Overview
A corporation is a business association with an independent legal personality. In a corporation the amount of capital or assets of the association stands in the forefront instead of its shareholders’ personality.
The agreement to incorporate, which is called the articles of association, must contain a minimum capital commitment required by law. The amount of this subscribed capital shows the initial financial strength of the corporation to the third persons. This determined capital of a corporation is divided into shares.
Those who own shares of the company are called shareholders (i.e. company partners). Shares of a corporation may be transferred through the transfer of stock certificates if issued or with a written sale agreement between the seller and buyer. As a result of such rule says being liable within the limited amount capital set by the Commercial Code, the liability of shareholders for the debts of the corporation will be terminated as soon as the amount attached in the shares is paid in.
Current Commercial Code (dated to January 13th, 2011) in Turkey is quite contemporary and up to date to answer all necessary questions of modern business relations.
Many of the provisions set by The Turkish Commercial Code on corporations are not mandatory and govern the grey area only if not agreed otherwise. There are several mandatory code provisions, which cannot be avoided with an agreement or by the articles of association. Some mandatory rules protect shareholders rights such as voting rights. Partners (shareholders) may choose to regulate certain corporate matters with written agreement, which is not written in the articles of incorporation. If such an agreement is not violating any mandatory provisions of the Code, it is considered enforceable.
Definition By Law
Second Book of
Turkish Commercial Code (T.Com.C. article no:124. -644.) with the title “Commercial Companies” defines and sets provisions regarding all type of companies. T.Com.C. Part IV within the Second Book under the title “Corporation” (i.e. Joint Stock Company) defines and sets provisions regarding this specific type of company between the articles 329. – 563. Division I. with the heading “General Provisions, Incorporation and Basic Princibles” starts with article no. 329 which gives a definition as follows: “Corporation is a company with fixed capital which is divided into shares, liable fort is debts with the corporate assets only.”
Fixed capital means the total committed capital amount of the company which was predetermined (prior to the formation) by the founders and declared and published in the articles of association through Official Gazette. This above-mentioned capital amount must be divided into shares.
The liability of the partners (shareholders) towards the creditors of a corporation is limited to the amount of their commitment to the capital. A shareholder, who has fully paid his subscribed amount of capital to the company, shall no longer be liable towards the creditors of the Corporation.
Official Supervision
Regardless of its type or the amount of capital involved, a Corporation is subject to official intervention, starting from the moment of incorporation. First of all, the incorporators must apply for and receive permission from the Trade Registry Office to form a corporation (which is not a significant obstacle), and later on in some cases a government official (commissar) attends to the general meetings of shareholders.
There are additional tough regulations for corporations which operate in the banking or insurance sectors or conducting other activities of particular economic significance such as leasing or the sale of securities.
The Capital Market Commission established by “The Capital Market Law” has a strong authority over publicly held companies such as keeping the records, investigating suspicious actions, granting permission to conduct certain types of business and issuing new rules and regulations.
Other than those limitations and regulations mentioned above a corporation operates fully free according the will of shareholders within free market rules.
actions, granting permission to conduct certain types of business and issueing new rules and regulations.
Other than those limitations and regulations mentioned above a corporation operates fully free according the will of shareholders within free market rules.
