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Loss of Company Ledgers

NUREFSAN CANDEMIR

Loss of Business Ledgers

According to the 12th article of the 6102 numbered Turkish Commercial Code (TCC), the person who operates a commercial enterprise in his name, even partially, is called a merchant. According to Article 11/f.1 of the TCC, a commercial enterprise is an enterprise in which activities are carried out continuously and independently, aiming to generate income exceeding the limit set for tradespeople. The legislator has required that both commercial books and documents be kept in a way that reflects the real situation of the commercial enterprise and that these books and documents are kept for the period specified in the law to ensure that the state, managers, creditors, partners, customers, and employees can obtain sound information about the activities of the commercial enterprise.[1]

What is The Obligation of Bookkeeping and Recording?

According to Article 64/1 of Turkish Commercial Code; “Every merchant is obliged to keep commercial books and in the books, commercial transactions and the economic and financial situation of the commercial enterprise, debt and credit relations and the results obtained in each accounting period, must be visible” per this law.

In the second paragraph of the same article, the obligation to keep the records has been extended in terms of commercial documents, and “the merchant is obliged to keep a photocopy, carbon copy, microfiche, computer record or a similar copy of any document sent in relation to his business, in written, visual or electronic media” formatted. Therefore, the merchant must keep all kinds of documents necessary to establish, execute, or cancel commercial transactions and understand and arrange commercial books.

What Are The Mandatory Commercial Books?

Commercial books that have to be kept by merchants can be divided into two as the ones related to the accounting of the enterprise and the ones that are not associated with the accounting. According to Article 64 of the Turkish Commercial Code, commercial books about the accounting of the enterprise are:

  • Journal Book,
  • General ledger,
  • Inventory.

Commercial books that are not related to the accounting of the commercial enterprise are:

  • Board of directors resolution book,
  • Share book,
  • General assembly meeting and negotiation book.[2]

Loss of Company Books and Documents

Loss of obligors’ books and documents can be evaluated in two groups. The first one is if their disappearance is due to unforeseen causes such as fire, flood, earthquake, and theft. The second is the case of the taxpayer knowingly and willingly destroying the books and documents.[3]

In Article 82 of the Turkish Commercial Code; “if they are destroyed within the legal period of storage due to fire, flood or earthquake or any disaster or theft merchant may request a document from the competent court of where the commercial enterprise is located in fifteen days starting from the date of the incident is learned. This case is filed without an opponent. The court may also order the collection of evidence that it deems necessary” is regulated. Conditions for obtaining a loss certificate regulated in this provision are:

  • The one requesting the loss certificate should be obliged to keep and/or store the book.
  • Lost books and documents must be used as commercial books and documents that the trader must keep.
  • The books must be lost as a result of force majeure.
  • Books and documents must be lost within the legal storage period.
  • The merchant requesting a certificate of loss must have duly kept a book.
  • The application must be made within fifteen days of prescription.[4]

In cases such as the destruction, loss, waste, being useless of the books and documents that are obliged to keep for ten years of legal period, the merchant shall make an application within fifteen days to the Commercial Court of First Instance where the commercial enterprise is located to have a “certificate of loss.” It is mandatory to make this application as the Court of Cassation considers the 15 days as a prescription period. The 15 day period of prescription starts when it is learned that there will not have any result from the recovery work to save the documents that loss of rights are requested.[5]

The expressions “fire, flood or earthquake” specified in Article 82 of the TCC are not restrictive for the definition of disaster. It is possible to understand these expressions as all kinds of extraordinary natural disasters and social events (thief, arson, etc.) that merchants cannot help. In such cases, as a “prudent business person,” the trader should not have any faults in the loss of commercial books and documents.

The defect implied here is a defect related to the preservation of the books; for example, the existence of a “general defect” such as; fire due to the plug being left in the socket will not prevent the claim for a loss certificate.

In an example case of the 11th Civil Chamber of Court of Cassation: “It is stated that the plaintiff’s books and documents were stolen from the vehicle seat, within this scope the books and documents were placed in the back seat of the vehicle so that they can be seen from the vehicle window. In this way, it is ruled that the merchant has violated the obligation to show due care and attention in terms of keeping his commercial books and documents as a prudent business person. In another case where it could not be explained how the commercial documents were lost, the Court of Cassation decided to reject it because the conditions stipulated in the TCC were not met, due to the absence of a lawsuit requirement.”[6]

If an application is made to the court with the request for a loss certificate, the list of the books and documents subject to the request (serial number, invoice number, the dates of the documents, etc.) should be specified in detail, in addition to this, the detection report of the incident, firefighter report, appraisal report, if possible police station report must be provided and submitted as an annexe to the petition to the extent that they can be obtained since those documents are crucial in terms of proof.

