously and unilaterally preparation, and(iii) submission to the other party.
validity assessment
  • In accordance with article 21 of TCO, in order for the GTC fall under the contract, it is necessary for the party who prepared the contract to give clear information to the other party regarding the existence of these terms, to provide the opportunity to the other party for learning the content of these terms and it is also necessary that the other party accepts such terms.
  • In the event of breach of the above provisions, the relevant GTCare deemed as not-included in the contract as invalid terms.
interpretation assessment
  • According to Article 23, if a term in GTCis not expressed with a plain language and easily understandable or ambiguous then it shall be construed against the party who prepared the contract and in favor of the weaker party. This provision with respect to the interpretation assessment is a reflection of the main principles of Roman Law “in dubio contra stipulatorem” (in doubt, the contract construed against the drawee).
content assessment
Content Assessment
  • Article 25 of the TCO sets forth that within GTCcannot contain terms which are against bona fides, against the other party and significantly disadvantageous for the other party.
enterprise law http the atc org data updates 120410turkey tr insights tcc 01112011 pdf
Enterprise Law

Preserving the characteristics of the oldTCC, TCC, 6102is orientated to harmonize the TurkishEnterprise Law with European Law. Main pointsregarding this reform refer to accounting principlesforenterprises, commercialbooks, commercialregistry, unfair competition and further to agency


«Business enterprise» is defined in such a mannerthatcovers e-commerce.

new accounting principles and commercial books
New Accounting Principles and CommercialBooks

One of the most remarkable reforms of the TCCis enforcing modern accounting rules and newnorms for commercial books. In this framework,TCCprescribes that all the accounting systemsof Turkish enterprises shall be arranged inconformity with Turkish AccountingStandards,which have been and will be further enforcedaccording to internationally accepted financialstandards(IFRS).


In addition to that, the enterpriseshall document and file all of its commercialtransactions, if necessary electronically, whichmeans that electronic registry mechanisms shallbe integrated within the accounting system of anenterprise(Art. 64/2 TCC). On the other part, anyrecords to appear in the commercial books of amerchant shall be complete, correct, on time andsystematic ( Art. 65/2 TCC). The most distinctiveaim of the lawmaker is, as reflected in the Code,“to enable an expert to achieve a proper pictureof the operations and of the financial situationof the enterprise within a reasonable period".


Inconnection with this hypothesis, rules referringto commercial books, accounting systems andauditing shall be regarded as a whole and thepractice shall be conducted in a manner to enabletransparencyandreliability.

commercial registry mersis
Commercial Registry: MERSIS
  • Establishing an electronicallybased registry system is one of the most crucialconcerns of TCC. Electronic registry will serve toimplement the principle of “ true and fair view”.

Through the electronic registry, the transparencyof the enterprise records will be reinforced,whereas positive and negative functions of theregistry system shall be conducted in a moreefficient manner. In addition, the State and theChamber of Commerce, which shall hold thecommercial registry, are successively responsiblefor the damages arising from the transactionscarried out by the registry holder (Art. 25/2 TCC).

  • With a global approach, the rules regarding theelectronic registry and the rules in respect with theinformation technologies shall serve for a betterimplementationof thetransparency.
business name
Business name
  • The rules referring to the businessname have been reformed in order to enable atransparent and reliable system. In this system,the lawmaker aims to enable third parties to getproper information about the legal situation ofthe enterprise. Particularly, the TCC underlines theprinciples of transparency and true and fair view(Art.39 TCC ff.) In addition to that, Art. 39 TCCevidently demonstrates the correlation betweenthe legal regime surrounding the business nameand the rules related to information technologies.
protection of business name
Protection of business name
  • Ifanybusiness name has beenregistered in anyregistrydepartment of Turkey, it cannot be usedbyanothermerchantwithoutmaking an additiontodiscern (Art.45, TCC). Thiskind of protection has beenacceptedforonlythebusinessnames of legal personmerchantsduringtheeffectiveness of old TCC, 6762. Thebusinessnames of naturepersonshavebeenprotectedonly in theboundaries of RegistrationRegionwhichthebusiness name wasregistered.
unfair competition
  • Competitionlawandtheregime concerning unfair competition are twodisciplines, which are continuously treatedwith a modern view in European and Swisslawsystems. The new legal regime concerningunfair competitondefines the concept of unfaircompetition and demonstrates the connectionbetween this legal regime and the competitionlaw.

