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Liquidation Process of Joint-Stock Companies Under Turkish Commercial Code
What is The Liquidation Process of Joint-Stock Companies Under The Turkish Commercial Code?
The liquidation process of Turkish Joint-Stock Companies (“JSC”) is subject to the pertinent provisions of the Turkish Commercial Code (“TCC”) numbered 6102 as well as Articles of Association (“AoA”) of the companies.
Dissolved Joint-Stock Companies declared as bankrupt shall be involuntarily liquidated by operation of law with the involvement of bankruptcy administration. However, we will be focusing on voluntary liquidation here within the context of this information note. In either case, the Joint-Stock Companies undergoing the process of liquidation shall retain its legal personality until its removal from the trade register.
1. Liquidation Officers
In a voluntary liquidation, the liquidation is conducted through a liquidation officer appointed at the general assembly meeting of the JSC by the approval votes of the shareholders. In this regard, The TCC does not set out any provision regulating the number and terms of office of the liquidation officers. Therefore, appointing more than one liquidation officer is fine if the shareholders deem it proper. At least one of the liquidation officers must hold Turkish citizenship and maintain a domicile in Turkey.
In a voluntary liquidation, the general assembly meeting of the shareholders might, at its discretion and any time, dismiss the liquidation officers and replace them with the new ones. In contrast, at involuntary liquidation with the involvement of bankruptcy administration, only the court in charge might dismiss the liquidation officers provided that there are reasonable grounds for such dismissal and replacement.
The appointment and dismissal decision of the liquidation officers shall be registered and announced at the Turkish Trade Registry Gazette.
2. What is The Liquidation Process of Joint-Stock Companies?
The following actions shall be taken for the liquidation of a JSC:
(I) Registration of the Resolution at pertinent Trade Registry Office
A general assembly meeting shall convene, and a resolution for liquidation be adopted at the said meeting to commence the liquidation process. The resolution shall include, among others, the reason for liquidation, the names of the liquidation officers, and the procedures that the liquidation officers should follow. The general assembly meeting resolution shall be notarised, registered with the Trade Registry Office in charge and finally announced at the Turkish Trade Registry Gazette.
The Board of Directors of the JSC shall draft, compile and submit the following documents to the Trade Registry Office in charge for the registration and announcement of the liquidation process:
- the petition requesting the registration and announcement of the resolution of General Assembly,
- notarised copy of the minutes of the general assembly meeting purports to indicate the company opted for liquidation,
- list of attendees of the general assembly meeting,
- signature statements of the liquidator(s) under the company’s title bearing the wording “In Process of Liquidation.”
(II) Liquidation Officers’ Duties
The liquidation officers shall take all necessary and precautionary measures to protect the best interest of JSC and are expected to finalise the liquidation process within a reasonable period without any undue delay. In this frame;
The liquidation officers should prepare the initial balance sheet and inventory upon their appointment. As an ensuing step, they shall invite the company’s creditors to apply to the liquidation officers to register and collect the amount owed to them. Such invitation shall be made with registered mail for the creditors whose addresses are known by the company. For creditors whose addresses have not been notified, three consecutive announcements addressed to the said creditors shall be made in one-week intervals at the Trade Registry Gazette to put them on notice that the company is being liquidated and extend them the opportunity to register their receivables. Should the identified creditors fail to inform their claims within the set time, the amount owed to them shall be deposited at a bank to be determined by the Ministry of Trade of Turkey.
(III) De-Registration From The Trade Registry
After completing the foregoing tasks by the liquidation officers, a second General Assembly Meeting shall be held for de-registration purposes of the company. A resolution on approval of the final and definite balance sheet shall be adopted at the said meeting.
Having held the general assembly meeting confirming that all the condition precedents for de-registration of the company are met, the liquidation officers are expected to apply to the competent Trade Registry Office for the de-registration of the JSC from the Trade Registry as well as the announcement of such de-registration at Turkish Trade Registry Gazette. In making the application, the following documents shall be submitted;
- the petition signed by the liquidator(s) requesting the de-registration,
- the minutes of the general assembly meeting approving the final balance sheet,
- List of attendees of the general assembly meeting,
- Declaration by liquidation officers stating that there are no further assets or debts left.
(IV) Additional Liquidation
Following the completion of the liquidation, if it is deemed necessary by the court upon application by the parties who have standing like shareholders and/or creditors, additional liquidation shall be conducted in cases such as; failure to take into account certain assets of the company in the distribution or any substantial breach of procedure that aggrieves the interest of the parties. In case of additional liquidation, the JSC shall be re-registered for a specific purpose until such time the process is entirely concluded.
3. What is Deletion From Merger?
Upon conclusion of the procedures, the trade name shall be permanently deleted from the Trade Registry, and the same is to be announced at the Trade Registry Gazette. Upon closure of the company, the liquidator delivers the books and documents of the company to a court or a notary public as the fiduciary. The fiduciary must keep the company records for a minimum period of 10 years.
Finally, relevant tax offices and social security institutions shall also be notified of the company’s liquidation to delete the company from the respective database.
- Amendment of The Articles of Association in Joint-Stock Companies Under Turkish Commercial Code,
- Registration and Announcement Obligation of Group Companies Under Article 198 of Turkish Commercial Code.