LIQUIDATION PROCESS OF JOINT STOCK COMPANIES UNDER TURKISH COMMERCIAL CODE
Liquidation process of Turkish Joint Companies (“JSC”) is subject to the pertinent provisions of Turkish Commercial Code numbered 6102 (“TCC”) as well as Articles of Association (“AoA”) of the companies.
A dissolved JSC which was 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 JSC undergoing process of liquidation shall retain its legal personality until its removal from the trade register.
In voluntary liquidation, the liquidation is conducted through 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, it is fine to appoint more than one liquidation officer, if the shareholders deem it is proper and at least one of the liquidation officers must hold Turkish citizenship and maintain domicile in Turkey.
In voluntary liquidation, the general assembly meeting of the shareholders might at its own discretion and any time, dismiss the liquidation officers and replace them with the new ones, whereas 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.
Appointment and dismissal decision of the liquidation officers shall be registered and announced at Turkish Trade Registry Gazette.
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 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 as well as the procedures that should be followed by the liquidation officers. The general assembly meeting resolution shall be notarized, registered with the Trade Registry Office in charge and finally announced at Turkish Trade Registry Gazette.
The Board of Directors of the JSC shall draft, compile and submit following documents to the Trade Registry Office in charge for the registration and announcement of the liquidation process:
- petition requesting the registration and announcement of the resolution of General Assembly,
- notarized 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 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 creditors of the Company 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 completion of 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 announcement of such de-registration at Turkish Trade Registry Gazette. In making the application, following documents shall be submitted;
- 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 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 specific purpose until such time the process is entirely concluded.
3. Deletion from Register
Upon conclusion of the procedures, the trade name shall be deleted from the Trade Registry on permanent basis 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 company records must be kept by the fiduciary for a minimum period of 10 years.
Finally, relevant tax offices and social security institutions shall also be notified on the liquidation of the company for deletion the company from the respective database.