Other dimensions of the reform shall bementioned as the enumeration of several versionsof unfair competition and further more efficientrules for the compensation of the damages arisingfrom unfair competition. The Code enumeratesand classifies many trade practices as unfaircompetition cases in conformity with the decisionsof the European Court of Justice.


Some examples for unfair competition are asfollows:

  • Fraudulent sale and advertisement practices
  • Procuring a person to invade or dissolve hiscontract.
  • Benefiting from other’s products in aninequitablemanner
  • Acquiring and declaring other’s business secrets.
  • Invading certain rules enforced for a certainbranchof profession
  • Utilizing inequitable general terms andconditions,

TCC pays special attention to preserve the Turkishjurisprudence evolved by the Turkish Court ofCassation up to date. Despite adopting the Swisslaw reform in respect with unfair competition,the lawmaker intends to maintain the formationof Turkish law in this discipline. New rules forunfair competition distinguish themselves bysafeguardingconsumerrights.


Inspite of theexistence of special regulations for consumer

protection, TCC equivalently elevates the consumervalue, since competition restrictions invadethe consumer’s legal status. The core of unfaircompetition law is orientated to protect not onlyrivals but all themarket participators.

agency contract
  • As the focal point of foreign investment, theagency contract is very common in practice.For this reason, the legal regime concerning theagency contract faces an extensive legal reform.
  • On the contrary, other similar agreements such asfranchising agreement and exclusive sales agencyagreement are not treated by TCC. Apparently,TCC seems to restrict the practice of theseagreements solely with general principles of lawand with certain regulations of Competition Law.
principal agent
  • The most remarkable points of the new rules areas follows: The rule for the unauthorized agencyhas changed in a manner, that in the event that acontract has been concluded by an unauthorizedagent and further in the event that the principaldoes not assume this contract at once after hehas been informed of the conclusion of thisagreement, the unauthorized agent is responsibleto fulfill this agreement (Art. 108 TCC).
agency fee
  • On the other hand, TCC reinforces the agent’sright to acquire the agency fee. Accordingly,the agent shall deserve a fee for each of histransactions, equivalently for the transactions notimplemented by the agent but implemented in hisgeographic area. Art. 113 TCC preserves the rightof fee, even in the case that the agency contracthas been terminated. The agent deserves the claimfor fee for the transactions started before thetermination of thecontract.
the obligations of the principal
The obligations of the principal
  • The obligations of the principalhave beenequivalently enumerated in TCC, whereas TCCdemonstrates which obligations shall be fulfilledby the principalin order to urge the agent toeffectuate his obligations (Art. 120 TCC). TCC characteristicallysafeguards the rights of the agents, sinceTurkish enterprises appear as agents rather thanprincipals.
portfol o compensat on
  • Another new dimension of agency contracts isportfolio management. In spite of the lack ofregulation, Turkish Higher Court has implementedportfolio compensation for the agencyagreements dissolved without the fault of theagent. Taking into consideration the regulationin Swiss Law and the decisions of Turkishjurisprudence, TCC enforces a specific norm forportfolio compensation, namely Art. 122 TCC.

According to this regulation, in the event that1. the agency contract has not been dissolvedon the basis of the fault of the agent, 2. thatthe principalacquires eminent benefits fromthis dissolution 3. that the agent is deprived ofputting forward a legal claim, which he is entitledto put forward under normal circumstances and4. finally that the principle of equity necessitatesthe payment of such a compensation, the agentmay ask for a portfolio compensation, which shallbalance the enrichment of the principalthanks tothe clients acquired by the agent for the principaland the loss faced by the agent because of thedissolution of the contract without the fault of theagent.


TCC advances to release a concrete normwhich allows the portfolio compensation for othersimilar types of agreements such as exclusive salesagencyagreements.

company law
  • General aspects

Through TCC, Turkish company law experiencesa comprehensive reform. The generalprinciples of company law as well as to joint stockcompanies and limited liability companieswill be tackled.

general principles
General principles
  • The first chapter of Company Law is dedicatedto general principles. Considering moderndevelopments in European and Swiss law systems,the Code proposes to enforce many principles andlegal institutions which are to a large extent newtoTurkishlaw.

