1. What are the breakthroughs introduced regarding the incorporation of Joint Stock Companies?
The draft version of the Turkish Commercial Code (“the Draft”) removed the current determination of progressive incorporation that is not applied. In addition, it is possible by the Draft for joint stock (“JSC”) and limited liable (“LLC”) companies to be incorporated by one shareholder and one partner.
The Draft requires founders’ statement to be granted as a result of the principle on the protection of the Company and JSC. In case real capital is invested, a business or real capital is transferred, it is mandatory for the statement to include compliance of the consideration of such business or capital, the necessity of the transfer of such capital and justifiable and certificated explanations which state the benefits to the company. Furthermore, founders’ benefits shall be included along with the justifications if any.
The Draft requires a new and statutory auditing mechanism as per the incorporation stage of a JSC. One of the conditions to be fulfilled in the incorporation stage of companies is to receive a process auditor report.
The Draft applies a simple, applicable and unique system for institutions that request to go public. It is not mandatory for the legal entity or the individual that undertakes to offer his shares to public to invest 1/4th of his shares, an undertaking would suffice. Such shares may be offered to public with a premium or public offering amount. The nominal value of the shares is deducted from the revenue received from the public and such value is paid to the company. The difference between nominal value and revenue remains with the possession of the undertaker. All of the non-purchased shares remain with the undertaker and he is obliged to promptly pay 1/4th of such shares to the company. Public offerings are held according to the communiqués of the Capital Markets Board (“CMB”).
2. What is a “Sole Corporation”? What are the determinations? What are the breakthroughs regarding real capital and shares?
One of the most important breakthroughs of the Draft is JSC with one shareholder and LLC with one partner. As is known, the current designations require five partners for a JSC and two for a LLC at least to be incorporated.
One shareholder or one partner may use all the authorizations of the general assembly and resolve on all matters. It is also possible for the board of directors to be formed of one individual.
Therefore, the jeopardy of termination is exceeded for companies that were incorporated with more than one partner however number of its partners are reduced to one and it becomes possible to continue their existence accordingly.
The Draft enables intellectual property rights, virtual environments and receivables on demand to be invested as capital. Such real capital shall not bear restraining rights such as lien, pledge etc.