Mandatory Central Securities Depository Notification for Closed Joint Stock Corporations
Mandatory Central Securities Depository Notification for Closed Joint Stock Corporations
With the “Law No. 7262 on Preventing the Financing of the Proliferation of Weapons of Mass Destruction” published in Official Gazette no. 31351 dated 31.12.2020, the Turkish Commercial Code no. 6102 [“TCC”] was amended. The TCC regulates the principles regarding the share certificates in its Articles 484 and onwards.
- In accordance with the amendment, the Central Securities Depository [“CSD”] should be informed of the holders of bearer shares in joint stock corporations and their shares in order for the exercise of rights connected to the respective share certificates and for the transfer of such shares.
- With the amendments, the sentence “the Central Securities Depository should be informed regarding the owners of bearer shares in joint stock corporations and their shares prior to the issuance of the share certificates” was added to the Art. 486 of the TCC, and Art. 489 regarding transfer of bearer shares was amended as such:
“(1) Transfer of bearer shares becomes effective vis-à-vis the company and third parties only upon notification to the Central Securities Depository by the acquirer. In case the Central Securities Depository is not notified, then owners of bearer shares cannot exercise rights attached to these shares until the necessary notification is made.
(2) In exercise of the rights attached to bearer shares vis-à-vis the company and the third parties, the date of notification is taken into account.
(3) Information kept by the Central Securities Depository regarding bearer shares are shared with the authorities specified in applicable laws.
(4) Rules and procedures regarding the notification of bearer shares to the Central Securities Depository shall be determined by a Communiqué published by the Ministry of Commerce.”
- The amendment requires information on bearer shares and their holders to be notified to the CSD prior to the issuance of certificates or in case of a share transfer.
- This notification is mandatory for the exercise of rights and liabilities attached to these shares. In other words, in case of a failure to make the notification, the shareholder will not be able to exercise their rights on his/her shares, including voting in general assembly meetings, participating in a capital increase and transfer/sale of the shares.
- Holders of bearer shares in closed joint stock corporations should apply to the company together with their shares before 31.12.2021, and companies should notify the CSD in 5 days following the application.
- Following the introduction of the amendment, failure to make the notification regarding a newly issued share would result in a 20.000.-TL fine, while a failure regarding the transferred bearer shares would lead to a fine of 5.000.-TL. As such, a failure would also mean rights attached to the shares could not be exercised, any sale or transfer would be null and void, and any profit gained from the shares would be deemed as “unjust enrichment”. Moreover, the Board of Directors is responsible for making the necessary notifications, meaning that a failure could result in liability for board members.
To ensure sustainability of internal and external relations in closed joint stock corporations, holders of bearer shares should apply to the companies in light of the foregoing regulations before 31.12.2021, and the company should then notify the CSD.