TCC encompassesdetailedrulesconcerningmergers, scissions (splitting) andtransformationsof enterprises (Art. 134-194 TCC). Existing rulesare inadequate to meet the needs of the practice.Considering many decisions of Turkish CompetitionAuthority, there is a very evident lack of rules withmaterial law character, subject to regulate thetransformation of enterprises. New rules of thisdiscipline originate from European and Swiss lawsystems.

group companies
  • Another novelty of the TCC is the legal regimeprescribed for the group of companies. Taking intoaccount the academic acquisition of the “HighLevel Group of Company Law Experts”’, TCCenforces a comprehensive legal system for thegroup of companies. First of all, TCC demonstratesmain elements of the group of companiesand enumerates fundamental instruments ofcontrol. By the means of these instruments, TCCequivalently raises a presumption of control,this means that the rules related to the groupof companies will have a critical role in TurkishCompanyLaw.
parent company subsidiary company
  • The new system implements special liabilityregimes for parent companies. Such liabilitygrounds on the misuse of the control or on theconfidence restored by the parent company in theviewof thirdparties.
reforms on joint stock companies
Reforms on joint stock companies
  • Foundation Existing rules related to the foundationof the joint stock companies enable “gradualfoundation”, which means that the founders,undertaking a certain part of the capital, maymake announcements in order to raise capital.
  • In this alternative, the company shall be foundedupon the collection of the whole capital. It shallbe recorded that this method of foundation hasnot gained currency in Turkish practice.
  • İzmir ScienceandTechnology Park Inc.

As a consequence of this event, TCC renounces themethod of gradual foundation and replaces thismethod with the method of public offer. In thisnew alternative, the company shall transform acertain part of the capital into pecuniary sharesand execute the public offer of these shares withina period of 2 months from the foundation of thecompany (TCC, Art.346).


With this perspective, TCC elevatesessential characteristics of joint stock company,by raising its anonymous character. Through thismethod, even private (not listed) companies maybenefit from the advantages of capital markets.

renouncing the ultra vires principle
Renouncing the “Ultra Vires” principle
  • According to Art. 137 of the current TCC, anytransactions of a company which fall outsidethe scope of the business activities prescribed inthe articles of association are deemed as invalid.Such transactions are named as “ultra vires”transactions, since all the transactions referring tothe core business activities stated in the articles ofassociation of the company are valid and “intravires”. In line with the 1st Company Law Directiveof EU, TCC renounces this principle.
joint stock company with a sole shareholder
Joint stock company with a sole shareholder
  • Considering the developments in EU Law, TCClaunches the joint stock company with a soleshareholder (one-man company Art. 338/1TCC). Three essential functions of this regulationare 1) to reconcile the legal regime with theeconomic truth 2) to establish a new modelfor investors who require limited liability 3) toconstitutea model facilitatingthelaunchingand the conduction of group of companies,institutionalization of enterprises and further theestablishmentof foundations.

On theotherhand, this reform enables a shareholder to buy othershareholders’ shares and turn the company intoa company with a sole shareholder. In the eventof such a transfer of shares to a sole shareholder,the board of directors is bound to register this factwith the commercial registry within seven daysfrom the transfer. Otherwise the board of directorsshall be liable for the damages borne by thirdparties because of this transfer.

registered share capital
  • TCC allowsthejointstock companies to adopt registered capital(Art.332 TCC). Particularly, it shall be stated thateven joint stock companies which are not publiclyheldmay equivalently benefit from this system.This reform reflects TCC’s tendency to diminish thedistance and differences between several kindsof joint stock companies. Even companies with alimited circle of shareholders, which consciouslyrefrain from becoming publicly-held companies,may need to adopt registered capital. The start-upcapital for the companies, adopting the system ofregistered capital amounts to 100.000 TL.
conditional capital increase
  • General Assembly maydecideconditionalincrease of capital. Thepurpose of thiscapitalincrease is toprovidetherighttoacquire of newsharestocreditorsoremployees.
q ualified share capital
Qualified sharecapital
  • Any property rights and property itemsmay be submitted as a part of capital to a jointstock company (Art. 342 TCC). Consideringthe evolution of technology and implementingrelated modern rules, intellectual property rightsare classified as a sort of qualified share capital,whereas it is enabled to propose a web site as aqualifiedcapitalinstrument.

