By the Law to Fight Against Proliferation of Financing Weapons of Mass Destruction No. 7262 (“Law”) published in the Official Gazette dated December 31, 2020 and numbered 31351, many amendments were enacted for the Turkish Commercial Code (“TCC”), including bearer share certificates.

With this newsletter, we aim to provide information about the amendments enacted in the TCC by the Law.

1. Which Companies Are Covered by the Amendments?

The amendments regarding bearer share certificates cover non-public joint-stock companies. On the other hand, the amendments regarding obligation to keep books electronically cover the companies that are obliged to keep books.

2. Which Information on Bearer Share Certificates Will Be Notified to the Central Registry Agency?

By the Law, the information on shareholders and their bearer shares will be notified to the Central Registry Agency (“CRA”) before the bearer share certificates are distributed to the shareholders. The information on current shareholders shall be notified in written until December 31^st, 2021.

3. How Do the Shareholders Who Hold Bearer Share Certificates Exercise Their Rights?

Prior to the Law, the person who possessed to hold the bearer share certificate could have the title of shareholder against the company and could exercise the rights arising from the share.

After the Law, in order to exercise the rights arising from the bearer share, the person shall prove that he has the possession of the bearer share certificate and the information of this person shall be notified to the CRA by the company. Otherwise, the person will not have the title of shareholder and will not be able to exercise the rights arising from the shares.

4. Is There an Amendment to Transfer of Bearer Share Certificates?

Prior to the Law, the transfer of bearer shares was in effect with the passing of its possession. In other words, with the transfer of possession, the title of shareholding could be claimed by the transferee against the company and third parties.

With the Law, the transfer will be in effect with the transfer notified to the CRA by the transferee. Unless the transferee notifies the CRA of such transfer, he will not be able to claim the title of shareholder against third parties and will not be able to exercise his rights arising from the shares such as voting right, participation in the general assembly, and dividends. Therefore, while the transfer of shares will have its consequences between the transferor and the transferee as of the moment of the transfer, it will have its consequences against the company and third parties, by notification to CRA.

5. Is There an Amendment to the Participation to General Assembly Meetings by the Shareholder Who Holds a Bearer Share Certificate?

Prior to the Law, bearer share certificate holders who received an entrance card within the TCC could attend the general assembly meeting.

By the law, the charts of the bearer shareholders who can attend the general assembly meeting will be obtained from the CRA. The entrance card application has been ended. In other words, the bearer shareholder whose information is not included in the schedule of shareholders to be obtained from the CRA will not be able to attend the general assembly meeting.

6. Which Books Will Be Kept Electronically?

With the authorization given to the Ministry of Commerce by the Law, it may be made mandatory to keep the share book, the board of directors’ decision book and the general assembly meeting book electronically.

7. Until When the Current Bearer Shares Will Be Notified to?

Those who have bearer shares are required to apply to the joint stock company together with the share certificates to be notified to the CRA between April 1, 2021 and December 31, 2021.

Upon application, the board of directors of the joint stock company is obliged to inform the CRA of the information regarding bearer shareholders and their shares within five business days. If the shareholders do not apply to the joint stock company, they will not be able to exercise their rights arising of the shares until the CRA is notified to. However, even if the shareholder applies to the company, there is no regulation on how the exercise of rights will be affected if the company does not notify to the CRA.

8. What Are the Sanctions for Non-Compliance of the Amendments?

In case that the information on bearer shareholders and their shares are notifies to the CRA by the company before the share certificates are distributed to the shareholder, or that those who already have bearer shares do not apply to the company or if the board of directors does not notify MKK within the time limit, an administrative fine of TRY 20,000 will be imposed.

An administrative fine of TRY5,000 will be imposed on the transferee, who has not notified to the CRA despite taking over the bearer share certificate.