The request for a certificate of loss consists of a request for determination, and this case is substituted without an opponent. The merchants can only bring the lawsuit in question; if it is understood that the person is engaged in small trade activity, the case will be dismissed due to the absence of active hostility. The lawsuit is filed in the Commercial Court of First Instance, where the commercial enterprise is located. Since the judgment to be given by the court will be in the nature of a “detection judgment,” it does not constitute conclusive evidence, and the opposite can always be proven.

What Are Legal Consequences of Losing Company Documents?

Disputes that may occur between real and legal persons who are obliged to keep books are resolved by the courts.

According to Article 80 of the Turkish Commercial Code, it may be requested to deliver the mandatory books during the trial. Suppose the books and documents are not submitted to the court when requested. In that case, they can be considered evidence in favour of the presenter side due to the submission of the legal books and documents by the counterparty. However, in the case of loss books and documents, obtaining a loss certificate and not submitting books and documents to the court is not considered a refraining from submission.[7]

As it can be seen, in such cases of theft, arson or fire, flood, earthquake or any disaster happened and resulted in the loss of the commercial books and documents in the legal storage period, it plays an essential role to printout the loss documents, to provide reports and records on the incident in terms of proving the trader’s flawlessness and the acceptance of the request for loss certificate by a court within the prescription period. Otherwise, serious legal sanctions may be in question, and even problems in terms of proof may arise in terms of possible legal disputes.


Related Article: What Are Smart Contracts?

Article Keywords: Company Ledgers, Loss of Company Ledgers, Legal Consequences of Losing Company Ledgers, The Obligation of Keeping Company Ledgers, Mandatory Company Ledgers, Losing Company Ledgers.


Sources

  • Arslan Ozkan, “Yargitay Kararlari Isiginda Ticari Defter ve Belgelerin Kaybi Halinde Zayi Belgesi Alinmasi,” <https://docplayer.biz.tr/117343496-Yargitay-kararlari-isiginda-ticari-defter-ve-belgelerin-kaybi-halinde-zayi-belgesi-alinmasi.html>.
  • “Ticari Defter ve Belgelerin Kaybolmasi ve Sonuclari,” <https://www.ozdogrular.com.tr/v1/fla-haberler-gizli-245/14974->.
  • SENER Oruc Hami, “Ticari Defterlerin ve Belgelerin Saklanmasi, Ziyai, Zayi Belgesi, Boyle Bir Belgenin Alinmasi ve Alinmamasinin Hukum ve Sonuclari,” <https://dergipark.org.tr/tr/download/article-file/754354>.
  • Ozturk Kubra, “Ticari Defter ve Belgelerin Kaybolmasi Durumunda Yapilması Gereken Islemler,” <https://www.mondaq.com/turkey/contracts-and-commercial-law/892728/ticari-defter-ve-belgelerin-kaybolmas305-durumunda-yap305lmas305-gereken-304351lemler->.
  • Forensis Hukuk, “Ticari Defterlerin Ziyai ve Sonuclari,” <http://www.forensislaw.com/blog/ticari-defterlerin-ziyai-ve-sonuclari>.

References

  • [1] Arslan Ozkan, “Yargitay Kararlari Isiginda Ticari Defter ve Belgelerin Kaybi Halinde Zayi Belgesi Alinmasi.”
  • [2] Arslan Ozkan, “Yargitay Kararlari Isiginda Ticari Defter ve Belgelerin Kaybi Halinde Zayi Belgesi Alinmasi.”
  • [3] “Ticari Defter ve Belgelerin Kaybolmasi ve Sonuclari.”
  • [4] SENER Oruc Hami, “Ticari Defterlerin ve Belgelerin Saklanmasi, Ziyai, Zayi Belgesi, Boyle Bir Belgenin Alinmasi ve Alinmamasinin Hukum ve Sonuclari.”
  • [5] Ozturk Kubra, “Ticari Defter ve Belgelerin Kaybolmasi Durumunda Yapilmasi Gereken Islemler.”
  • [6] Forensis Hukuk, “Ticari Defterlerin Ziyai ve Sonuclari.”
  • [7] “Ticari Defter ve Belgelerin Kaybolmasi ve Sonuclari.”