TCC implementsthegeneral principleforqualifiedsharecapital, namelythat the instrument shall be alienable and shallnot be subject to any liens or legal executions.For preserving the assets of the corporation, TCCprescribes that personalendeavor, service performance, commercialreputationandcredits which are not of due date,may not be submitted as a part of capital to thejoint stock company (Art. 342/1 TCC).

challenges to the decision mechanism of joint stock corporations
Challenges to the decision mechanism ofjointstockcorporations

Board of directors

  • Board of directors may be constituted solelyby one member (Art. m. 359/1 TCC).
  • Legal persons may acquire the statute of aboard member (Art. m. 359/2 TCC).
  • The requirement to be shareholder is nomore a must for the board members.
delegation of powers
Delegation of powers
  • TCC enacts a detailedlegal regime for the delegation of managementpowers to CEO’s and directors. As usual, thenewregimeclassifiesmanagementpowersas the administrative powers and power ofrepresentation (Art. 367 TCC). In the eventthat the power of representation shall beimposed on a sole person, this person shall bea board member (Art. 370/2 TCC). Contrarily,administrative powers may be delegated to aperson, who is not a member at the board (Art.367/1 TCC). As a consequence of this, all themembers of the board may function as nonexecutivemembers.

For the delegation of management powers, anevident regulation in the statute is necessary.In case of delegation, the board of directors isobligated to release a directive of organizationto enforce a management regime for thecorporation, which includes the powers of eachadministrative subject as well as the hierarchicalstructure between the board of directors andCEO’s and other management bodies.


Theobligation to release such a directive is in line withthe evolution of Modern Company Law throughcorporate governance principles. Through thesemechanisms, it is possible to achieve a moreeffective liability regime. On the other hand, inthe light of the principle of transparency, it willbe more evident for third parties, through whichmanagement mechanisms the corporation willadvance to achieve its own purposes.


Even in case that all the members of the boardshall function as non-executive directors; TCCunderlines the need for an efficient corporationamong the management units. The statute isthe exact instrument to achieve this functionalcooperation. Due to the management structure,TCC enables the monist as well as the dualiststructure. In other words, the managementstructure may solely consist of the board ofdirectors as well as of the board of directors andthesupervision board.

executive director non executive director independent director outside director

IndependentDirector is a member of BDswho does not have a material or pecuniary relationship with company or related persons, except sitting fees. Independent Directors do not own shares in the company.

independent directors cannot
  • Be a recentemployee,
  • Have a recentmaterialbusinessrelationshipwiththecompany,
  • Haveclosefamilyties,
  • Haveexecutivepowers.
  • Decision of Council of Ministries: OG 23/01/2013, Nu.28537
  • Decision of Council of Ministries, Institution of PublicSupervision, AccountandAuditStandards OG 12.March, 2013, Nu.28585
responsibilities of independent directors under the cmb law
Responsibilities of independentdirectorsunderthe CMB Law
  • Dutiesarisingfromcorporategovernancecommittees,
  • Duty of stayingindependent
  • Duty of protectingthebenefits of alltheshareholderswithoutmakinganydiscrimination at times of relatedpartytransactionsandsignificanttransactions,
  • Duty of allocatingnecessary time
  • Duty of objectiveanalysisandreview.
  • Remuneration
  • Risk management
  • Auditing
  • Corporategovernance
  • Nomination
duties of members of bos
Duties of members of BOs
  • Personallyperformingduties (proxiesare not permitted) (TCC, Art.375)
  • Duty of care (TCC, Art.369)
  • Duty of loyalty (TCC, Art.369-395)
  • Duty of confidentiality (insidertrading) (TCC, Art.363)
  • Duty of non-compete (TCC, Art.396)
  • Duty of non-borrowing (TCC. Art.380-395)
specific liabilities of directors under the tcc
SpecificLiabilities of Directors underthe TCC
  • Incompliance of thecompanyDocumentsandStatementswiththeLaw (TCC, Art.549)
  • FalseStatementsregardingtheShareCapitalandAwareness of PaymentDeficiency (TCC, Art.550)
  • Corruption in Evaluation of Value (TCC, Art.551)
  • General Liability (TCC, Art.553).»Intheeventthefounders, board members, managersandofficialliquidatorsbreachtheirobligationsarisingout of thelawandthearticles of associationbybeing at fault, theywill be responsibleforthedamagescausedtothecompany, shareholdersandcompanycreditors.»
conditions of liability
Conditions of Liability:
  • A breach of an obligationorduty,
  • Being at fault, and
  • Theexistence of a damage.
  • Who can holdliable:
  • Shareholders
  • CMB
  • Creditors
  • Art. 330 of the current TCC refersto meeting and decision quorums of board ofdirectors. As a consequence of the insufficientwording of this article, the practice has faceddifficulties in determining whether a valid decisionis formed in certain cases. The new formulation ofthe new TCC has a very definite and clear wordingand underlines the principle of majority (Art. 390 TCC).
invalidity of bod decisions
Invalidity of BOD decisions
  • ThecurrentTCC does not include any articles referring the validityof board of director’s decisions. The jurisprudencehas evolved a theory of invalidity, based on thegeneral principles of Civil Law. Regarding thisfact, TCC adopts to enact a specific article forthe invalidity of these decisions.

