This legislation primarily targets amendments to the Turkish Commercial Code numbered 6102 (“Turkish Commercial Code”) but also encompasses revisions to several other laws, including the Law on the Protection of Competition, the Law on the Protection of Consumers, the Law on the Union of Chambers and Commodity Exchanges of Turkey, the Law on Cooperatives, and the Law on the Regulation of Retail Trade.
In particular, concerning the Law on the Protection of Consumers and the Law on the Regulation of Retail Trade, new administrative penalties have been introduced for practices such as excessive pricing and refusal to sell. This is a crucial measure to strengthen consumer protection and promote fair trade practices in Turkey. Excessive pricing, which often disadvantages consumers and disrupts market equilibrium, will now be subject to more stringent regulatory control. Similarly, the refusal to sell, a practice that can restrict consumer choices and foster monopolistic tendencies, will be mitigated through these new sanctions.
Moreover, the amendments to the Law on the Protection of Competition introduce a requirement for the Competition Board to notify relevant parties during investigations. This adjustment aims to improve transparency and accountability within the Board’s operations, providing companies with better insights into the investigative processes and allowing them to prepare and respond more effectively.
Beyond these modifications, significant changes to the Turkish Commercial Code under Law No. 7511 are outlined below.
Previously, in joint stock companies, board members were elected for three years, while the chairman and vice-chairman were chosen annually. Law No. 7511 abolishes the necessity for annual elections for the chairman and vice-chairman, aligning their terms with those of the board members. This change aims to offer more stability and continuity within the company’s leadership. Annual elections for these positions often caused disruptions and inconsistencies in leadership, which could impede strategic planning and the achievement of long-term goals. By synchronizing the terms, companies can now benefit from a more consistent and stable leadership framework.
The responsibility to appoint and dismiss branch managers in joint stock companies is no longer an inalienable duty and authority of the board of directors. This modification provides greater flexibility in the management structure of these companies, facilitating a more decentralized decision-making approach. Branch managers, who are pivotal to the operational success of a company, can now be appointed and dismissed more readily and efficiently. However, it is crucial to note that there are no changes regarding the inalienability of the board’s authority to appoint and dismiss other managers, and this practice will continue. This distinction ensures that while there is flexibility in managing branch operations, the overall strategic control of the company remains with the board.
Currently, the authority to convene the board of directors is solely vested in the chairman. Law No. 7511 extends this authority to all board members. With this change, any board member can request a meeting in writing, and the chairman must call the meeting within thirty days of receiving the request if a majority of the board members submit a written request. This amendment aims to promote a more collaborative and democratic environment within the board. Allowing any board member to call a meeting ensures that significant issues can be addressed promptly and that the decision-making process is more inclusive. It also prevents any potential misuse of power by the chairman, promoting a more balanced governance structure.
Lastly, Article 17 of Law No. 7511 introduces a temporary article to the Turkish Commercial Code. The added temporary article states:
“Joint stock companies and limited liability companies with capital below the minimum required capital must increase their capital to the amounts specified in Articles 332 and 580 by 31/12/2026; otherwise, they will be deemed to have dissolved. Non-public joint stock companies that have adopted the registered capital system with a minimum issued capital of two hundred and fifty thousand Turkish Liras must increase their initial capital and issued capital to five hundred thousand Turkish Liras by the specified date, or they will be deemed to have exited this system. No quorum is required for general assembly meetings held to increase the capital to the amounts specified in Articles 332 and 580, decisions will be made by the majority of votes present at the meeting, and no privileges can be used against these decisions. The Ministry of Trade may extend the deadline specified in the first paragraph by one year at most, twice.”
Thus, with the provisional article added, it is mandated that joint stock and limited liability companies whose capital is below the new minimum capital amount must conform to the new capital requirement by 31.12.2026, or they will be considered dissolved. This stipulation is essential for ensuring that companies maintain a sufficient capital base to support their operations and financial obligations. By raising the minimum capital requirements, the law aims to enhance the financial stability and resilience of companies operating in Turkey. Companies that fail to meet these new requirements will face dissolution, emphasizing the importance of compliance.
Additionally, no quorum will be required for general assembly meetings to increase the capital to the specified amounts, decisions will be made by the majority of votes present, and no privileges can be exercised against these decisions. This provision simplifies the process for companies to comply with the new capital requirements, minimizing potential delays and obstacles. The absence of a quorum requirement ensures that decisions can be made efficiently, even if not all shareholders are present. Moreover, the stipulation that no privileges can be exercised against these decisions ensures that the process is fair and equitable for all shareholders.
The amendments made to the Turkish Commercial Code under Law No. 7511 will take effect on the date of their publication. This immediate implementation underscores the urgency and significance of these changes. Companies operating in Turkey must quickly adapt to the new regulatory environment to ensure compliance and avoid potential penalties or disruptions. The comprehensive nature of these amendments highlights the Turkish government’s commitment to improving the country’s commercial and legal framework, promoting fair competition, protecting consumer rights, and ensuring the financial stability of businesses.
Overall, Law No. 7511 represents a considerable advancement in the modernization of Turkey’s commercial laws. By addressing a broad spectrum of issues, from consumer protection and competition to corporate governance and financial stability, the law aims to create a more robust and equitable business environment. Companies operating in Turkey will need to thoroughly review and understand these changes to navigate the new legal landscape effectively. The emphasis on transparency, accountability, and fair trading practices reflects a broader trend towards enhancing the regulatory framework to support sustainable economic growth and protect the interests of all stakeholders in the Turkish economy.
If you have any questions or require additional information, please reach out to your customer representative.