International Guide to Share Transfers in Turkish Joint Stock Companies

At CCS Law, we understand the complexity of share transactions within joint stock companies in Turkiye, governed by Articles 489-501 of the Turkish Commercial Code (TCC). This guide aims to demystify the process of share transfer, providing clear insights into the types of shares and the necessary procedures to ensure a smooth transfer, appealing to our international clientele interested in Turkish corporate investments.

Understanding Share Types in Joint Stock Companies

In the realm of Turkish joint stock companies, owning shares equates to participating in both the profits and management of the company. The TCC recognizes shares as "pay senetleri," although the common term "hisse senetleri" (share certificates) is widely used. The types of shares and their transfer processes vary:

1. Bearer Shares: These shares must be fully paid and issued in certificate form before they can be transferred. If not fully paid, bearer share certificates are considered invalid.

2. Registered Shares: Issued under certain conditions when demanded by minority shareholders, representing at least one-tenth of the company capital in non-public companies and one-twentieth in public companies.

3. Interim Certificates (İlmühaber): Issued temporarily until the bearer shares are printed.

4. Naked Shares: Represent share ownership not tied to any physical certificate.

Legal Framework for Share Transfer

Transferring shares in a joint stock company can involve the complete or partial transfer of ownership rights. This transfer must align with the company's articles of association and the TCC. The process differs based on the type of share:

• Bearer Shares: Transfer of ownership is effective through physical possession and requires notification to the Central Registry Agency (CRA) to be recognized legally.

• Registered Shares: Transfer through endorsement and delivery of the share certificate, subject to fewer restrictions unless otherwise stipulated by law or the articles of association.

Is a Share Transfer Agreement Necessary?

While share transfers in joint stock companies are generally flexible, certain situations necessitate a formal transfer agreement, especially when transferring non-certificated shares or dealing with shares regulated by the CRA.

Share Transfer Formalities

A share transfer does not necessarily require notarization; however, formalizing the transaction through a notarized agreement can provide additional legal safeguards. Share transfers do not require registration but must be recorded in the company’s share ledger to be effective against the company.

Conclusion

Navigating the transfer of shares in Turkish joint stock companies involves understanding various share types and adhering to specific legal stipulations. At CCS Law, we offer expert legal services to ensure your share transactions are executed efficiently and in compliance with Turkish law. For further assistance, please contact us.

Frequently Asked Questions (FAQs) – Share Transfers in Turkish Joint Stock Companies

1. What are the main types of shares in a Turkish joint stock company? 

Turkish joint stock companies issue several types of shares, including bearer shares, registered shares, interim certificates (İlmühaber), and naked shares. Each type has different rules for issuance and transfer under the Turkish Commercial Code (TCC).

2. How can bearer shares be transferred in Turkey? 

Bearer shares must be fully paid and physically issued before they can be legally transferred. Ownership is transferred through physical delivery of the share certificate and must be notified to the Central Registry Agency (CRA) for legal recognition.

3. What is required for transferring registered shares in a joint stock company? 

Registered shares are transferred through endorsement and delivery of the share certificate. The transfer becomes effective against the company once recorded in the share ledger. Additional restrictions may apply under the company’s articles of association.

4. Do share transfers need to be notarised in Turkey? 

Notarisation is not legally required for share transfers but is recommended as a protective measure. A notarised share transfer agreement can strengthen the enforceability of the transaction, especially in case of disputes.

5. Is a formal share transfer agreement required? 

A formal agreement is not always required but is advisable, particularly when dealing with uncertificated shares or shares under the Central Registry Agency system. It helps to clarify terms and protect both parties’ rights.

6. What is the role of the Central Registry Agency (CRA) in share transfers? 

The CRA plays a key role in registering the transfer of bearer shares. Without notification to the CRA, the legal transfer of ownership is not recognised, even if the share certificate has been physically delivered.

7. What are interim certificates (İlmühaber)? 

Interim certificates are temporary instruments issued before bearer share certificates are printed. They represent ownership rights until the actual bearer shares are formally issued.

8. What are “naked shares” and how are they transferred? 

Naked shares refer to shareholdings not represented by any physical certificate. Their transfer typically requires a written agreement and proper recording in the company’s share ledger.

9. Does a share transfer need to be registered with the trade registry? 

No, share transfers in joint stock companies do not require trade registry registration. However, the company must record the transfer in its share ledger to make it effective against the company.

10. Can a company restrict the transfer of its shares? 

Yes, a company’s articles of association may include restrictions or conditions on share transfers, especially for registered shares. These restrictions must comply with the Turkish Commercial Code.

Disclaimer: This article is intended for informational purposes only and does not constitute legal or tax advice.