Legal Commission
Commission Chair: Gökay Celep — Architect
Commission Member: Seyde Türkoğlu — Civil Engineer
Commission Member: Murat Fidan — Civil Engineer
A GENERAL OVERVIEW OF THE NEW TURKISH COMMERCIAL CODE NO. 6102
Our Turkish Commercial Code No. 6762, which entered into force on 1 January 1957, has been in effect for approximately 54 years. However, during this period very significant developments have taken place both in Türkiye and around the world, and it has become necessary to enact a new commercial code that meets the requirements of the age. Among the most important of these developments are advances in national and international trade, industry, services, finance and capital markets, progress in technology — particularly the internet becoming an indispensable part of our lives — and globalisation. As a result of the needs created by all these developments and changes, and following lengthy work, the new Turkish Commercial Code No. 6102 was adopted by the Grand National Assembly of Türkiye on 13 January 2011 and published in the Official Gazette dated 14 February 2011.
With the new Turkish Commercial Code No. 6102, a new era begins in Turkish commercial life. The new Turkish Commercial Code truly contains fundamental changes.
Article 1534 of the new Turkish Commercial Code sets out the provisions on the entry into force of the law. Accordingly, the new Code will generally enter into force on 1 July 2012. However, the effective dates of certain provisions differ.
Provisional Article 2 of the Code, concerning the determination of Turkish Auditing Standards, and Provisional Article 3, concerning the auditing of auditors, entered into force on 14 February 2011, the date of publication of the Law.
Article 1524, which regulates the obligation of capital companies to set up a website — or, if a website already exists, which matters must be published on it — will enter into force on 1 July 2013, that is, one year after the Code enters into force.
Provisions on financial reporting that require real and legal person merchants to be subject to the Turkish Accounting Standards (TMS), which are the equivalent of the International Financial Reporting Standards (IFRS), and Articles 397 to 406 on the auditing of joint-stock companies, will enter into force as of 1 January 2013.
Apart from these provisions, various periods have also been granted to companies under the Enforcement and Implementation Law No. 6103 with respect to fulfilling the obligations imposed by the new law.
A General Overview of the Changes Introduced by the New TCC
The principal innovations introduced into commercial life by the new TCC can be listed as follows:
* With the new law, capital partnerships become more transparent. Companies are now required to establish a website and, on these websites, to publish the company’s financial statements and audit reports in accordance with the principle of public disclosure, and to announce decisions taken regarding the company’s representatives and management. Moreover, it has become obligatory to show, on every kind of paper and document the merchant uses in connection with its business, the merchant’s registry number, trade name and the centre of its business — and, if the merchant is a capital company, the address and number of its website alongside the committed and paid-in capital.
* Company mergers have been re-regulated with an innovative perspective, and company divisions have been fully regulated in all respects for the first time in the law.
* As a new institution, the “Single-Shareholder, i.e. Single-Person Joint-Stock and Limited Company” has entered our legal system. This stands out as one of the most striking changes, because, as is known, under the existing law at least 2 partners were required to establish a limited company and at least 5 partners to establish a joint-stock company.
* In joint-stock companies, it has become obligatory for at least one quarter of the board members to have received higher education.
* As a provision that comes to the fore especially in single-person companies, it has been accepted that the management body may consist of a single person.
* Through certain provisions added to company law, uncompromising regulations have been introduced concerning the protection of capital. Company managers are prevented from borrowing from the company, and a kind of professional management approach is brought to the fore. In this way, an attempt is made to prevent companies from being asset-stripped by their managers.
* In partnerships, the value of share ownership has been raised, the rights of examination and obtaining information have been reinforced, and minority rights have been strengthened.
* As also noted in the justifications of the articles, importance has been given to the principles of TRANSPARENCY AND CONSISTENCY, which are among the fundamental principles of accounting, and regulations on financial reporting have been introduced requiring real and legal person merchants to be subject to the Turkish Accounting Standards (TMS), the equivalent of the International Financial Reporting Standards (IFRS).
* With the new law, the system of Independent External Audit and Transaction Audit emerges as the guardian of company management. Many provisions in the law, particularly those concerning the audit of companies, were prepared under the influence of the International Financial Reporting Standards (IFRS) and accounting principles. As is known, internal audit has applied to joint-stock companies until now, and a sound audit could not be carried out and the relevant parties could not be adequately informed. With the change, “independent external audit” has been introduced in its place. This regulation will also facilitate information sharing for minority shareholders and the state.
In parallel with technological developments, we also see the following changes:
* It will be possible to carry out the formation processes of contracts in electronic media.
* It will be possible to create and store invoices and confirmation letters in electronic media.
* Companies’ general assembly calls may be made by e-mail; managerial rights such as attending the meeting, submitting proposals and voting may be exercised online with an electronic signature; and general assemblies and board meetings may be held by teleconference. Holding the general assembly in electronic media becomes obligatory for companies whose shares are listed on the stock exchange. In other words, millions of shareholders will not have to travel to a single venue and will be able to exercise their voting rights online.
* Among merchants, notices or warnings regarding placing the other party in default, terminating the contract or withdrawing from the contract may now also be made through a registered electronic mail system using an electronic signature.
* Insurance policies may now also be issued in electronic media with a secure electronic signature.
* With respect to commercial companies and other real and legal person merchants, it has become possible to carry out all transactions made obligatory by this Law in electronic media with a secure electronic signature, and a registered electronic mail system has been adopted for e-mails sent with a secure electronic signature.
* One of the most important regulations is that the Trade Registry Gazette is being moved to electronic media. With the new law, trade registry records may be kept and stored in electronic media. Thus an electronic information bank will be created, and information on all merchants registered in the trade registry will be accessible electronically through a “commercial registry information bank”.
* Commercial books kept in electronic media in accordance with the Turkish Accounting Standards and meeting certain conditions have also been recognised as valid. In this way, the keeping of commercial books in electronic media — frequently encountered in practice — has found its place in the law.
In summary: especially with the obligations brought by being part of international markets, we see that in the new Turkish Commercial Code the principle of corporate governance has come to the fore in companies, accounting standards have been raised to the international level, companies’ financial statements have been bound to the rules required by the age both for the companies themselves and for groups of companies, an effort has been made to ensure the effective, independent and internationally standardised auditing of joint-stock and limited companies, and provisions have been introduced regarding the spread and validity of electronic transactions and electronic commerce.
It is expected that the new commercial code will contribute to institutionalisation in Turkish companies, strengthen international cooperation, ensure quality competition and increase investment in technology. It is also anticipated that sectors and professions such as information technology, insurance, legal consultancy and financial advisory will come to the fore more.
Considering that the new Turkish Commercial Code and the secondary regulations that will follow it contain — and will contain — fundamental changes affecting commercial life, it is of great importance that both lawyers and companies analyse well the content and possible legal consequences of these regulations. In particular, it should be borne in mind that all these regulations introduce rights and obligations that are different from, more advanced than, and unfamiliar compared with those of current commercial life.
In conclusion: in order to avoid problems during the process of adapting to the changes introduced by the new law, and to foresee problems that may arise in the future and ensure that necessary amendments are made to the law before its entry into force, it will be highly beneficial for company partners and managers, lawyers, accountants and financial advisors to analyse and discuss the content and consequences of the new regulations through various organisations before 1 July 2012, the date of entry into force of the Law.
ATTY. FENNUR GÜÇLÜ