Inthisrespect, decisions invading the principle of equality,conflicting with the essential character of thecorporation, invading the fundamental rights ofthe shareholders or further invading the definiteallocation of powers between the generalassembly and the board of directors shall bedeemed invalid (Art. 391 TCC).

online bod meetings
Online BOD meetings
  • Due to the modern needsof business, TCC enables online meetings of boardof directors (Art. 1527 TCC).
information technology services
Information Technology Services
  • Jointstockcompanies and LLCs shall arrange a web site andinform its stakeholders through this web site.It is the board of director’s liability to arrangeand conduct this web site and to renew itscontent continuously. Every joint stock companyand limited liability company shall announce itsaudited statement of accounts in its web site.
  • The corporate web site shall bear comprehensiveinformationforitsstakeholders. Benefitingfrominformation technologies will help the corporationto review and reflect his own corporategovernanceperformance.
division of powers between bod and general assembly
Division of powers between BOD andgeneral assembly
  • Confusion of authorities between the generalassembly and board of directors threatensthe efficient performance of the governancemechanisms. In order to prevent such confusion,
  • TCC advances to enumerate certain powersof the general assembly and of the board ofdirectors and to determine the mutual position ofbothdecisionmechanisms.


  • Absolute and inalienable powers of the board ofdirectors have been enumerated in Article 375 TCC.
  • Similarly, absolute and inalienable powers ofthe general assembly have been enumerated inArticle 408 TCC and in some other articles.
  • For decisions which are not within the absolutearea of each organ, the statute may appointthe competent organ. In the absence of such aregulation, the board of directors is competenttoresolvethematter.
general assembly a shareholder oriented perspective
General assembly :A shareholder-orientedperspective
  • Articles 407-451 TCC, which are regulatingthe legal regime for the general assembly andobviously preserving the essence of TCC, evaluateshareholder’s rights much more as a centralpoint. In TCC, shareholder is not considered as anobligatory body for the existence of the corporationbut it is evaluated as a “conditio sine qua non” forthe effective conduction of the corporation. Thisnew characteristics of the mentioned rules may beobserved in the following mechanisms.
representation of the management in the general assembly
Representation of the management in the general assembly
  • CEO’s, at least one memberof the board of directors and the independentauditor appointed for the inspection of a certaintransaction such as mergers shall participate in thegeneral assembly (Art.407 / 2 TCC). This regulationis oriented to enable an efficient coordinationamong several units of the corporation and to servefor a better information service to shareholders.
by laws
  • The board of directors shall arrangeby-laws referring the mechanisms and theconduction of general assembly and registerthese by-laws with the commercial registry ( Art.419/2 TCC). The preparation of by-laws as acomplementing source in addition to the statute ofthe corporation will serve to the establishment of atransparent and efficient corporate organization.
quorums in respect with the statutory amendment s art 421 tcc
Quorums in respect with the statutory amendments (Art. 421 TCC).

