New regulations have been introduced to Turkish Commercial Code (“TCC”) regarding bearer share certificates with the Code on the Prevention of the Financing of the Propagation of Weapons of Mass Destruction No. 7262. The procedures and principles regarding the new regulations have been determined by the Communiqué on Notification and Registration of Bearer Share Certificates to the Central Registration Agency (“Communiqué“)[1].

Which companies are covered by the Communiqué?

  • All joint stock companies that are not in the status of Publicly Held Company in accordance with the Capital Market Law and owning bearer share certificates are covered by this Communiqué.

Regulations regarding the issuance, distribution and cancellation of bearer share certificates:

  • Board of directors of joint stock companies that will issue bearer share certificates (“BSC“) will notify the Central Registry Agency (the “CRA“) before distributing BSCs to their shareholders. This notification will include information regarding the company whose shares that will be certificated, BSC holders and BSCs. Following the notification, a unique number will be assigned for each BSC by the CRA.
  • BSC is issued within 3 months after the payment of the share subscription amounts, the CRA is notified and the BSCs are distributed to the relevant shareholders. Newly issued shares as a result of a capital increase are also subject to the same regime.
  • In the event that BSC is canceled due to capital decrease or alteration of share certificate, CRA makes the necessary correction upon the notification of the company to the CRA.
  • In the event that the company is withdrawn from the trade registry, CRA cancels the registration for BSC ex officio or upon notification.

Regulations regarding the transfer of share certificates:

  • In order for the transfer of the BSC to be effective before the company and third parties, it is obligatory to transfer the possession of the BSC and notify the CRA. The notification can be made by the company or those who are parties to the transfer.
  • When asserting rights arising from BSC against the company and third parties, the date of notification made by electronic methods to the CRA will be taken as basis.
  • In case of failure to notify the CRA, BSC holders will not be able to use their rights related to the share arising from the TCC until the notification is made.

Regulations regarding the general assembly meetings and the chart of shareholders:

  • In the general assembly meetings, shareholders chart in relation to the bearer share certificates, will be prepared according to the list to be obtained from the CRA. No further list is requested from the CRA when the Electronic General Assembly Meeting System is used, since it is obtained from the Electronic General Assembly Meeting System.

Regulations regarding the records to be kept under the CRA:

  • Records regarding the bearer share certificate holders and their shares will be kept in the electronic environment created by the CRA.
  • According to the Communiqué, the records kept under the CRA are confidential. These records can only be shared with authorities authorized in accordance with the relevant laws.
  • Bearer share certificate holders are able to inquire with regards to their shares registered under the CRA on their behalf, through the “e-Investor: Investor Information Center” application of the CRA, and obtain the relevant document electronically.

Levy and Injunction Practices on BSC

  • The company notifies the CRA about the above mentioned number generated by the CRA in order to impose a levy or an injunction on BSC by the relevant authorities and CRA creates the necessary record. These records are removed from the system in the same way upon the notification of the relevant authority.
  • Unless otherwise is decided by the relevant authority, the record regarding the transfer of the share that is levied or subject to an injunction cannot be registered.

Other Important Issues:

  • Services to be provided by the CRA in accordance with the Communiqué are subject to a fee and these fees are stated under the annex of the Communiqué.
  • As per Provisional Article 1 of the Communiqué, bearer share certificate holders shall apply to the company on the effective date of the Communiqué, so as to be notified to the CRA within the framework of the procedures and principles specified in the Communiqué. Information regarding the share certificate and the shareholder will be notified to the CRA within five business days by the authorized representatives of company and will be recorded under the system established for this purpose. Subsequently, the procedures for the return of the share certificate to the shareholder will be completed. If the shareholders do not apply to the company, they will not be able to use their rights related to share arising from the TCC until the application is made.
  • Pursuant to the Provisional Article 1 of the Communiqué, shareholders who have applied to the company so as to be notified to the CRA but have not yet been notified to the CRA by the company will also be taken into consideration while preparing the list of attendees of the general assembly meeting until December 31, 2021.

[1] The Communiqué entered into force immediately after being published in the Official Gazette dated April 6, 2021 and numbered 31446.