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Amendment of The Articles of Association in Joint-Stock Companies Under Turkish Commercial Code
The Turkish Commercial Code Allows Joint-Stock Companies to Amend Their Articles of Association
The procedures and principles of amendments at Articles of Association of the company have been regulated in articles 452 et seq. of the Turkish Commercial Code numbered 6102.
In addition to that, under regulation on the “Procedures and Principles of the General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry to Attend These Meetings,” amendments to be brought at the articles of association are among the inalienable duties and powers of the General Assembly.
1. What Are The Matters Requiring Amendments to The Articles of Association?
Amendment of the Articles of Association in joint-stock companies is required in the following cases;
- Changing the field of activity of the company,
- Expanding the company’s field of activity,
- Granting various privileges to some of the shareholders, removing the privileges,
- The capital increase, capital reduction,
- Merger, division, changing the type of the company,
- Limiting the transfer of registered shares,
- Moving the headquarters of the company abroad.
2. What is The Articles of Association Amendments Procedure?
According to Turkish Commercial Code Article 452 et al., As a rule, the provisions of the Articles of Association may be amended by the General Assembly meeting under the conditions stipulated in the law.
The general assembly meetings to be held to amend the articles of association are held as indicated in the Articles of Association. The call for the General Assembly meeting is published at the company’s website and trade registry gazette of Turkey. This call is made at least two weeks before the meeting date, excluding the announcement and meeting days. The shareholders registered in the share book and the shareholders who have notified their addresses by submitting a share certificate or a document proving their ownership to the company are notified by registered mail on the day of the meeting, along with the trade registry gazette excerpt where the agenda and the announcement were published.
As per meeting and decision quorum, amendment of the articles of association is taken by the majority of the votes present at the general assembly meeting, whereby at least half of the company’s capital is represented unless otherwise provided in the law and the articles of association.
If the meeting quorum stipulated by law cannot be achieved in the first meeting, a second meeting can be held if it does not exceed one month. At the second meeting, the new quorum represents at least one-third of the company’s capital at the meeting.
That being said, some decisions require a change in the Articles of Association which must be taken unanimously or qualified majority by the owners or their representatives of the shares that make up the entire capital; such as to completely change the business subject of the company, to create privileged shares, and to limit the transfer of registered shares.
Finally, the amendment at Articles of Association must be registered at the respective trade registry and announced. According to Article 454 of the TCC titled “Registration”, the decision of the General Assembly regarding the amendment is registered by the Board of Directors in the trade registry of the place where the company headquarters and branches are incorporated, and the relevant decision is published on the company’s website. The decision to amend does not affect and bind third parties before the announcement.
3. What is The Obligation to Have a Ministry Representative?
According to the recent amendment brought to article 32 of regulation on the “Procedures and Principles of the General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry to Attend These Meetings;” the presence of a Ministry Representative is not mandatory in the general assembly meetings of companies with a single share, except for companies whose foundation and articles of association are subject to the permission of the Ministry.
Suppose the company has more than one shareholder. In that case, the presence of a Ministry Representative is mandatory during the general assembly meeting, whereby a decision related to Articles of Association is adopted.