a. As of the statutory amendments, TCC differsbetween listed companies and private (unlisted)joint stock companies. In listed companies,decisionssuch as capitalaugmentation, particularly the augmentation of the authorizedshare capital and the transformation of thecompany shall be formed with usual quorums (Art. 418 TCC).


b. Statutory amendments which impose secondaryobligations or the obligation to cover thebalance losses on shareholders may be solelyformed with unanimity (decision quorum).


c. The amendment of the subject of the company,the creation of preference stocks, restrictionsreferring the transfer of the shares shall bedecided and resolved with the votes of theshares amounting to 75 % of the whole capital (decisionquorum).


d. All other sorts of statute amendments shall bedecided on a basis of 50 % of the whole capital (decisionquorum).

  • e. Contrarily to TCC, in the event that the statuteamendment shall not be decided at the firstgeneral assembly, the quorums at the secondassembly are the same as the ones at the first general assembly.
representation of the shareholder in the general assembly
Representation of the shareholder in the general assembly
  • For achieving a more efficientparticipation, TCC appraises a comprehensiveregulation for the representation of theshareholder at the general assembly. In thiscontext, the representatives are classified as corporaterepresentative, independentrepresentative and institutional representative (Art. 427 TCC). Besidesefficientparticipation, therulesin respect with representation of the shareholdersequivalently aim to draw the framework of the representatives.
law no 2499 capital market law

Capital Market Law No. 2499 published in the Official Gazette number 17416 on July 30, 1981.

  • Article 3 – Certain terms used in this Law are defined as follows:

b) “Capital Market Instruments” : Securities and Other Capital Market Instruments.

“Securities” : Negotiable instruments which, represent a share or participation in the property of theissuer or an obligation of the issuer, represent a specified quantity of money, are of a series of instruments of thesame nature, have the same wording, are dealt in as a medium for investment, are fungible, earn periodic incomeand have the terms and conditions determined by the Board.

“Other Capital Market Instruments” :Instruments which are not Securities and which have terms andconditions determined by the Board, excluding cash, checks, bills of exchange, promissory notes and certificates

of deposit.


Article 13- Issuance of Debentures and other Debt Instruments

  • Article 13/A- Mortgage Covered Bonds
  • Article 13/B- Asset Covered Bonds
  • Article 14- ConvertibleBonds
  • Article 14/A- NonvotingShares
  • Article 15- Principles concerning the Distribution of Dividends and Bonus Shares
6362 numbered capital market act
6362 numbered CAPITAL MARKET ACT
  • The New Capital Markets Law has been published in the Official Gazzette on 30 December 2012.
hypothecary capital market instrument
  • Art.3 (i) İpotekli sermaye piyasası aracı: İpotek teminatlı menkul kıymetler, ipoteğe dayalı menkul kıymetler, ipotek finansmanı kuruluşları tarafından ihraç edilen pay dışındaki sermaye piyasası araçları ve konut finansmanından kaynaklanan alacaklara dayalı olarak veya bu alacakların teminatı altında ihraç edilen diğer sermaye piyasası araçlarını
  • MortgageCoveredBonds (Art.13/A, 2499)
  • Art.3 (o) Menkul kıymetler: Para, çek, poliçe ve bono hariç olmak üzere;

1) Paylar, pay benzeri diğer kıymetler ile söz konusu paylara ilişkin depo sertifikalarını,

2) Borçlanma araçları veya menkul kıymetleştirilmiş varlık ve gelirlere dayalı borçlanma araçları ile söz konusu kıymetlere ilişkin depo sertifikalarını,

capital market instruments
  • Art.3 (ş) Sermaye piyasası araçları: Menkul kıymetler ve türev araçlar ile yatırım sözleşmeleri de dâhil olmak üzere Kurulca bu kapsamda olduğu belirlenen diğer sermaye piyasası araçlarını
  • Capital market ınstrumentscover;

- Securities,

- OtherCapital Market Instruments; derivativeinstruments-investmentcontracts…


Art.3 (u) Türev araçlar: Aşağıda sayılan veya Kurulca bu kapsamda olduğu belirlenen diğer türev araçları:

1) Menkul kıymetleri satın alma veya satma veya birbirleri ile değiştirme hakkı veren türev araçları,

