A) Joint Stock Companies
A share is the part of the main capital divided to a specific number of unit value. In accordance with the current Turkish Commercial Code (hereinafter shall be referred to as”the TTC”) it is not mandatory for a Joint Stock Company (hereinafter shall be referred to as “JSC”) to issue shares. JSC reserves two types of shares. These are registered share and bearer share. A JSC may issue shares following the official registration of the company.
Unless the contrary is determined in the articles of association, registered shares are transferred over the delivery of the endorsed share to the transferee. However, the transfer is valid only after such transfer is registered to the share ledger of the company. In line with the Article 418 of the TTC, the Board of Directors of the JSC may refrain from registration of the transfer of the registered share to the share ledger if such determination is determined in the articles of association.
Bearer shares may only be transferred over the delivery of the shares to the transferee. JSC cannot limit or forbid the transfer of bearer shares. It is not mandatory for bearer shares to be registered to the company share ledger.
In line with the draft version of the TTC, partly paid registered shares may only be transferred unless they are transferred in accordance with inheritance, portion of the inheritance, marital property or enforcement provisions.
B) Limited Liable Companies
The capital of a Limited Liable Company (hereinafter shall be referred to as “the LLC”) is divided into shares having nominal value of minimum 25 TRY. Technically, a LLC does not have shares; therefore shares are not represented by share certificates even though the capital is divided into shares. Share certificates may be issued as the proof of the partnership however they do not reserve negotiable instrument qualities.
The draft version of the TTC designates that an LLC may issue registered shares. Besides, the draft TTC removes the liability of the registration of the share transfer to the share ledger. In addition to this, the transfer may be valid without the presence of the partner’s assembly resolution if such determination is designated in the articles of association of the company. Accordingly, notarized share transfer agreements shall be sufficient and valid following the effective date of the draft TTC.