Stock Corporations I

Glossary of Legal Terms Articles of corporation: şirket esas sözleşmesi Board of Directors: Yönetim Kurulu Charter: articles of corporation Commercial Registry Gazette: Ticaret Sicili Gazetesi Compulsory: zorunlu Core: gövde

Glossary of Legal Terms Dissolution: Sona erme Dividend: temettü; kâr payı General Assembly: Genel Kurul Incorporator: kurucu ortak Indorsement: ciro Issued capital: çıkarılmış sermaye Negligently: ihmal ya da kusurlu olarak Negotiable instrument: kıymetli evrak

Glossary of Legal Terms Registered capital: kayıtlı sermaye Share: pay; hisse Shareholder: paydaş; hissedar Stock: pay; hisse Supplement: ek Voluntary: isteğe bağlı

STOCK CORPORATIONS (A.Ş.) A stock corporation is a company with its own firm name whose predetermined capital (share capital) is divided into parts (shares) and whose liability is limited to the company’s assets. The liability of shareholders is limited to their capital contribution in the company. They are not personally liable for the debts of the company.

Advantages: It is the most suitable company type for the capitalist economic system. It enables to collect large amounts of capital from different people. The large capital collected suits the market economy relying on perfect competition. Big entrepreneurships can be better organized and incorporated. The enterprise risk can be shared among large number of partners and minimized.

Disadvantages: It requires greater expense and effort to be created and operated. In comparison with limited partnerships decision-making process works slower. The power of minority shareholders can sometimes be misused against the majority in the general assembly.

Disadvantages: The only relationship between the shareholders is material. The managers can negligently or maliciously damage the common interests of the innocent shareholders in majority.

Characteristics of Stock Corporations: 1-) Legal personality: A stock corporation has a private law legal personality. It can acquire rights and incur obligations upon their registration. It can sue and be sued at law. It has independent and separate assets from the assests of its shareholders. Corporate debts are payable only out of corporation’s assets.

Characteristics of Stock Corporations: 2-) Capital fixed in advance: The (share) capital of the corporation refers to the sum of shareholder’s contributions. It must be predetermined in the articles of incorporation (charter). The share capital of the corporation shall amount to a minimum of YTL. For some corporations dealing with certain business types a higher share capital can be predetermined by law (for

Characteristics of Stock Corporations: example banks, foreign trade capital corporations, leasing companies, insurance companies etc.). As a rule, to increase or decrease the capital, the articles of incorporation (charter) must be amended; moreover this amendment must be registered in the commercial registry and published in the Commercial Registry Gazette.

Characteristics of Stock Corporations: 3-) Stock Certificates and Free Transferability of Shares: A stock certificate is a negotiable instrument issued by a corporation that evidences ownership of a specified number of shares in the corporation. According to Turkish Law, stock corporations is the only type of companies which can issue stock certificates. Stock certificates are negotiable and generally freely transferable by indorsement and delivery.

Characteristics of Stock Corporations: 4-) Limited Liability: The liability of the corporation is limited to its assets (movable property, immovable property, rights having an economic value etc.), but not to the amount of share capital. In other words, the shareholders are not personally liable for the company’s debts. The share capital illustrates the minimum, and the assets the maximum guarantee for the creditors of the corporation.

Characteristics of Stock Corporations: 5-) Firm Name: Türk Ticaret Bankası A.Ş. Alsancak Şb. compulsory addition Essential part voluntary addition (with permission)

Characteristics of Stock Corporations: 6-) Purpose and Subject Matter: A stock corporation can be established to operate a commercial enterprise in any business which is not forbidden by law.

Characteristics of Stock Corporations: 7-) Number of Incorporators: As a rule, for the establishment of a stock corporation the existence of only one shareholder is sufficient. Incorporators can be a real person or a legal person in nature. There is not any limitation by law for the maximum number of shareholders.

Single Share Holder Company The single shareholder is allowed to exercise all the authorisations granted to the general assembly, and can take all types of decisions. In addition, the board of directors are allowed to be formed with the only partner.

Single shareholder company is reflected to the Turkish legislation as a requirement of the 12th European Union directive concerning the one shareholder companies. The reason relates to the protection of small and medium size enterprises. In this way, SMEs with one real person merchant shall be discharged from unlimited liability. Foreign investment can easily establish a company in Turkey.