2) Değeri, bir menkul kıymet fiyatına veya getirisine; bir döviz fiyatına veya fiyat değişikliğine; faiz oranına veya orandaki değişikliğe; bir kıymetli maden veya kıymetli taş fiyatına veya fiyat değişikliğine; bir mal fiyatına veya fiyat değişikliğine; Kurulca uygun görülen kurumlarca yayınlanan istatistiklere veya bunlardaki değişikliğe; kredi riski transferi sağlayan, enerji fiyatları ve iklim değişkenleri gibi ölçüm değerleri olan ve bu sayılanlardan oluşturulan bir endeks seviyesine veya seviyedeki değişikliğe bağlı olan türev araçları, bu araçların türevlerini ve sayılan dayanak varlıkları birbirleri ile değiştirme hakkı veren türevleri,

capital markets instruments

  • CommonStocks
  • Bonds : Refers to debt certificates of equal face value and bearing the same expression, issued by corporations with the purpose of borrowing,
  • ParticipatedDividendShares
  • Profit andLossSharingCertificates
  • AssetBackedSecurities
  • Real EstateCertificates
  • ForeignCapital Market Instruments
  • İTMK
  • House FinancingFundsand IDMK
  • AssetCoveredBonds
share certificates
  • Article 484 of the New TCC governs about share certificates. This article reaffirms the basic principle set forth in Article 409 of the TCC, which allows share certificates to be issued either as registered or bearer share certificates. However, the New TCC has coined a new wording with regards to the term of share certificate, and opted to use the term “share certificate” instead of “stock certificate”.

Pursuant to Article 484/2 of the New TCC, bearer share certificates may not be issued for the shares fully unpaid shares. The bearer share certificates, which have been issued contrarily to this rule are void, on the other hand, compensation rights of bona fide persons are reserved.

  • Pursuant to Article 485 of the New TCC, unless stated otherwise in the articles of association, the type of a share certificate maybe modified by means of conversion. The relevant article brings clarification to the issue, which had been left obscure to understand by the TCC, and states that the conversion may only be realized by amendment to the articles of association. Moreover, the relevant article regulates that, in the event that the conversion is a legal requirement the board of directors’ resolution is an essential condition for the execution of conversion transaction, and it shall be reflected to the articles of association at a later stage.

Pursuant to Article 486 of the New TCC regulating the principles pertaining to the printing of share certificates, similarly to Article 412 of the TCC, share certificates printed prior to the incorporation of the company are void, however, obligations resulting from the undertakings of subscription remain valid. Additionally, those who print share certificates prior to incorporation are required to compensate the damages resulting therefrom. The second and third paragraphs of Article 486 of the New TCC contain new provisions that were not included in the TCC. Accordingly, for bearer certificates, the board of directors shall, within three months following the payment in full of the share price, print the share certificates and deliver them to shareholders. With the said provision, a printing requirement with regards to bearer share certificates has been adopted. The board of directors’ resolution pertaining to printing the bearer share certificates shall be registered and announced, and published in the web site of the company. Moreover, the relevant article regulates that interim certificates may be issued until the issuance of original share certificates and shall be subject to the same the provisions as registered share certificates..


Pursuant to Article 486/3 of the New TCC, upon request of minority shareholders, registered share certificates shall be printed and delivered to shareholders. This provision is one of the innovations brought by the New TCC. With the statutory printing requirement of registered share certificates, inconsistent share ledger problems that may arise from not updated ledger records, are staved off. A very unbecoming practice, especially in closely-held joint stock companies, that unprinted share certificates may cause considerable obstacles of proving shareholding status. In the justification of the New TCC, it is stated that in case of infringement of the said article, shareholders are endowed to initiate a lawsuit. By this way, shareholders may benefit from an efficient statutory protection.Articles in the New TCC concerning the rules for the form of share certificates, reaffirm the relevant articles in TCC about the worn-out or defaced share certificates.

transfer of share certificates
Transfer of ShareCertificates
  • Pursuant to Article 489 of the New TCC, the basic principle concerning the transfer of ownership of bearer share certificates is that the transfer of the share is only valid with regards to the company and third persons by the transfer of possession of the share. While the relevant disposition is identical with Article 415 of the TCC, the term “delivery” was used instead of the term “transfer of possession” in the TCC. The New TCC preferred the latter term in order to describe the concept more clearly.

