In Turkey, if the shareholders, who carry out their commercial activities through a Limited Company, wish to continue their activities under a Joint Stock Company, type of the company should be changed in accordance with Turkish Law.
The Turkish Commercial Code (“TCC”) explicitly permits the change of type of Limited Company to a Joint Stock Company. Therefore, there is no legal obstacle for shareholders to initiate the procedures to change the type of the Limited Company.
Although the establishment provisions of the Joint Stock Company will apply to Limited Companies, it should be noted that the provisions regulated on behalf of the Joint Stock Company will not apply in terms of the minimum number of shareholders, the contribution of capital in kind, and the signing of contracts.
While the transformation process will be concluded, the shares and rights of the shareholders in the company will remain. In the case of privileged shares, an equivalent value may be granted or an appropriate compensation will be paid.
If there are redeemable preference shares at Limited Company, rights of the same value will be granted or the actual value at the date of the conversion plan will be paid.
For the change of the type that will be made over the registered capital, a request number must first be obtained by applying on the Mersis website. Afterwards, an application should be made to the regional representative without an appointment.
The documents required for the application are listed on the official website of the Istanbul Chamber of Commerce (“ITO”) ;
a) Petition
b) In case of foreign partners, 1 copy of the Establishment Notification Form
c) CPA or Certified Public Accountant report with the last Balance Sheet or, if the changing type of the company is subject to audit, the report containing the auditor’s findings (Balance Sheet date should not be more than 6 months)
-One original and as many photocopies as the number of authorities to be notified should be attached.
– In case there are no goods and rights that require special registry; it should be notified that these issues do not exist.
-Consultant’s activity certificate (original or notarized)
d) Declaration 1 signed by the company officials addressed to the Commercial Registry Directorate containing the information of all assets or intellectual rights registered in the registry of the company whose type will change and photocopies of documents showing that the company belongs to the company.
-Separate declaration should be written for each authority to be notified. Declaration 2 addressed to the relevant directorates must be submitted.
e) Type change plan to be prepared in writing by the manager or managers of the Company
The elements that the relevant documents should contain;
-The trade name of the company before and after the change of type, its headquarters and information on the new type,
-Contract of a joint stock company,
-Explanations on the number, type and amount of shares that the shareholders will hold in the joint stock company after the change of type.
f)Change of Type Report on the change of type by the director or directors of the company
In the report, in general; the purpose and results of the conversion into a joint stock company, the fulfillment of the establishment provisions of the joint stock company, the agreement of the joint stock company, the rate of change regarding the shares to be held by the shareholders in the joint stock company, the additional payment and other personal performance obligations and personal liabilities arising from the conversion into a joint stock company, if any, regarding the shareholders, and the issues regarding the obligations arising for the shareholders due to the change of type should be explained in legal and economic terms by showing the justifications.
Article 186 of the TCC stipulates that the issuance of the Change of Type Report may be waived if approved by all shareholders in the general assembly.
A Certified Public Accountant’s Report or Sworn-in Certified Public Accountant’s Report and a certificate of activity must be submitted for showing if the company is small or medium-sized enterprise.
The following matters shall be submitted to the examination of the shareholders thirty days before a decision is taken at the shareholders’ meeting (TCC Art. 188)
o Type change plan,
o Change of type report,
o Financial statements for the last three years
o If more than six months have elapsed between the balance sheet date and the date of the conversion report, or if significant changes have occurred in the assets of the company since the last balance sheet was issued, the interim balance sheet
o Copies of the aforementioned documents may be provided free of charge to shareholders upon request. The Company informs the shareholders that they have the right to inspect them in an appropriate manner.
g) Notarized 1 copy of the acceptance of the change of type
Upon completion of the above procedures, the manager or managers of the company shall submit the conversion plan for the approval of the shareholders’ meeting thirty days after the shareholders have been given the right of review.
On behalf of the change of type plan, it is taken by the decision of three quarters of the shareholders, provided that they have at least three quarters of the capital in limited liability companies.
h) Declaration of signature under the title, if not submitted
j) If subject to the permission or appropriate opinion of the Ministry or other official institutions, this permission or appropriate opinion letter
k) If the company has a branch or branches registered at directorate where the company headquarters is located or in another Trade Registry Directorate, the attached Branch information statement must be signed and attached to the document.
If there are no branch(es), a signed declaration of non-existence must be given.
In addition, it should be noted that if there is a capital increase, the relevant documents should also be attached.