Pursuant to Article 490 of the New TCC governs the transfer of registered share certificates, and states that the transfer of share is realized with the convey of possession of the registered and endorsed share certificate. This article clarifies that the transfer of possession of the endorsed share certificate is a requirement for completion of legally binding transfer transaction. With this article, confusions about the statutory transfer requirement for the endorsed share certificate are prevented.

dividend right certificates
DividendRight Certificates
  • Provisions concerning dividend right certificates are set forth in Articles 502 and 503 of the New TCC. Pursuant to Article 502 of the New TCC, the general assembly may, in accordance with the articles of association or by amending the articles of association, decide on the issuance of dividend right certificates in favor of the shareholders whose shares have been extinguished by legal provisions, creditors or persons related to the company. In the relevant article, the basic principle laid down under Article 402 of the TCC is repeated. However, unlike the TCC, the New TCC regulates that the dividend right certificates may be issued as payable to bearer or payable to order of specified person.
  • Article 503 of the New TCC contains dispositions similar to Article 403 of the TCC. Pursuant to the said article, holders of dividend right certificates cannot be granted with shareholding rights; however, they may be granted with other rights; to participate to net profit, to the remaining amount after liquidation, to acquire newly issued shares.
debt instruments and securities containing right to purchase and exchange
Debt Instruments and Securities Containing Right to Purchase and Exchange
  • Article 504 and following articles of the New TCC regulate debt instruments and securities containing right to purchase and exchange which were not regulated under the TCC.Upon the exercise of the right to purchase or right to exchange of the holders of the said rights, the company’s capital increases in proportion to these rights. The capital increase upon the exercise of the right to purchase or right to exchange occurs automatically, without further operation. Right to purchase and right to exchange are creative positive rights. Therefore, the relevant declaration generates its consequences once it is received by the other party, it cannot be revoked and it cannot be bound to a specific condition.

Pursuant to Article 504 of the New TCC, debt instruments - bills of exchange and commercial bills, securities- containing right to purchase and right to exchange and every kind of securities may be issued upon the resolution of general assembly, unless stated otherwise by legal provisions. Article 504 of the New TCC makes reference to Article 421/3 and 421/4 with regards to the resolution of general assembly to be adopted. Pursuant to the said provisions, these resolutions should be adopted by the votes of shareholders holding at least seventy five percent of the capital or their representatives. In the event that this quorum is not reached in the first general assembly meeting, the same quorum should be obtained for the following meetings. However, a provision on the contrary may be embodied to the articles of association (New TCC Article 504). Pursuant to the justification of the articles of the New TCC, it is possible to increase or decrease the quorum provided by the relevant article.


The general assembly resolution pertaining to issuance of security is required to contain all relevant terms and conditions of securities.The security certificates issued in accordance with Article 504 of the New TCC may be payable to the bearer, payable to order of specified person by bearer with nominal value. The general assembly and, in case it is authorized, the board of directors are competent bodies for determination of the nominal value. The last sentence of Article 504 contains a provision which regulates only debt instruments. Accordingly, the payment method of debt instruments should be in cash and it should be paid at the time of delivery.Pursuant to Article 505, unless otherwise regulated by law, the general assembly may authorize the board of directors with regards to issuance of security, determination of the terms and conditions related thereto and appointment of the operation auditor for a maximum term of fifteen months. In the justification of the articles of the New TCC, it is stated that the provision of a maximum term has been introduced for convenience purposes.


Reference is made to Articles 421/3 and 421/4 with regards to quorums which shall be applied to resolutions pertaining to authorization of the board of directors. Accordingly, the resolutions shall be adopted with the votes of shareholders holding at least seventy five percent of the capital or their representatives and in the event that this quorum is not reached in the first general assembly meeting, the same quorum should be obtained for the following meetings.Article 506 of the New TCC provides a limit concerning the total value of the debt instruments to be issued in accordance with the articles above. This value shall not exceed the sum of the company’s capital and reserve funds which appear on the balance sheet. Pursuant to Article 506/2 of the New TCC, provisions of the Capital Market Law are reserved.